

SaaS Funding: Based on a Multiple of Your Monthly Recurring Revenue - iamchmod
http://www.saasfunding.com/

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dg123
I’m Darrin Ginsberg, Founder of SaaS Funding.

Regarding the comments, I would like to make a few points:

1\. Like all of you I have been an entrepreneur, starting companies since my
teens. I have been both an equity investor and a lender to many successful
SaaS companies. We may be lenders, but we are not “bankers”. 2\. As a serial
entrepreneur, I despise red tape. From our application to funding our typical
turn around time is 5 days. Try to beat that with an Angel Investor, VC, or a
traditional bank. With SaaS Funding, there are no operational hassles or
requirements (or even suggestion) to move card processing to the vendor of our
choice. I happen to have a payment processing background and can show most
SaaS companies how to get better rates on their current processing, but there
is no requirement to take our advice. 3\. Our rates reflect our perception of
risk. The average effective rate is approximately 25%. Is that ‘usurious’? I
don’t think so. (Keep in mind that this is not necessarily the rate your
company would pay. You could be lower if your company is credit worthy, has a
great management team, a great growth plan and good recurring revenue. You
could pay higher than this if your company has “issues”. Each deal is
individually reviewed and scored based on its own merits and based on what we
feel is the right risk/reward ratio.

\- We tell every prospect to apply for a bank loan first. It’s cheaper. If you
don’t qualify for one of many reasons, can’t get all that you need, or you are
pressed for time, give us a shot. We promise not to waste your time. \- We
underwrite software providers, not their VC investors. In fact, many of our
clients do not have equity investors. \- We don’t have financial covenants.
You run your business. \- We don’t take equity. Not one share. We won’t dilute
you or ask for Options or Warrants. \- We sometimes do Revenue Participation
deals where the rates can be significantly lower but they have some type of
Revenue Participation attached.

So for an example, let’s consider the math on a $200k loan for a 24 month loan
at the rate of 25%. would cost $56k in interest over 2 years. What can you do
with the 200K to grow your business? If you can’t increase its value by $56K,
or use it to help you bring in at least $56K, then you shouldn’t take this or
any type of loan. Could you increase your business 10%, 20%, 30%, 50% or more
if you had $200K to spend in marketing your product?. Is $56k too expensive
for our product? What is the cost of issuing equity at this stage in your
company? I suspect that if you are successful, it will cost you much more than
that in the long run.

So, if you have revenue already and want to reach out and talk with me or one
of my team, please let me know. Thanks.

Darrin Ginsberg – CEO SaaS Funding, a division of Super G Funding.
Darrin@supergfunding.com 949.673.2009

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patio11
I looked into this earlier while banging my head against the wall trying to
get a bank loan and thinking "Crikey, somebody has to have a better option for
this."

There aren't a heck of a lot of options, so if somebody said "Our business
accepted their terms" I wouldn't immediately think "You must be crazy.", but
I'll observe that 19~40% APR is pretty expensive for debt and that "You have
to switch credit card processors to one we nominate and, btw, your new account
will be a lockbox controlled by us." is both an operational hassle and strikes
me as a fairly onerous term.

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tjpd
19-40% is pretty usurious. Alongside the requirement for operational control
over payments makes this a bad idea. For small amounts (under $250k) you're
better off even taking a personal unsecured term loan (8-15%) or remortgaging
(4-6%). But there are still better business options provided by venture-aware
banks and lenders like SVB, CNB, Square 1, WTI etc.

