Banks: Bullet Programs
By Michael Weiner
 At least twice a day, someone writes who is looking for a bullet program to enter. Without understanding how and why these bullet programs come about, they think they can just send in their application package of compliance documents, and some bullet will be always available any time they want.
This could not be further from the truth, and it is a huge waste of time. Here’s why:
Bullet programs (called because they come and go so fast) result when there is a temporary over-supply of bank paper that has been ordered by the commitment holder on behalf of a buyer. When the buyer fails to perform, the commitment holder has been left ‘holding the bag’ on the paper he committed to buy. He cannot call the bank and say, “sorry, I need to cancel the order”. That’s not how it works, if one wants to remain a commitment holder. The commitment holder has to provide an incentive to clients to move that paper out faster, usually by offering a higher profit temporarily for a few days, until the over-supply is liquidated.
Just because a new client wants to be in a Bullet program is never any guarantee that a Bullet will be running when he is cleared through compliance, has signed the AMA, and has confirmed his funds are ready to be blocked for the line of credit which will be the actual trade account. Bullet programs come and go fast… very fast… and they only are around when someone in the channel of the buy/sell has failed to fulfill his end of the contract.
Advice? Don’t make the mistake of insisting on coming into a program only if it is a Bullet. The lost profit from being in the plain-old-vanilla PPP is too great to ignore, despite the dazzle a Bullet might offer.
Mike Weiner is the President/CEO of PreConstruction Catalysts, Inc., a global business development firm with direct principal relationships at the highest end of the managed buy/sell trade groups.
About the Author
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| Michael Weiner, PreConstruction Catalysts Inc
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