Merchant Cash Advance and Startup BusinessesOctober 20, 2010 | By: Sean Murray
Kudos to the entrepreneurs taking a chance in the worst economic period of modern times. Starting a business is already a truly challenging task in itself but before we shower you with praise for being the ultimate warrior of capitalism, let’s put everything into perspective.
Risk takers are a minority in today’s startup community. A persistently high rate of unemployment is breeding a culture of survivalists; Individuals that have been pushed to the limit via pay cuts, layoffs, and robo-signing foreclosing bankers. It’s resumé rejection, employer double talk, and anger at how Wall Street bankers continue to live. The new entrepreneurs are a resounding chorus of “If I can’t get a job, I’ll make my own job!” These people are going for it on 4th Down and Long and running it up the middle for a touchdown. It’s as if Charles Darwin spiked their Corn Flakes.
Startup survivalists are just as inspiring as their risk taking counterparts. Both groups have the drive and that’s essential. But you can’t forego some basic tools. Financing is a must. No capital, no business. Unless you are fortunate to start with deep pockets, you need access to cash.
New businesses are not likely to be offered credit terms by vendors, nor can you push back overhead expenses such as rent, until you’re generating revenue. If unforeseen demand overwhelms your capacity, a cash shortage can do irreparable damage to your success.
Rather than spew rhetoric about the importance of funds, and shortchange you with a bullet point list of vague sources whom in reality are so illiquid, they’re not actually viable, we’ll offer our real 2 cents.
Banks. For a startup? Not happening. Angel Investors and Venture Capitalists? Slim to no chance. Unless these private investors live in your community, they’re not going to invest in your business. More than 90% of startups fail. For an investor to take that much risk, they’re going to do some hands on management or want to follow you around and critique how you’re spending their money. That’s not necessarily a bad thing. It just means that one can’t reasonably expect a return on their investment without intimate knowledge of the demographics and community the business is situated in.
Looking for private investors over the internet? Don’t. Your pro forma financial statements, data research, and business plan won’t help. Do you know how many businesses fail to open even after they incorporate, sign a lease, purchase inventory, advertise, and make preliminary hires? An astounding number are eclipsed by failed health inspections, license/permit rejections, and building code violations. This reasserts that unless an investor is personally intimate with your progress, the odds are stacked against them.
Lastly, you need not pay to get approved for capital. We’ve spoken with many start ups over the last year and are flabbergasted by the amount of new businesses that are convinced they have to pay a $3,000 upfront fee to get approved for a loan. The ones that actually pay are quick to learn what town the lender is based in; It’s called Scam City.
Real Option? Merchant Cash Advance. A Merchant Cash Advance offers a business with a lump sum of capital upfront. In return, a piece of every sale the business makes will go towards paying it back plus a predetermined fee. There is no due date or set term for repayment. That means if sales are slow to get off the ground, then funds will be repaid slower and with no penalty.
A Merchant Cash Advance provider entrusts you with their capital because of the unique security the repayment method offers. The business itself must accept credit cards as a form of payment. The credit card processing company will automatically deduct the agreed percentage piece of each sale transacted and forward it to the Merchant Cash Advance provider on your behalf for repayment.
A startup can qualify with as little as 1 week in business. As long as you open, you can get funding. Credit can play a limited factor and the cost can be hefty, but the access to capital is unmatched. From the date you apply, funds can be received in as little as 5 days.
Purchase inventory, pay the rent, advertise, hire, or seize an opportunity. Whichever shortcoming you face, it can be overcome with a Merchant Cash Advance. Industry experts project that funding is on pace to reach over $600 Million for 2010 alone. With advances ranging from as small as $1,000 to as high as $500,000, there is proof that numerous deals are being made every day.
We’ve seen the same books, guides, and expert advice columns that you’ve seen and all of them seem to be a reprint of useless suggestions like the SBA and searching for angel investors online. These people earn a living writing. Whether or not the money expert column in your newspaper actually helps you, makes no difference to them. We have many years experience in the Merchant Cash Advance industry and we make careers out of funding you, not telling you about funding.
We try not to promote any one company over another. There is no harm in enlisting the service of a middleman or reseller for one of the direct funding sources. It may actually benefit you. If you are open for business, you can obtain a Merchant Cash Advance. If you have been in business for a long time, a Merchant Cash Advance is still a fantastic option.
It’s 4th Down and Long. You’re ambitious, focused, and ready. You are the ultimate warrior of capitalism. A Merchant Cash Advance will supply the cash. Grow, take risks, survive, and don’t be surprised if your Corn Flakes taste funny.Last modified: August 29, 2013
Sean Murray is the founder of deBanked, an 11-year veteran of the merchant cash advance industry, a casual Lending Club and Prosper note investor, the co-founder of Daily Funder, an alternative lending speaker, consultant, writer, and enthusiast. Connect with me on LinkedIn or follow me on twitter.