1 00:00:00.200 --> 00:00:03.600 So, all right. So the Federal Reserve they put out the study every single year at 2 00:00:03.600 --> 00:00:06.000 least as far back as 2015. I think that's when 3 00:00:06.200 --> 00:00:09.200 we first started reporting on it. I don't know if I was the first one ever, but that's the first time 4 00:00:09.200 --> 00:00:12.300 we reported on one because the first time I ever saw the word merchant cash 5 00:00:12.300 --> 00:00:16.000 advance and the Federal Reserve, you know, annual study. And 6 00:00:15.500 --> 00:00:18.300 so pretty consistently since round 7 00:00:18.300 --> 00:00:21.300 2015 for for small 8 00:00:21.300 --> 00:00:26.200 businesses that applied for financing historically 9 00:00:25.200 --> 00:00:28.500 7% had sought out 10 00:00:28.500 --> 00:00:29.600 an MCA. 11 00:00:30.200 --> 00:00:33.300 Does it mean only MCA? Yeah, but at least in MCA among other 12 00:00:33.300 --> 00:00:37.100 products, yeah, that number is help pretty steady 7% 13 00:00:36.200 --> 00:00:39.400 for at least five, six, seven years or 14 00:00:39.400 --> 00:00:42.200 at least 56 years. And then we saw I think a little 15 00:00:42.200 --> 00:00:45.300 bit of a bump in 2020 and then 16 00:00:45.300 --> 00:00:48.400 2021 is gone up to 10 percent. So 17 00:00:48.400 --> 00:00:51.400 that is a significant number of because we finally hit double double 18 00:00:51.400 --> 00:00:56.200 digits. Yeah, that's a market penetration metric. 19 00:00:55.500 --> 00:00:58.300 If I, if I had to, you know, call 20 00:00:58.300 --> 00:00:59.900 it something. Because if 21 00:01:00.300 --> 00:01:03.400 Of those who seek out financing for 22 00:01:03.400 --> 00:01:06.600 the small business, if 10% of them include MCA, 23 00:01:06.600 --> 00:01:09.300 as among the solutions that they seek. I'd 24 00:01:09.300 --> 00:01:12.200 say that's a pretty pretty big success story for 25 00:01:12.200 --> 00:01:15.500 the industry. But at the same time shows you 26 00:01:15.500 --> 00:01:18.500 how much more Runway there is because 27 00:01:18.500 --> 00:01:21.300 we talked and consider often that. Perhaps this 28 00:01:21.300 --> 00:01:24.600 industry is saturated. How much more of the market is there? Yeah. 29 00:01:24.600 --> 00:01:27.600 Well only one out of 10 small businesses who 30 00:01:27.600 --> 00:01:29.800 have sought capital in 2021 only. 31 00:01:30.100 --> 00:01:33.500 One out of ten sought in MCA as part of what they needed. 32 00:01:33.600 --> 00:01:36.200 It might be because NCAA didn't fit and that's what he didn't seek it 33 00:01:36.200 --> 00:01:39.200 out. Right? I don't think it went in, you know, 34 00:01:39.200 --> 00:01:42.500 too into the weeds. Yeah. As to why they wanted something or not. 35 00:01:42.500 --> 00:01:45.600 But yet small, small businesses have 36 00:01:45.600 --> 00:01:48.300 more this time sought out 37 00:01:48.300 --> 00:01:51.400 MCA that in all previous years. Yeah, and 38 00:01:51.400 --> 00:01:54.200 I think like you said, you know, the 39 00:01:54.200 --> 00:01:57.500 way I viewed is that like MCS were finally we're getting 40 00:01:57.200 --> 00:01:59.900 we we haven't arrived, but 41 00:02:00.200 --> 00:02:03.800 You know, like we're getting attention of many different people, you know, from government 42 00:02:03.800 --> 00:02:06.100 officials, you know, to like the headline that we 43 00:02:06.100 --> 00:02:09.400 just spoke about where, you know, there's people 44 00:02:09.400 --> 00:02:13.300 are being indicted because they've, you 45 00:02:13.300 --> 00:02:16.200 know, try to incorrectly do 46 00:02:16.200 --> 00:02:19.200 business with MC companies and now seeing that, you 47 00:02:19.200 --> 00:02:22.700 know, this new Federal Reserve study, so, you know, we're 48 00:02:22.700 --> 00:02:26.600 finally getting the attention of everyone. So 49 00:02:26.900 --> 00:02:29.300 it's pretty much something pretty 50 00:02:29.300 --> 00:02:29.900 cool to see. 51 00:02:30.300 --> 00:02:33.000 How I remember like the back in the 52 00:02:33.200 --> 00:02:36.300 day, the industry wasn't, you know, people were like, what's that MCA? And 53 00:02:36.300 --> 00:02:39.900 now everyone like people know, yeah, you're not even in the industry that 54 00:02:39.900 --> 00:02:42.500 there's ways to get loans without going to the bank, for 55 00:02:42.500 --> 00:02:46.100 example, so people know. Yeah, I 56 00:02:46.100 --> 00:02:49.500 noticed also that factoring is held pretty consistent over 57 00:02:49.500 --> 00:02:52.400 the last, like, seven years or so. It's hover between three 58 00:02:52.400 --> 00:02:55.600 and four percent a long time ago. The factoring 59 00:02:55.600 --> 00:03:00.000 industry was very down on the MCA product. 60 00:03:00.200 --> 00:03:03.700 They found it highly competitive and they found it. 61 00:03:03.100 --> 00:03:06.500 Not as good as theirs and they 62 00:03:06.500 --> 00:03:09.300 didn't want their customers to 63 00:03:09.300 --> 00:03:12.700 choose it over their product. Yeah, so there was this resistance to 64 00:03:12.700 --> 00:03:16.000 it. This is bad. Customers 65 00:03:15.300 --> 00:03:19.000 shouldn't use it, use factoring instead. 66 00:03:18.200 --> 00:03:21.900 The problem with badgering is that there's extra traditional batteries 67 00:03:21.900 --> 00:03:24.200 extra steps involved. And 68 00:03:24.200 --> 00:03:27.600 if you don't have accounts receivable and you don't invoice, your customers, it 69 00:03:27.600 --> 00:03:30.000 becomes a lot more difficult to find. 70 00:03:30.100 --> 00:03:33.500 And clients, right? And the MCA product is 71 00:03:33.500 --> 00:03:36.500 looking at Future Revenue. So you don't need to have the 72 00:03:36.500 --> 00:03:39.200 traditional invoice system to be eligible for it. So 73 00:03:39.200 --> 00:03:42.800 you have a broader Market that's eligible for an MCA. And 74 00:03:42.800 --> 00:03:45.200 so factoring is kind of Health consistent where the 75 00:03:45.200 --> 00:03:49.000 NCAA is now it's almost triple in 76 00:03:48.300 --> 00:03:51.400 terms of Market penetration. Yeah, I 77 00:03:51.400 --> 00:03:54.300 think that's significant. If you know the history between the 78 00:03:54.300 --> 00:03:57.400 two rival factions of small 79 00:03:57.400 --> 00:04:00.000 business, finance to see where they've gone since then. Despite. 80 00:04:00.100 --> 00:04:03.300 All the talk about regulation and what customers want 81 00:04:03.300 --> 00:04:06.500 and having a pandemic and stuff. The fact that here. 82 00:04:06.500 --> 00:04:09.600 We are looking at 2021 that MCA 83 00:04:09.600 --> 00:04:12.300 came in at 10% factoring still down, you 84 00:04:12.300 --> 00:04:15.300 know, down under it just says 85 00:04:15.300 --> 00:04:18.700 a lot about what the small business appetite is for 86 00:04:18.700 --> 00:04:21.300 the two products when they put head-to-head. Yeah. No, 87 00:04:21.300 --> 00:04:22.500 it's good. It's good.