Lightspeed: ‘We plan to grow our MCA business cautiously’

Global e-commerce platform Lightspeed continues to see a lot of potential in the merchant cash advance space. It more than doubled the cash expended to originate MCAs quarter-on-quarter to $18.5M up from $8.3M.

“I’ll start by saying that when we look at our peers that are doing capital and have been doing capital for a long time as a part of their business, they’re giving out about 1% of their GTV (Gross Transaction Value) in merchant cash advance,” said Lightspeed CFO Asha Bakshani in the Q4 2024 FY earnings call. “If we were to do 1% of our GTV, that’s almost $1 billion in merchant cash advance. So, definitely a ton of growth potential for this business.”

Bakshani continued by saying:

What we plan on doing is growing this business very cautiously given the macro. As we’ve said before, we are in the perfect position to underwrite our customers for capital, determine the creditworthiness of our customers and how much they should be underwritten for, and we’ve had great success with the business so far, but again, growing it in a very steady and cautious manner. We don’t expect that we would use our balance sheet for several hundred million of merchant cash advances underwritten.

We’re already in talks with partners. There are lots of interested parties because they recognize that Lightspeed is in a great spot to underwrite customers. So, we’re already in talks with partners today. We have at any given point in time, $50 million to $60 million outstanding from this merchant cash advance business, and that may go up to $100 million, but we’re not planning to leverage our balance sheet for much more than that.