What the Election Means for The Merchant Cash Advance Business

David Roitblat is the founder and CEO of Better Accounting Solutions, an accounting firm based in New York City, and a leading authority in specialized accounting for merchant cash advance companies. To connect with David, email david@betteraccountingsolutions.com.

After what feels like years, next week the United States of America will finally vote in our next president and get a break from the incessant political chatter…until it all resumes the next morning.

While the implications of this election are obviously enormous in a whole number of arenas, most significantly for us the repercussions of who we elect will have a major effect on the merchant cash advance business. With President Donald Trump and Vice President Kamala Harris proposing very distinct visions for their economic and regulatory agendas, MCA businesses will need to respond to who wins and adjust accordingly.

Here’s a closer look at how the upcoming presidential election might affect the merchant cash advance industry.

1. Tax Policies and Business Borrowing

Trump has promised to extend the Tax Cuts and Jobs Act (TCJA) and further reduce corporate taxes to 15%. This could increase small business profitability, which might lead some companies to rely less on MCA services, opting instead for more traditional financing solutions. However, businesses could still need short-term capital for expansion or to take advantage of new tax incentives, keeping MCA demand steady.

Harris’s administration is expected to take a different approach, focusing on progressive tax policies that could increase the tax burden on corporations and high-income earners. In such a scenario, businesses may experience tighter cash flows and turn to MCAs for quick injections of capital to meet operational needs.

2. Regulatory Climate and Business Sentiment

The regulatory environment will play a major role in shaping MCA activities. Trump’s platform emphasizes deregulation, which could reduce compliance costs and encourage entrepreneurship. With fewer regulatory hurdles, more entrepreneurs might be empowered to take a chance to open their dream businesses and seek short-term financing to fuel growth.

In contrast, Harris is likely to advocate for stronger oversight across industries, which could introduce stricter regulations for MCA companies. Increased compliance requirements would raise operational costs and change how they do business, forcing MCA firms to adapt quickly to remain competitive.

3. Tariffs and Supply Chain Impact

Trade policies are another critical area that will shape demand for MCA services. Trump’s proposed tariffs, such as a blanket 10%-20% on imports, would disrupt industries that rely heavily on global supply chains. Businesses affected by tariffs might seek cash advances to cover working capital needs as they adjust to higher costs and delays. While their loss is our industry’s gain, MCA providers could face greater risks if these businesses struggle to manage cash flow, increasing the chance of defaults.

If Harris focuses on stabilizing international trade through alliances and regulatory frameworks, businesses might experience more stable operations. However, as mentioned earlier, her compliance-related policies could still push some companies to seek short-term funding, keeping MCA services relevant in certain sectors.

4. Interest Rate Policy and Capital Costs

The election will also influence interest rate policy. Trump has criticized the Federal Reserve’s recent actions and indicated that he would like to replace its leadership. If this shift results in looser monetary policy, the cost of borrowing money will decrease, prompting more businesses to take loans from traditional banking institutions instead of MCAs.

On the other hand, if interest rates remain high, businesses may find it harder to secure bank loans. Under these circumstances, MCA services—known for quick access to capital—remain attractive to small businesses facing cash flow challenges.

5. Changes in Consumer Spending and Business Revenues

Both candidates’ economic plans will shape consumer behavior, which directly affects small business revenues—the core market for MCAs. Trump’s focus on reducing taxes and expanding domestic energy production may increase consumer spending in the short term, benefiting retail businesses that rely on discretionary income.

Meanwhile, Harris’s potential focus on healthcare, education, and environmental programs could favor businesses in those sectors. MCA providers may see shifts in their client base, with certain industries flourishing while others experience slower growth. These shifts will influence which businesses turn to MCAs for operational funding or growth capital.

Essentially, Trump’s pro-small business, pro-tariff and pro-deregulation positions would be a major boon for MCA businesses. Harris is expected to call for more taxation, more governmental oversight and compliance ordinances, and stifle economic progress in pursuit of a more “equitable economy”. As the political landscape evolves, being prepared for these changes will be key to thriving in the post-election MCA business environment.

OppFi Shares More About The Bitty Advance Deal

OppFi, a publicly traded fintech with a $430M market cap, discussed its recent investment in Bitty Advance during its regular quarterly earnings call today. OppFi acquired a 35% stake in the company with the option to acquire a majority in 2027.

“This acquisition is intended to serve as the foundational piece of our new small business financing vertical,” said OppFi CEO Todd Schwartz. “Bitty is a credit access company that offers revenue-based financing and other working capital solutions. Bitty generates income through origination and service fee income and therefore does not have balance sheet or credit risk.”

Special mention was made about Craig Hecker, who is still the majority owner, and his great leadership.

“I’m personally looking forward to collaborating with Craig and helping him and his team take Bitty to the next level of profitable growth by leveraging OppFi’s expertise in data analytics, marketing and automation,” Schwartz said.

During the Q&A session, Dave Storms of Stonegate Capital asked Schwartz to elaborate on any exciting short-term synergies the deal might present for OppFi. This was his response:

Todd Schwartz: I think Craig is a talented operator and obviously someone who has a lot of experience in the small business space. We think the collaboration between our two companies is going to yield great results. To remind everyone, Craig has a business that currently is in origination, so he’s earning his income from origination and servicing. We think that has a lot of optionality. He also has a really good digital platform. We believe in this digitization of small business and think there’s a lot of growth there. I think when you take a lot of the things that we do well and the things that Craig’s doing well, there’s a lot of complementary skill sets.

And I think it’s going to yield great results. I think we’ve done a lot of research on the SMB market and we feel that there is supply/demand imbalance. And we feel that there’s ability to not only take market share, but as the addressable market continues to go online to search for working capital options, that there potentially is even growth in the total addressable market. So we’re excited. We think there’s some accretion to earnings that we mentioned in this year and then for the future but we feel really good about taking our time there. We’ve kind of started to talk about it for over a year and a half. And so I think we’re just happy that we’ve fulfilled on our and delivered on our promise that we’re going to create, that OppFi is going to create a brand that has best suite of best-in-class digital financial service products that address supply/demand imbalance and credit access. And we feel like we’re on our way. We have all the ingredients to be able to do that and will yield great results for us.

What Big Publicly Traded Companies Say About Merchant Cash Advances

deBanked examined the public messaging from some of the largest publicly traded merchant cash advance facilitators in the US and this is what it found:

SHOPIFY

A merchant cash advance is a purchase of your future sales, also known as receivables. If your application for funding is accepted, then Shopify provides you a lump sum of money for a fixed fee. Under the Shopify capital agreement, this lump sum is known as the amount advanced, and the total to remit is the amount advanced plus the fixed fee. In return, you pay Shopify Capital a percentage of your daily sales until Shopify receives the total to remit. The percentage of your daily sales that you must remit to Shopify is known as the remittance rate. The amount advanced and the remittance rate depend on your risk profile.

For example, Shopify Capital might advance you 5,000 USD for 5,650 USD paid from your store’s future sales, with a remittance rate of 10%. The 5,000 USD amount that you receive is transferred to your business bank account specified in your admin, and Shopify Capital receives 10% of your store’s gross daily sales until the full 5,650 USD total to remit has been remitted. You have the option, at any time, to remit any outstanding balance in a single lump sum.

There is no deadline for remitting the total to Shopify Capital. The daily remittance amount in USD is determined by your store’s daily sales, because the remittance rate is a percentage of your store’s daily sales. The remittance amount is automatically debited from your business bank account.

DOORDASH

DoorDash Capital is a cash advance, not a loan. With a cash advance, the offer is based on your sales and account history, and includes a simple, transparent one-time fee that you’ll know before you decide to accept the offer. A loan operates using interest, which can compound over time, and often includes other fees in addition to the stated interest rate.

LIGHTSPEED

AMAZON

A [merchant cash advance is a] non-revolving sum of funding with flexible payment, no personal collateral required and no late fees. With flexible payment, no personal collateral required and no late fees, a merchant cash advance provides sellers funding to help run and grow their business. Unlike interest-bearing loans, the advance ties payment to a portion of a seller’s future sales for a fixed capital fee, there are no additional fees or interest charged.

NERDWALLET

Fixed withdrawals from a bank account
Merchant cash advance companies can also withdraw funds directly from your business bank account. In this case, fixed repayments are made daily or weekly from your account regardless of how much you earn in sales, and the fixed repayment amount is determined based on an estimate of your monthly revenue.

PAYPAL

A merchant cash advance is not a loan, but rather a type of financing that business owners pay back with a percentage of their future sales.