Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.
Articles by Sean Murray
Merchant Cash Advance On Huffington Post / Just Call it a Coupon!
March 16, 2012An article was published by the Huffington Post today that explained the need for Merchant Cash Advance providers. Though some of it was described in an unflattering light, it conveyed some important messages.
- Real business owners explain that banks both big and small are not interested in lending to them
- One woman is quoted as saying: “If I ever write a book on how to open a restaurant, the first chapter is going to be ‘Banks Are Not Your Friends.'”
- A direct funding provider revealed that demand for merchant cash advances increased by 15 percent to 20 percent in 2011 and that 70% of businesses use more than 1 advance.
Our favorite line and perhaps the most important thing you can take away from this article is the quote by the CEO of AmeriMerchant. “[Merchant Cash Advance] is less expensive than [offering] a Groupon for 50 percent off or putting inventory on sale for 30 percent off.” Isn’t it ironic that the Groupon/e-coupon/social coupon concept is today’s business as usual and is at the same time significantly more costly than what the media considers to be expensive financing?
LivingSocial has 60 million members worldwide and they operate much in the same way that Groupon does. Let’s discuss this. According to wikipedia, Groupon’s business model works as follows:
For example, an $80 massage could be purchased by the consumer for $40 through Groupon, and then Groupon and the retailer would split the $40. That is, the retailer gives a massage valued at $80 and gets approximately $20 from Groupon for it (under a 50%/50% split).
So the 50% discount to the consumer is actually a 75% loss of revenue for the business owner. This practice is publicly accepted as fair, practical, and a way to increase your sales. If that’s the case, should’t financing that costs $2,800 to receive $10,000 be considered a bargain? We think so. Expensive is in the eye of the beholder. The media has a funny way of convincing people that a 75% discount is a great deal but financing costs of 28% are astronomical. Not to say that 28% is cheap, but there is only one reason that low rate bank loans even existed in the first place. The SBA is willing to cover up to 90% of the defaults and charge it to the taxpayers. That’s an advantage the rest of the private sector doesn’t get.
We can’t help but think what would be if the Merchant Cash Advance concept was rebranded as a powerful social marketing tool to drive sales. What if a Merchant Cash Advance provider purchased $12,800 of a store’s future sales in exchange for $10,000 today and then mass marketed that business to local consumers through mailing lists, iphone apps, and website ads to drive customers to the store. That would allow the Merchant Cash Advance provider to recoup their purchase as fast as possible and at the same time create viral growth for the business. The technology already exists and businesses are already willing to accept 75% losses. Isn’t it time they all started getting a lot more bang for their buck?
It’s not expensive when it’s spun that way is it? Sayonara Groupon and LivingSocial! Merchant Cash Advance is the sleeping giant at your doorstep.
– deBanked
https://debanked.com
What Ever Happened to Gradual Change?
March 13, 2012
Did we really go from one extreme to the other?
CNN 8/25/10: Credit Card Debt at 8 Year Low
NY Post 2/26/12: U.S. Credit Card Debt Nearing Toxic Levels (U.S. Consumer Debt at highest point in a decade)
In 18 months, we managed to go from barely using our credit cards to TOXIC LEVELS! So much for gradual change. On August 25, 2010, the Dow Jones reached an intraday trading low of 9,925. As we write this article, it’s currently priced at 13,177.
The unemployment rate in August 2010 was 9.6%. Many believed that figure to be understated. In February 2012, it was 8.3%.
The headlines change so quickly that we’re starting to wonder what the heck is actually happening in this country. Every story announces that something is either the best thing in history, the worst thing in the world, on the verge of destruction, or never seen before. Many people are not even sure how to interpret these fluctuations. Does it mean that we’re in the middle of a full blown recovery or are we experiencing pre-storm volatility as we near the cliff of a catastrophic depression?
In August 2010, the average price of a gallon of gas was under $2.81. Today it’s over $3.71. And consumer spending is increasing but only because Americans are going deeper into debt. Meanwhile the the demand for business loans is increasing, signaling that the private sector is optimistic and preparing for growth.
Don’t take our word for it but the stock market is probably the best indicator of what all this data means. Using the efficient markets hypothesis as a basis, we believe that the recent surge in stock prices indicates that we are on the path to recovery. When the experts realized that the economy was on track to perform well, the market immediately priced stocks as if things were already great. That’s why you can’t beat the market. By the time you’re ready to make a trade, the price has already changed. Today’s Dow means tomorrows success.
It’s time to jump on the recovery bandwagon!
Right?
– deBanked
https://debanked.com
United Capital Source Provides Medium-Sized Business With $1,250,000
March 9, 2012
deBanked (MPR) has learned and confirmed that New York based funding provider, United Capital Source (UCS) has provided financing to a medium-sized business in the amount of $1,250,000. While the parties have requested to keep certain specifics of the arrangement under wraps, the business is involved in the sale and repair of highly specialized equipment, and has operations and headquarters in multiple states.
While it was not structured in the traditional Merchant Cash Advance sense, it is believed to have been set up with fixed payments. UCS has received a lot of attention in the last six months due to the wide variety of clientele they are servicing. With deals ranging from a few thousand dollars to over a million, they are quickly becoming a top choice for any business in need of capital.
MPR has been doing research to quantify the size of the Merchant Cash Advance industry. In a recent article, the term itself was redefined. We’ve known for some time that there were some larger advances/loans being done within the space but not all of them are being publicized. What we’ve discovered is that it is not unusual for deals to reach as high as $2 million. The recent media attention on CNN and FOX is also an acknowledgment that the Merchant Cash Advance concept has penetrated the mainstream and is no longer an alternative, but the standard.
– deBanked
https://debanked.com
Merchant Cash Advance Leads Page Updated
March 8, 2012We have finally cleaned up the HTML of the Merchant Cash Advance leads page. When we transferred servers in August 2011, a lot of the CSS styling and html for certain pages were no longer supported. If you are looking for Merchant Cash Advance leads or interesting in having your company listed, the interface is now more aesthetically pleasing.
Are You Ready to Ride The Merchant Cash Advance Wave?
February 18, 2012Less than a year after we acknowledged the stunning absence of Merchant Cash Advance financing from the mainstream media, suddenly it’s the only thing being talked about. It took a few years but journalists are finally learning to complete the phrase of banks aren’t lending with, fortunately there are other options. The term Merchant Cash Advance is being thrown around so much that financial institutions that offer different funding programs entirely such as American Express are trying to attach their names to it. They are now trying to rebrand their product as Express Merchant Financing. This isn’t to be confused with a Dallas, TX based company called Express Working Capital which offers Merchant Cash Advances. You can understand why there is so much confusion. Merchant Cash Flow Loans too, which are micro loans based on gross sales are often identified as Merchant Cash Advances even though there is little common ground.
But let’s not fuss over small details because it’s not just the funding companies that are talking about it now, it’s the media.
No matter how well your website is designed or how good your sales people are, it’s important to recognize that small business owners think like normal consumers. According to a 2007 Nielsen Survey, 63% of people’s trust in a company forms from newspaper sources and 56% from television sources. Even though this type of financing has been around since the 1990s, the lack of news coverage has held the industry back. Despite the advancement of social networking and internet background searches, the majority of Americans still have that If it’s on TV, it must be true mentality. Why else would political candidates still be spending billions of dollars on TV commercials to get their message across?
The broad use of Merchant Cash Advance terminology, the recent recognition by the mainstream media, and the march of average Americans into the reseller market is an omen. A wave is coming. Whether some deem the current industry’s size to be $600 million a year or $1 billion is irrelevant. Merchant Cash Advance and similar financing programs have the potential to be a $10 billion market annually, especially since the major banks are retreating from SBA loans.
We suspect that in 2012, particularly the latter half of it will be explosive unlike the entire industry has seen before. Too many small businesses have been waiting on the sidelines since 2008. If the trend of rising employment is correct and a real recovery is underway, then we’ve got all the ingredients for a perfect storm. Confident Business Owners + Fast, Easy Access to Capital = American Recovery.
Call these business loan alternatives whatever you want: Merchant Cash Advances, Merchant Cash Flow Loans, Express Merchant Financing, etc. Just make sure you have a surfboard. A giant wave is coming.
– deBanked
https://debanked.com
The SEO War for ‘Merchant Cash Advance’
February 12, 2012
Let’s admit it, we’re all at war. If you’ve uttered the terms Panda, PageRank, Backlinks, or Organic in the last few months, you know what we’re talking about. We didn’t choose this fight, Google forced it upon us. And so after a long day of phone calls and handshakes about affordable working capital, we return to our homes at night and search the web. Not for information of course, but to find out where our company website pops up when we Google the phrase: Merchant Cash Advance or other relevant terms. Today we ask, is the fighting worth it?
In 2007, back when the industry hadn’t put much thought into the Internet, the #1 search result for Merchant Cash Advance was the blog by David Goldin, the CEO of Amerimerchant. It made sense because it was a self proclaimed “online resource dedicated to the merchant cash advance industry.” There, small business owners and competitors could read about the trials and tribulations of an industry on the verge of explosive growth. It was interesting, it was informative, and best of all, he ranked first without trying.
Nowadays, it’s all commercial. Merchant Cash Advance companies with fat advertising budgets are spending thousands to rank for their favorite keywords, with Merchant Cash Advance still high on that list. The friendly information resource has been replaced by a website that not only crushed the competition in search positioning but seems to publicly brag about it too.
As we write this article, the top 10 Google search results for Merchant Cash Advance are:
1. Merchant Cash in Advance
2. YellowStone Capital
3. Entrust Cash Advance
4. Merchants Capital Access
5. Merchant Resources International
6. American Finance Solutions
7. Nations Advance
8. Bankcard Funding
9. Rapid Capital Funding
10. Paramount Merchant Funding
Do keep in mind that your results may differ slightly depending on your region. Google geographically targets searchers to bring them the most relevant matches.
How much is the #1 spot worth? The market priced it at $75,000 three months ago when MerchantCashinAdvance.com was sold in an online auction for that amount (saved in pdf). So which powerful Merchant Cash Advance company unloaded their precious website? None. The owner of the site was actually an SEO guru looking to make a quick buck. He studied the industry a bit and then within two months ranked a site at the top of Google.
75k might even be considered a steal, as we were actually approached to purchase that website ourselves in August 2011. The exchange was a bit contentious, with them being unwilling to accept less than $200,000 and us making an insulting offer of $100. Perhaps it was jealousy or perhaps it was because we didn’t realize how a Merchant Cash Advance website could be worth so much, but the discussion quickly degraded into name calling and we never spoke again.
How many small businesses are searching for Merchant Cash Advance anyway? According to Google, there are 14,800 searches for it a month. We assume that at least 75% of those are from the companies offering it. You probably Google the phrases several times a day yourself. Admit it!
The real money is in the long tail keywords, since merchants are more likely to personalize their search. Being first for merchant loan for bad credit might be more potent than Merchant Cash Advance. It’s tough to say since deBanked doesn’t really rank for either of those. Then again, we’re an information destination, much like David Goldin’s Blog was/is.
We’re not SEO experts, but we do quite alright with Google ourselves. Without giving away all of them, this is our current placement for just the following keywords:
- Merchant Cash Advance directory: 1, 2
- Largest Merchant Cash Advance companies: 1
- Merchant Cash Advance UCC: 1, 2, 3
- Merchant Cash Advance statistics: 1
- Merchant Cash Advance stats: 1, 2
- Merchant Cash Advance default: 1, 2
- Merchant Cash Advance UCCs: 2, 3, 4, 5
- Merchant Cash Advance laws: 2
- Merchant Cash Advance forums: 2
- Merchant Cash Advance articles: 3
- Merchant Processing: 3
- Merchant Cash Advance Jobs: 8
- Sell your mom for cash: 1 (don’t ask)
MerchantCashinAdvance.com was no different and they claimed to be #1 for over 300 business lending related keywords. A spreadsheet of the analysis they put up during the auction can be found here.
With nothing more than an organic search presence, they claimed to have had the following results:
Month of July for 2011: Received 647 calls & 148 online business lending applications: Funded 81 deals, $26,000.00 profit.
Month of August for 2011: Received 731 calls & 234 online business lending applications: Funded 113 deals, $29,500.00 profit.
Month of September 2011: Received 1026 calls & 276 online business lending applications: Funded 147 deals, $41,750.00 profit.
If that’s the case, then $75,000 was a bargain. That no doubt led to the auction of a similar site just a month later. MerchantCashAdvances.org is currently ranking 51st for Merchant Cash Advance. They claimed to earn $12,500 annually in ad revenue and $200,000 in commissions. The starting bid was $10,000 and although there were many inquiries, it didn’t sell.
That doesn’t mean it wasn’t worth the price. Most Merchant Cash Advance companies are secretly or not-so-secretly investing thousands into SEO campaigns. Black hat SEO is rampant and even the most reputable companies have engaged in it at some point. The underwriting room is the one they show their clients. The sales floor is the one they show their new recruits. But ask where the internet marketing room is, and they’ll claim it doesn’t exist. But it does of course. They’re usually small quarters with no windows that are filled with computers armed with software like ScrapeBox, Article Marketing Robot (AMR), XRumer, and a list of working proxies.
Even the white hats are building backlinks manually and creating endless articles for use on their own company blogs or for services like BuildMyRank. One moderately sized Merchant Cash Advance company in New York City has just as many SEO employees as they do sales representatives. For some, this is just the beginning. It’s not unusual to spend $10,000 – $20,000 a month on pay-per-click campaigns.
The Internet has become a place where the person with the most to spend wins. Because of competition, a paid Google campaign for Merchant Cash Advance keywords can cost $20 per click! We did a phone call with Google and were told that less than 10% of clickthroughs convert into a sale or completed form. If only 1 out of every 10 visitors calls or inquires through the site, that amounts to $200 for a single lead. If only 1 out of every 5 of those leads turn into a closed deal, the acquisition cost is effectively $1,000. That number is awful especially considering commissions and factor rates have been rapidly declining over the last year. And merchants wonder why this financing is more expensive than a bank loan…
It also explains why the practice of closing costs and service fees have survived internal industry scrutiny. Some resellers would be operating in the red without them. Organic traffic is in essence free, that is if you don’t consider the salary or fees you pay your SEO team. Hopefully they don’t overdo it and place your site in the Google sandbox. Until then, the rewards outweigh the risks and every day the industry pushes the envelope a little further in the quest to rank on page 1.
If you can earn $200,000 a year from a website or sell one for $75,000 after two months of work, then there is plenty of room for growth. If the industry was saturated, it wouldn’t be that easy. If your mother is getting into the Merchant Cash Advance business, make sure she knows how to market her website. It’s a war out there.
– deBanked
https://debanked.com
The Debit Interchange Fee Battle Continues…
February 7, 2012It’s the story that won’t ever die. First it was Dont Make Us Pay and now it’s Where’s My Debit Discount? It’s the latest campaign in an epic struggle between the big banks and congress. Unless you’ve been in a coma for the last two years, the Wall Street Reform and Consumer Protection Act passed on July 21, 2010 and it granted the Federal Government authority to regulate debit card interchange rates. In the year that followed, billions were spent by lobbyists to either diffuse the law or make it stick.
The law has been in effect for several months now but it seems the war isn’t over. The Electronic Payments Coalition is back on the campaign trail to repeal the Durbin Amendment. This time they’re offering proof that consumers are not receiving the savings they were promised.
Without recapping all of the particulars, the news was rampant with misinformation and the chronology of events is difficult to remember. That’s why we have memorialized it with articles that covered the developments of it since December, 2010. How did the war play out? Read below:
Electronic Payments Industry Changing Forever – All points bulletin | December 17, 2010 | In it, we slammed the Federal Government and Senator Dick Durbin for a law we believed would lead to the extermination of the entire banking system. We predicted that rewards on debit cards would immediately disappear, as would the entire concept of debit cards themselves over time. We also surmised that quality, fraud protection, and assurance would suffer.
Debit Card Costs May Be Put on the Consumer – Don’t Make Us Pay | February 18, 2011 | We discovered Dontmakeuspay.org, an organization representing consumers in the fight against debit fee regulation. We encouraged people to sign up.
Congressman Steve Israel Replies to Our Concerns About Debit Card Reform | February 22, 2011 | We signed the dontmakeuspay.org petition and received a letter back from Congressman Steve Israel.
Say Goodbye to Debit Cards | March 11, 2011 | We acknowledged that our predictions were coming true. JPMorgan announced that consumers would likely face a spending cap of $50 – $100 per purchase when using their debit cards.
Debit Interchange Fee Study Act: A Few Good Senators Try to Stop the Madness | March 17, 2011 | At this point our inbox had filled up with emails from people accusing our website of being a secret front for the major banks. The term ‘astroturfing’ came up more than a few times. In our article on this day, we reminded the public that banks employed millions of average Americans, and that they would likely be the ones to suffer if regulations forced monetary losses. We praised the Senators who were trying to muster up support for a bill to put the Durbin Amendment on ice for a few years, while the impact of reform could be studied further. The bill was not successful.
Debit Card Rewards Go the Way of the Dinosaur | March 23, 2011 | JPMorgan announced they will terminate rewards on debit cards for all of their customers as a result of the Durbin Amendment. This affirmed one of our original predictions.
Wells Fargo, Chase, SunTrust Cancel Debit Rewards Program | March 28, 2011 | More of the big banks followed suit.
Interchange Regulation and Reduction | April 16, 2011 | We presented evidence that reform would fail by outlining what happened in Australia when they enacted similar regulations ten years earlier. Small businesses did not save money and consumers did not benefit.
Debit Card Fee Reform is Gaining Steam in Canada | April 18, 2011 | Inspired by the U.S., The Canadian Government Begun Taking Another Crack at Limiting Debit Interchange Fees.
Save My Debit Card Video Finalists | May 9, 2011 | We covered the results of the competition held by dontmakeuspay.org. Some of the videos made by consumers to save their debit cards were pretty funny.
Debit Card Fee Reform to be Finalized June 29 | June 28, 2011 | We made our final prediction on what the interchange cap will be.
Blackjack! 21 Cent Debit Card Interchange Fee Plus 5 Basis Points | June 30, 2011 | Regulations were written as Federal Law. Many sections of the original legislation were clarified, specifically that the fee cap is limited to interchange, the amount card issuing banks make per transaction. There is no cap on the fees that retailers pay at the point of sale. The only party that appears to have been affected are the card issuing banks. Acquiring banks and merchant service providers are not required to lower fees or to pass down the savings to retailers.
And the Misinformation Continues | July 12, 2011 | BusinessWeek had just featured a story about a small restaurant owner that was thrilled that her debit card fees would soon be only 21 cents per transaction. We blasted the story as being factually incorrect since the law did not place any cap on the point of sale. We highlighted the fact that so much misinformation had gone around, that retailers did not realize that interchange fees are the fees acquiring banks pay to card issuing banks. Merchant service providers still control the amount retailers pay. They are not required to share the savings at all. Our e-mails to BusinessWeek did not receive any response.
15,000 Exempt From The Debit Card Interchange Fee Standards | July 14, 2011 | 15,000 banks were apparently exempted from the debit card reform law because they had less than $10 billion in assets. It becomes evident that the law will have strange consequences since it only applies to the largest banks.
Don’t Make Us Pay Goes Quiet | August 7, 2011 | The dontmakeuspay.org consumer movement appeared to have been a secret front for the major banks. A closer look revealed that there may never have been a consumer movement at all.
Revenge for the Durbin Amendment | October 3, 2011 | Bank of America announced a plan to charge their customers a $5 monthly fee to use a debit card.
Don’t Make Us Pay is Back At it Again | October 21, 2011 | Months after the “consumer movement” disappeared, it appeared to rise again when they sent out a mass e-mail.
Where’s the Debit Discount? | December 11, 2011 | The Electronic Payments Coalition (EPC) released a report that illustrated consumers were not experiencing the savings that retailers had promised they would pass down when the debit card fee cap went into effect. The EPC is the same group behind the dontmakeuspay.org movement.
Law to Reduce Debit Card Fees to Retailers Has Opposite Effect | December 12, 2011 | The new law was found to have caused certain retailers to pay higher debit card fees than previously. Retailers began learning that they may not be getting the savings they thought they had won.
