CC Splits Still Make Profits, Payments Knowledgeable Funders Benefit

June 15, 2021
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paymentsBack in its heyday, the MCA industry began as credit card factoring. The original product was simple- purchase future credit card receivables, and collect a percentage of them every day: easy peasy. Then, the industry broadened into ACH, funding businesses that did not have credit card purchases and credit card receivables became less common.

But some funders still work with credit card payments through long-standing payment processor relationships. Cash Buoy is a Chicago-based MCA firm that uses a network of twelve major credit card processors and thousands of representatives from payments ISOs to fund old-fashioned MCAs. Co-Founder and president Sean Feighan would tell you that having connections in payments pays off for both merchants and ISOs.


“The whole point is to add value to their business. By doing split funding remittance,” Feighan said. “It’s a much more comfortable way for the merchant to pay back the advance, it gives them some breathing room on the ebbs and flows of their volume, as opposed to having that hard fixed daily ACH that doesn’t care if they were closed on Monday, are slow on Tuesday, or we’re in a global pandemic.”

Feighan attests that the CC model still works great. He said alongside co-founder Brian Batt, they started Cash Buoy to give ISOs a better option. He boasts a renewal rate of 90% on his CC products, and his default rates for standard MCAs are a “night and day difference” with CC splits.

But operating heavily within the payments realm requires some expertise, something that long-time veterans of the MCA space are fortunate to have accumulated from the era of the product’s origin.

split paymentsSteven Hunter, a multi-decade industry vet explained where the MCA concept came from. Hunter worked at CAN Capital back in 2000 when it was still was called AdvanceMe when he and the data team developed one of the first credit card factoring products.

“The idea came across to build a credit card-based product, because a lot of the original development team other than myself, were the First Data guys,” Hunter said. “And they said ‘okay well what if we could factor future sales, instead of three invoices or accounts receivable or inventory’, which we all know how to factor those things, that’s been in place since biblical times.”

So they built a model, aiming to fund merchants and take out a small amount of money from their credit card splits. Merchants would never see the money hit their bank, and the product just felt like free investing money paid for off of the increase in future sales.

When restaurants and other merchants shut down during the pandemic or rolled back to 25% capacity, many ACH funders found out their customers could not keep up with the pre-set debits. While defaults were on the rise, Cash Buoy was getting paid back, Feighan said, at an admittedly slower rate but still seeing returns.


Feighan has intentionally shied away from ACH. Cash Buoy is modeled on his and Batts’ connections in the payments space. They founded Cash Buoy after five or six years of experience in on-boarding merchant accounts. Feighan said he tried brokering but became disappointed with the process of working with an outside funder.

“[Other firms] may not have the relationships to get split funding at national processors,” Feighan said. “Maybe they didn’t have enough business or money in the bank when they went through the application process with different processors to get true split funding accommodations.”

Hunter agreed that without payment connections it is hard to factor CCs these days. Shortly after AdvanceMe began CC splits, other firms caught up and began developing similar products, with slightly changed terms like automatic set ACH draws. Eventually, he said this made MCAs more loan-like as opposed to a real variable product.


In 2021, there are many reasons that firms adopt ACH right off the bat, he said.

“Well, several reasons one, not every company takes credit cards,” Hunter said. “The thing is that some credit card processors, I’m not going to name any names, are very hostile to the product and they will not actually help people. They won’t help you manage the remittance, they won’t split for you, because they consider you to be a competitor, afraid you will take a portion away.”

technologyThe final reason Hunter said is a lot less elegant. He said in order to make this work, as a direct funder, you have to exchange files with every credit card processor you work with every night on every deal you have.

“So you got to send them something out and say, populate this for us. ‘Joe’s Bait Shop, What did they do today? Today they did this much money, your split is 11%, here’s what’s coming to you,'” Hunter said. “Then you import that back into your system and Joe’s Bait Shop’s balance drops by this amount. Right, that’s hard. I mean it’s a pain in the ass to manage, and I have people who do nothing but exchange, you’ve got to have processors who work with you and you’ve got to have the expertise.”

Hunter now works as a consultant, known in the industry as a go-to for MCA funding help. As for Cash Buoy, after the pandemic year, things are only on the up and up. Covid could not have happened at a worse time right after a three-year bull run, Feighan said, but now that things are back, there are “high water funding amounts each month.”

“The biggest thing here in Cash Buoy are our partners, our ISO partners, and processors,” Feighan said. “And if anybody were to say, ‘tell me, what’s the most important thing to you, Cash Buoy,’ it is 100% Our agent partner program. That is number one. The whole point of the company was to be able to provide a ton of value to national processors and ISOs.”

Live Stream With Oz Konar

June 2, 2021
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I will be speaking with Oz Konar, the founder of Business Lending Blueprint, at 12:15pm ET on deBanked TV.

Konar teaches people how to build successful home-based businesses in the alternative finance industry and has a highly popular youtube channel.

Tune in at 12:15 on deBanked TV.

Oz Konar

Irish E-commerce Revenue-Based Funder Raises $76 Million Series A After First Year

May 27, 2021
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wayflyer logoAn Irish revenue-based e-commerce financing platform called Wayflyer raised $76 million in a funding Series A round this past week. It has been a roaring first year for the small fintech, so far funding $150 million to online merchants. The firm just launched its cash advance product 14 months ago and raised $10.2M in a seed round only six months ago.

Wayflyer offers e-commerce sales-based funding, without the need for collateral, from $10k up to $20M. They partner with firms across the UK, including a recent deal with the international athleisure brand Gym+Coffee.

Left Lane Capital led the round with investments from DST Global, QED Investors, Speedinvest, and Zinal Growth. The successful funding comes after the firm widened its credit facility by $100M to keep up with the demand for capital and a partnership announcement with Adobe Commerce.

The cofounders, Aidan Corbett and Jack Pierse came together in 2019. Back then, Corbett led an online marketing analytics firm called Conjura when Pierse, a former venture capitalist, proposed using analytic tech to underwrite what amounts to digital MCAs.

“Jack came to me and said, ‘You should stop using our marketing analytics engine to do these big enterprise SaaS solutions, and instead use them to underwrite e-commerce businesses for short-term finance,'” Corbett told Tech Crunch. “We just had our heads down and started repurposing the platform for it to be an underwriting platform.”

Launching in April 2020, Wayflyer funded $600,000 in the first month. In March of 2021 alone, the firm did about $36 million in advances.

“So, it’s been a pretty aggressive kind of growth,” Corbett said.

After Funding Millions, Alt Financier Hosts Funding CEO Challenge

May 25, 2021
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Leo KenellLeo Kanell, a funder from Utah, runs the 7 Day Funding CEO Challenge, a seven-day marathon video livestream of inspirational and educational funding content.

“So how [the challenge works] is basically, we’re looking for communities, and we’re building a community,” Kanell said. “Our focus is how can we help existing loan brokers, and then how can we help people who are looking for an additional stream of income that they can do from home obviously with the pandemic.”

All the action happens in a livestream on Facebook.

“Everybody kept asking ‘we need some training,’ so we built out a custom website for them so that they can build their funding empire from home,” Kanell said.

Many of the brand new market entrants are sales-minded individuals that are interested in working from home. Kanell has a sales mind and a small business funding background. He grew up in a family of nine from a small town in Utah with a population of only 3,000. He knew he would be a salesman when he turned a summer painting business internship into a $60,000 operation. After college, he tried his hand at real estate, but after 2008 he started looking for another industry.

“I started and went ‘Well, I’m gonna need money for that business,'” Kanell said. “I started looking at the different options to get financing for that next business venture, and it was very difficult, especially for a new business, especially if you’re a pre-revenue business or you don’t have a lot of sales and or collateral.”

He realized SMB funding was the business he should be getting into so he jumped in with both feet. From there he veered into a business education program alongside products like business credit cards.

He soon said that he was doing well, but he heard the funding industry calling his name. “Everything pulled me back into funding,” Kanell said and he decided to combine his education system toward loan broker training programs. He said many brokers don’t realize startups and pre-revenue bushiness can qualify for 0% for up to 15 months.

Now, Kanell hosts an industry podcast that features financial industry guests, and alongside funding, he looks forward to building a community of broker and funder education services.

“We’re going to not only get you the best funding guaranteed, but we’re going to educate you and empower you along the way,” Kanell said. “They can work as direct funders and keep 100% of the commission, and that if they want us to do the work you know, we can do splits.”

One on One With Joe Camberato at National Business Capital

May 23, 2021
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I sat down with Joe Camberato (@GrowByJoe), CEO of National Business Capital in Bohemia, NY. He shared tips about how to run a successful business and gave me a personal tour of his company’s office.

North Carolina Joins States Proposing Commercial Financing Disclosures

May 12, 2021
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Raleigh North CarolinaNorth Carolina is the latest in a series of states to introduce a commercial financing disclosure bill.

The “Small Business Truth in Financing Act” introduced on May 11th, would cover business loans, factoring, and merchant cash advances.

The language was copy and pasted from bills elsewhere, like the recent one in Connecticut. The “double dipping” term is noticeably absent from this one, however.

The North Carolina bill was introduced by Rep James D. Gailliard (D). If it succeeds in moving forward, it’s written to go into effect on May 1, 2022.

You can read the full text of the bill here.

Forward Financing Wins Customer Service Award, Originates $165M in 2020

May 10, 2021
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forward financingForward Financing won a Silver Stevie Award for the Best Customer Service Department of the Annual American Business Awards, for their work helping clients during the pandemic year. The firm originated a total of $165,826,203 across 6,142 advances in 2020, a representative said.

“We are truly honored to receive recognition for the fantastic job our Account Servicing team does every day to help our small business customers,” Justin Bakes, co-founder and CEO, said. “Particularly in 2020, that help was needed more than ever before to help small business owners get through the most difficult months of the pandemic.”

The firm said that in 2020, thousands of customers reached out to the Account Servicing Department (ASD) to request payment relief from the pandemic shutdown. The company trained 18 team members from different departments to join ASD, nearly tripling the size of the team, the firm said.

Forward competed with more than 3,800 nominations submitted this year for organizations across the US. Since 2012, Forward Financing has provided more than $1 billion in funding to more than 26,000 small businesses.

How Funders Survived PPP and a Year of Covid

May 4, 2021
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we're openA year into the pandemic and from the deBanked office in Brooklyn, it looks like the world is opening up again.

After a year of Zoom and LinkedIn networking, those in the industry lucky or talented enough to have survived can still complain without restraint about big government lockdowns and misguided legislation. Competing with Uncle Sam’s deep PPP pockets have slowed deals down, and with a new fund opening this week for restaurants, it might be more of the same.

But two funders said that though there is an initial slowdown when a new stimulus is rolled out, the programs have still been vital for business– and if firms kept up with contacts, the business could be booming even after the pandemic.


CEO David Leibowitz of San Diego-based Mulligan Funding said that his firm survived the worst of the shutdown. That was due in no small part to government programs that kept merchants in business.

“People forget where we were sitting in April, May last year, 20 million people filed for unemployment. The segments of the market that we serve in general don’t have more than 30 days of cash on hand at any time,” Leibowitz said. “There’s no chance that our market survives that without the level of government support that they’ve been given.”

Sure, there’s a dampening effect at first, but there wouldn’t be B2B without businesses to fund. Leibowitz said he thinks the macroeconomic effects of printing money will have consequences in the long term, but it’s the lesser of two evils.

Matthew Washington, the well-known CRO of PIRS Capital, has also been vocal about PPP. Like Liebowitz, he said it has its pros and cons, creating a slowdown and demand for capital in one stroke. In his experience, because the stimulus was limited to payroll and rent, merchants were hungry for other products.

“They’re only able to allocate it for certain things, payroll, and hiring people, right,” Washington said. “Our funding allows them to be able to use capital for other opportunities, like buying supplies, buying inventory. Although it’s kind of been somewhat slow, they need to have other working capital needs to be provided for.”

Washington also said some merchants used their PPP funds as low-interest loans, paying off and refinancing advances. PIRS has succeeded through the pandemic due to its relationship-based model.

“It’s all about keeping in touch with your merchants during this time, having a big pulse with the people you do business with,” Washington said. “We’re really a lean and mean company, we kind of have the community bank approach to this space; we’re more relationship-based.”

PIRS had only paused for 60 days and was lucky enough to be set up with recurring merchant partners that turned out to be essential businesses.

“We were very blessed; a lot of our portfolio was operating during the shutdown,” Washington said. “Our portfolio did very well for the circumstance.”

That was how they survived, a lot of good faith and hard work, but pinches of luck as well. Leibowitz said that contrary to popular belief, many good people lost their business during the pandemic. It wasn’t just bad actors and funders with terrible underwriting.


“In March, we had customers who, for reasons totally beyond their control, couldn’t pay. And we weren’t sure in March, how long that would go on for, we weren’t sure how bad it would get,” Leibowitz said. “If you’d asked me in March, April, were we going to survive this thing. There’s no way I would have been able to give you a confident answer.”

Some with public securitizations, well-run businesses, dropped out and disappeared. Leibowitz said Mulligan was able to keep every employee on staff and got through the “sh*t show.” In part, it was with help from competitors who specialized in PPP funding that Leibowitz said his firm was still going strong.

“So I think for all of its shortcomings, I have a world of respect for the SBA and the program. I think of Brock and guys at Lendio, I think of the guys at BlueVine and Kabbage, who really have done a truly extraordinary job of distributing that product to our target market,” Leibowitz said. “And I’m sitting here today, unquestionably, enjoying the benefit.”

So PPP helped, despite the slowdowns, in the short term, and Liebowitz said in the long term, the government overspending might get hairy. But with talk about the world opening back up, with bars open down the block for the first time in a year, what does Washington think about the near future?

The world just isn’t going to stop; it’s just evolving with the new temp of what’s going on; I think there’s a lot of positive things on the horizon for our business,” Washington said. “Once the vaccine rates, and everyone’s ‘cured’ how are they not going to open up.”