Merchant Cash Advance Forums Goes Quiet
March 31, 2011
The Merchant Cash Advance Forums is an old discussion board for those working within or looking into the Merchant Cash Advance industry. On March 25th, 2011 the Forums implemented stricter account policies that now require members to submit detailed information about who they are and who they represent. This includes:
- Real name
- Company you work for
- Company’s address
- Your phone number
A public notice on the forums states “For the sake of adding value and integrity to the MCA Forums, an additional layer of moderation as well as basic data collection have been implemented. Members MUST now complete their private profile with their basic contact information. This required information is confidential, and other members will NOT be able to view it. Data collected is NEVER sold to third parties remains strictly confidential.”
And since this went into effect, the bustling discussion board has been for the most part a ghost town. While a few active participants proudly make their company affiliations known, most users hide behind a nickname for privacy. This certainly makes sense from a personal standpoint (the internet is dangerous!), but it also helps protect employers from liability should one of their employees openly discuss their opinions.
For example: John Doe states his affiliation with ABC Funding Co. upon registering with the site and posts “tHe iNdUsTrY iS dOoMeD!” Many of the other forum members may interpret that to mean ABC Funding Co. is in serious trouble or because of the way John Doe posts, that ABC Funding Co. does not employ very intelligent people.
Though there is an explicit promise of confidentiality, this industry has bred many stone cold skeptics over the years. If Facebook can get someone in trouble, anything can.
Of course, we may be wrong completely and the dull conversation could be a result of more time spent working, there being little to talk about, or an unwillingness to talk as the news of what is happening in California spreads.
This is by no means an attack on the MCA Forums. We used to check in on it pretty often. We recommend anyone in the MCA, payments, or banking industry to sign up to for DailyFunder.com now as of 2013. Just be careful. Anything you post on the internet can be linked back to you by someone, somehow.
Merchant Cash Advance Outlook for 2011
January 2, 2011
Happy New Year! Over the past few weeks we spoke with many Merchant Cash Advance(MCA) industry professionals, read blogs, and scanned forums to find out what is predicted for 2011. Here is what we learned:
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The number of businesses facing tax liens will rise, making it increasingly difficult for them to obtain a traditional MCA. Their only resort may be “starter” or “decline” programs, which come with low capital and high costs.
Credit card processors(CCPs) will venture into funding their own clients. Over the past few years, CCPs were a necessary third party to a MCA transaction. The CCP would split the business’s batch to allow the MCA provider to collect on their purchased receivables. Their years as a third party have granted them incredible insight into the funding business. In the latter half of 2010, some CCPs tested the waters and funded businesses on their own. In 2011, we will begin to see the role of MCA provider and CCP gradually merge into solitary entities.
Resellers of MCA began to drift away from their dependence on funding providers in 2010. In 2011, there will be a surge in the number of resellers funding businesses on their own. The MCA industry will become largely decentralized and may give rise to new challenges.
Decentralization will lead to greater competition and create downward pressure on costs. Businesses stand to benefit by the likely trend of decreasing retrieval rates and factor rates.
Businesses hanging on by a thread are less likely to obtain funds in 2011. Bank loans were never meant as a means to stave off bankruptcy and neither is a MCA. Most detractors of the MCA industry were business owners on the verge of bankruptcy before obtaining capital. This is not a lifeline. Good businesses grow, bad businesses fail. That’s the way it has to work in order for the economy and capitalism to be functional.
The Federal Reserve’s 12 cent debit fee cap may negatively impact resellers that depend on merchant residuals.
The MCA industry will continue to use less expensive means of marketing. Expensive regional trade shows are becoming less popular and UCC hunting is on the rise.
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2011 is yet to be told. One thing is for sure, MCA providers are not unlike the businesses they fund. It’s a tumultuous economy and there is no guarantee that we’ll all still be standing in 2012. Remember those who have come before us (look at the bottom of this page). Much luck to all!
-deBanked
The Direct Funder Model is Sooo 2009
December 1, 2010Originally posted on Dec. 1, 2010
We touched on this in a previous post and think it’s important to expand on it. The Merchant Cash Advance industry has evolved over the last several years. The clear line between Broker and Funder is becoming incredibly blurred.
Many Direct Funding companies are now offering brokers the opportunity to contribute their own funds towards an advance and share in the profits(And the risk!). On the same token, many big name brokers seem to have filed a handful of UCCs as a secured party, an indication that they have funded accounts all by themselves.
Some industry vets have taken things to another level and are calling on multiple parties to share in a single advance. For example: A broker contacts several other brokers/funders and requests if they want to all chip in. One firm usually takes the lead and services the account to reap a management fee. This collaborative group financing acts like a mini hedge fund but we believe this signals an evolutionary move towards the Peer 2 Peer(P2P) Lending model. In essence a P2B model that looks like this:
This is an an altered picture of the Prosper.com P2P Lending Site.
Prosper boasts of having funded $210,000,000 since their inception. The Merchant Cash Advance industry has put out more than that in just the previous 6 months. So the concept is similar and it fits the mold. Merchants submit documents and an application to a P2B Network. The Network posts the business profile, processing history, personal credit score, reference information, and publicize it on the site. Anyone can then peruse businesses and choose which to contribute funds towards. Once the total advance amount that the P2B Network recommends has been raised, the P2B Network converts the processing, transfers funds to the merchant, and maintains the account for a fee.
While we don’t anticipate the entire industry to convert to this model, nor do we predict if it will actually work, this will inevitably become a segment of the market. The Merchant Cash Advance industry received much criticism back in 2007 and 2008 but the tone has changed dramatically. The phrase “banks aren’t lending” is so worn out that people should be fined for saying it. Self regulating industry practices, the recent mass exodus of devilish sales brokerages, and the banking problem, have not only brought the Merchant Cash Advance industry legitimacy but also made it one of the preferred and most credible funding options available to small business.
A P2B network could do all of the underwriting, complete with a final say on approvals or they could present a business as is and allow everyone in America to be their own underwriter and make the determination themselves. How tempting would be it to invest $100 to a business in your community and buy a percentage of their future credit card sales? We like the concept and the industry is halfway there. Who’s going to start this first?
– An Opinion by the Merchant Cash Advance Resource
https://debanked.com/merchantcashadvanceresource.htm
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UPDATE 12/23: P2P MARKETPLACE FOR MERCHANT CASH ADVANCE FOUND ALREADY TO EXIST, READ HERE
Merchant Cash Advance and Startup Businesses
October 20, 2010
Kudos to the entrepreneurs taking a chance in the worst economic period of modern times. Starting a business is already a truly challenging task in itself but before we shower you with praise for being the ultimate warrior of capitalism, let’s put everything into perspective.
Risk takers are a minority in today’s startup community. A persistently high rate of unemployment is breeding a culture of survivalists; Individuals that have been pushed to the limit via pay cuts, layoffs, and robo-signing foreclosing bankers. It’s resumé rejection, employer double talk, and anger at how Wall Street bankers continue to live. The new entrepreneurs are a resounding chorus of “If I can’t get a job, I’ll make my own job!” These people are going for it on 4th Down and Long and running it up the middle for a touchdown. It’s as if Charles Darwin spiked their Corn Flakes.
Startup survivalists are just as inspiring as their risk taking counterparts. Both groups have the drive and that’s essential. But you can’t forego some basic tools. Financing is a must. No capital, no business. Unless you are fortunate to start with deep pockets, you need access to cash.
New businesses are not likely to be offered credit terms by vendors, nor can you push back overhead expenses such as rent, until you’re generating revenue. If unforeseen demand overwhelms your capacity, a cash shortage can do irreparable damage to your success.
Rather than spew rhetoric about the importance of funds, and shortchange you with a bullet point list of vague sources whom in reality are so illiquid, they’re not actually viable, we’ll offer our real 2 cents.
Banks. For a startup? Not happening. Angel Investors and Venture Capitalists? Slim to no chance. Unless these private investors live in your community, they’re not going to invest in your business. More than 90% of startups fail. For an investor to take that much risk, they’re going to do some hands on management or want to follow you around and critique how you’re spending their money. That’s not necessarily a bad thing. It just means that one can’t reasonably expect a return on their investment without intimate knowledge of the demographics and community the business is situated in.
Looking for private investors over the internet? Don’t. Your pro forma financial statements, data research, and business plan won’t help. Do you know how many businesses fail to open even after they incorporate, sign a lease, purchase inventory, advertise, and make preliminary hires? An astounding number are eclipsed by failed health inspections, license/permit rejections, and building code violations. This reasserts that unless an investor is personally intimate with your progress, the odds are stacked against them.
Lastly, you need not pay to get approved for capital. We’ve spoken with many start ups over the last year and are flabbergasted by the amount of new businesses that are convinced they have to pay a $3,000 upfront fee to get approved for a loan. The ones that actually pay are quick to learn what town the lender is based in; It’s called Scam City.
Real Option? Merchant Cash Advance. A Merchant Cash Advance offers a business with a lump sum of capital upfront. In return, a piece of every sale the business makes will go towards paying it back plus a predetermined fee. There is no due date or set term for repayment. That means if sales are slow to get off the ground, then funds will be repaid slower and with no penalty.
A Merchant Cash Advance provider entrusts you with their capital because of the unique security the repayment method offers. The business itself must accept credit cards as a form of payment. The credit card processing company will automatically deduct the agreed percentage piece of each sale transacted and forward it to the Merchant Cash Advance provider on your behalf for repayment.
A startup can qualify with as little as 1 week in business. As long as you open, you can get funding. Credit can play a limited factor and the cost can be hefty, but the access to capital is unmatched. From the date you apply, funds can be received in as little as 5 days.
Purchase inventory, pay the rent, advertise, hire, or seize an opportunity. Whichever shortcoming you face, it can be overcome with a Merchant Cash Advance. Industry experts project that funding is on pace to reach over $600 Million for 2010 alone. With advances ranging from as small as $1,000 to as high as $500,000, there is proof that numerous deals are being made every day.
We’ve seen the same books, guides, and expert advice columns that you’ve seen and all of them seem to be a reprint of useless suggestions like the SBA and searching for angel investors online. These people earn a living writing. Whether or not the money expert column in your newspaper actually helps you, makes no difference to them. We have many years experience in the Merchant Cash Advance industry and we make careers out of funding you, not telling you about funding.
We try not to promote any one company over another. There is no harm in enlisting the service of a middleman or reseller for one of the direct funding sources. It may actually benefit you. If you are open for business, you can obtain a Merchant Cash Advance. If you have been in business for a long time, a Merchant Cash Advance is still a fantastic option.
It’s 4th Down and Long. You’re ambitious, focused, and ready. You are the ultimate warrior of capitalism. A Merchant Cash Advance will supply the cash. Grow, take risks, survive, and don’t be surprised if your Corn Flakes taste funny.
