Shopify Continues to Grow its Merchant Funding Business
May 8, 2025“We continue to grow our capital business and have recently introduced several product innovations that give merchants more choice for how they manage their loans, and how they choose among various loan options,” said Jeff Hoffmeister, CFO of Shopify during the Q1 earnings call.
The company had ~$1.4B in business loan & merchant cash advance receivables on its balance sheet as of March 31, 2025. It purchased & originated $805M worth of business loans in Q1, putting it on pace to surpass the $3B total for all of 2024.
“Shopify Capital is a financing program that offers merchant cash advances and loans to eligible businesses based on the store’s location, history, use and interaction with the Shopify platform,” the company states. It is offered in the US, Australia, Canada, and the UK.
OppFi: Bitty performed well in Q1 2025
May 7, 2025“Our investment in Bitty continued to perform well in the first quarter of 2025,” said OppFi CEO Todd Schwartz during the earnings call. “The business continued to drive accretive profitability and cash flow to OppFi. We continue to see significant imbalance between supply and demand for working capital among small businesses. We are excited to be part of Bitty’s growth ahead.”
OppFi owns a 35% stake in Bitty.
During the Q&A, Schwartz reiterated that Bitty was well-positioned despite the uncertainty surrounding tariffs in the current environment.
Getting Backdoored? Put Your Mark on the Docs
April 30, 2025Christina Duncan was once working on a renewal as an MCA broker when things turned south. Her client suddenly received so many calls with offers for funding that they had to turn their phone off.
“[The client] eventually reached out to us via email and basically said, ‘Hey I don’t know what’s going on but these people are saying they’re with you and they have my bank statements. I’m really concerned,'” Duncan said.
Duncan’s renewal had been backdoored. It was hardly the first time, and she was hardly the only victim. As many in the industry often complain, it has become a growing trend in which a broker submits a client’s deal and it somehow slips out the back door into the hands of a third party. The broker then ends up competing on their own deal, or they lose out on it completely. And that’s how many brokers see it—as something that happened to them. But there’s also the business owner who is now left wondering how their data ended up in the wrong hands and what to do about it.
In the above example, Duncan tried to help the client learn how an unauthorized party came into possession of those bank statements, but she was simply hung up on and blocked. It was a dead end.
“So those are the situations that we encounter every day and it’s tough to navigate,” she said.
Born in San Jose, CA and based in San Francisco, Duncan has seen it all. She started in equipment financing more than 15 years ago and gradually shifted into brokering MCAs. When complaints about backdooring began to crop up, everyone had their own opinion on the cause.
“I’ve seen people get caught up on just trying to point the finger or use backdooring as an excuse for their lack of success,” Duncan said, “But the reality is that it is very real. I’m a part of the DailyFunder forum. I see people talking about it all the time but there just hasn’t really been an efficient way to deal with it.”
But then she came up with a solution: Aquamark, a defensive watermarking tool that differs from other tactics employed across the industry to reduce the risk of backdooring. It allows brokers to permanently stamp the documents as having originated from them.
With the assistance of AI and a small team, Duncan left the broker world behind to go full-time into developing the technology, which she said can be used on all the documents in the process.
“It’s not just the bank statements, it’s tax returns, your application,” Duncan said. “What’s happening is it’s someone who has access to these submissions, these packages, and it very well could be internal, someone on your team, it could be a lender and the lender doesn’t know that…”
So it’s not only a problem, but one that can happen at multiple levels in the process. The Aquamark tool, still in its early days but already being used by funders and brokers, can apply custom-branded watermarks onto PDF files with ease. On the one hand, she said, the tool had to be designed to prevent AI from removing the watermarks, and on the other hand it had to work with encrypted statements. When she solved both challenges, she knew she had something. Now, brokers simply upload their documents through the portal, and the platform returns them in seconds.
“By design, I built this in a way that it’s very lightweight and it’s self-service,” Duncan said. “You don’t really need me to do anything and more importantly we’re not storing anything. So essentially you’re uploading your documents and I’m giving it back to you. There’s no logs, there’s no history, none of that is happening behind the scenes.”
The company’s mission statement is a simple one: “Prevent Backdooring. Fund More Deals.”
As Duncan explains, lenders might not even know that a deal they’ve received has been backdoored because the submitting party doesn’t always make it obvious where they got it.
“It’s tough, especially in this environment with all the competition, cost to acquire customers are through the roof, and you lose that,” she said. “It sucks. And honestly it’s so frustrating because aside from it being [how brokers make their money], for the merchants it puts that bad taste in their mouth in the industry. And it’s very real. And so I just wanted to come out with something that—again, the MCA industry gave me a lot and this just feels like a way to give back, as cheesy as that sounds.”
How to Prepare for Outside Syndicators
April 29, 2025David 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.
There’s a clear gap of knowledge in our industry, and how merchant cash advance businesses need to prepare themselves to receive outside money in investment or syndication.
Whether you’re seeking your first institutional investment or scaling to eight-figure funding rounds, the preparation required isn’t just about having good portfolio performance—it’s about having the financial infrastructure responsible investors need to see before forking over money to you. Not knowing how to prepare that for them can cost you months of delays or even kill promising funding opportunities entirely.
I’ve seen too many MCA shops operating under a misconception. They believe that the impressive Google Sheets presentation showing their advance volume, daily collection rates, and merchant performance will be sufficient when courting serious investors.
Sometimes that’s enough. When you’re looking to raise money from friends and family, you have flexibility. These investors typically accept basic performance reports showing advance volume and collection rates, might not request detailed merchant-level financials, and generally won’t demand formal audits. Basic spreadsheets might suffice at this stage when you’re raising up to about $1 million in capital to fund your advances.
The financial documentation requirements escalate dramatically when you need more than that.
Once you move beyond self-funding or friends and family money into the realm of raising $5-10 million or more, investors won’t accept your homegrown reporting systems or month-end bundle accounting—they want audited financials and proper transaction-level documentation.
Sophisticated syndicators expect a professional CRM system tracking all merchant relationships, detailed default modeling, GAAP-compliant accounting systems that properly account for income recognition on merchant advances, and as investment amounts increase, audited financials become non-negotiable.
Auditors don’t accept shortcuts in the MCA space. They require transaction-level detail with recognized income on each advance, estimated defaults by cohort, and precise documentation of collection performance. They’re specifically looking for attempts to bundle or obscure individual merchant performance – a common practice in some MCA shops that raises immediate concerns with institutional investors.
Here’s what most MCA operators don’t realize: Getting your books audit-ready isn’t a quick fix. It’s a process that can take several months to update historical advance and collection records, 3-4 months for a first-time audit (always longer than subsequent audits), and additional time for any remediation of collection documentation. In total, you’re looking at potentially 9-12 months from financial disarray to audited statements. That’s an eternity in the fast-moving MCA world when a funding opportunity appears.
If you even think you might seek significant outside capital within the next year, start preparing now. Implement proper merchant tracking systems immediately. Ensure all bookkeeping follows GAAP principles for advance recognition. Consider getting audited financials before you need them.
Yes, this requires upfront investment, but put it in perspective: If you’re raising $5 million to fund your advance portfolio (often just the starting point), the cost of proper financial infrastructure is minimal compared to the capital you’ll secure and the acceleration in your timeline.
The most successful capital raises in the MCA industry aren’t just about having a great portfolio performance – they’re about being ready when opportunity knocks. Don’t be the MCA provider explaining to eager investors why they need to wait a year while you get your advance and collection records in order. The most valuable asset in fundraising isn’t just your merchant performance – it’s being prepared to prove it immediately.
SBA Places Restrictions on Use of Proceeds to Refinance Merchant Cash Advances and Factoring Agreements
April 22, 2025The Small Business Administration has made some notable changes to its Standard Operating Procedures that go into effect on June 1. For instance, the new guidance specifically says that “merchant cash advances and factoring agreements are not eligible for refinancing” for Standard 7(a) loans, 7(a) Small loans, SBA Express loans, Export Express loans, and International Trade loans.
The new SOP is here. This was the previous SOP that did not mention MCAs.
Going All In: How Joe Sasson Saw the Opportunity of Being a Broker Early On
April 7, 2025
“For me, the biggest approach to the industry that I took was honoring integrity and transparency to our clients more than anything else.” That’s what Joe Sasson, Chief Sales Officer at Advance Funds Network (AFN), attributes his success to in the small business finance industry. Sasson saw the vision and the potential of this business at a younger age than most of his peers. That’s because he started as a summer intern for AFN right before his freshman year of college at George Washington University, when he was only 18.
“I said I could use some money, obviously, going into school being a freshman, so why not?” Sasson explained. “And then I really enjoyed it that summer. I kind of discovered that sales is kind of a knack for me, and correlates well with the way I like to operate, the way I like to do things. So it kind of just stuck with me.”
The company had a mutually good feeling about his abilities, and they agreed to extend the arrangement, which consisted mostly of making sales calls, even while he was in school. By the time summer rolled around again, they handed him the reins for the entire internship program. The student was now the teacher for 20-25 eager high school juniors and seniors hoping to learn the ropes, an experience he recalls fondly. That was in 2019, and its impact is still felt today since some of those interns are still with AFN. But it was a crossroads for Sasson because his college curriculum required him to be in Washington, D.C., but AFN’s office was in New York. Ultimately, he said his eyes had been opened to the opportunity.
“I saw that our company really had the right values and the right approach to the way we do things,” Sasson said. “Thank G-d I was I was able to kind of recognize that early and that I was working with really good people.”
Sasson transferred to Baruch in New York, a school much closer to AFN. It was a move that paid off since he’s risen up to become part of the C-suite. His day-to-day is managing new business, overseeing dozens of agents, and helping them out wherever he can. That means at any given moment he could be giving advice, helping an agent finish a deal, or on the phone with a lender. Knowing a lender’s box is only part of it, as he says that relationships play an important role in AFN’s success.
Last year, when AFN’s Chief Revenue Officer, Irving Betesh, had earned a spot as one of six finalists to compete in the live inaugural Broker Battle at deBanked CONNECT Miami, it was Sasson who roleplayed with him to practice beforehand, which they did in front of the whole company as both a teaching experience and entertainment. As fate would have it, the roles reversed because it was Sasson himself who ended up on stage in person for Broker Battle 2 this past February, where he secured the runner-up position in a strong matchup after he made it to the championship.
Roleplaying and practice are important at AFN. Sasson said that the company is really good at training new talent, regularly conducts fun motivational contests, and even hosts an annual retreat to get the team out of the office and away from the grind, though sometimes they find themselves having to handle a deal or two on the beach, an unavoidable part of the business even though they definitely try to wind down.
As someone who’s been in the business since before the Covid era, he’s seen a remarkable amount of change. In his opinion, less expensive options, more creative options, and quicker options are now more widely available than when he started. That means he and others have to constantly stay on top of what’s changing and be able to deliver to their clients. That also means knowing what all their lenders are doing, staying on top of AI, monitoring the tariff situation, and more.
Through it all, doing good business with good people seems to be a recurring theme, whether that be the internal team or partners they work with.
“I’ve been doing this for a while now, quite well,” Sasson said. “And I would say, since I started seven years ago, we do a lot of business with a lot of the same people still. So for us, the relationships really do matter more than anything else.”
PayPal Exceeds $30B in Business Loans and Merchant Cash Advances
March 26, 2025
PayPal has officially crossed $30B in merchant cash advance and business loan originations, the company announced.
“Access to capital is consistently one of the top challenges small businesses face as they look to maintain and scale their businesses,” shared Michelle Gill, EVP and GM of SMB and Financial Services at PayPal in an official release. “Traditional business loans are not only difficult to secure for small businesses, but the application process can be challenging and prohibitively time consuming. PayPal’s financing solutions have a streamlined online application process with no lengthy paperwork or extensive credit checks, and approved PayPal loans are funded within minutes. We launched PayPal Working Capital and PayPal Business Loan to serve this important need, and to provide a quick and responsible way to inject much needed capital to help fuel small business growth.”
PayPal had pulled back significantly on originations for a while as can be seen here but ramped back up last fall. For example, PayPal said that global originations had surpassed $25.6B at the end of Q2 2022 across a total of 1.3 million transactions. That means it has added roughly $5B in originations across 100,000 transactions in the span of almost 3 years since they now report 1.4 million total.
“Small businesses have seen tremendous value in PayPal Working Capital and PayPal Business Loan, as both offerings continue to receive remarkable feedback from customers,” the company said. “Additionally, both offerings have achieved Net Promoter Scores of 76 and 85 respectively and our customers renew loans or access our offerings on a repeat basis more than 90% of the time. Businesses also experience an increase in their total PayPal payment volume by 36% after adopting PayPal Working Capital and 16% after taking a PayPal Business Loan.”
Why MCA Companies Need Syndicators
March 21, 2025David 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 or schedule a call about working with Better Accounting Solutions, email david@betteraccountingsolutions.com.
The merchant cash advance (MCA) business is all about balance—managing risk while keeping capital flowing.
Many funders hesitate to bring in outside capital, especially if they already have a line of credit. The thinking goes: “If I have my own money, why should I split the profits?” But that perspective overlooks the key benefits syndication brings—not just in terms of capital but also risk mitigation and overall profitability.
The biggest advantage of working with syndicators is the ability to do more deals while spreading out risk. The more deals you fund, the more you diversify, which naturally increases your stability. If you’re advancing your own money, you’re taking on 100% of the risk. But with syndicators, that exposure is shared. Even if you already have a line of credit, using syndication means you’re not tying up all your liquidity in a few high-risk advances. Instead, you’re spreading your capital across more opportunities, reducing the chances of any single deal tanking your portfolio.
Syndication also creates a financial buffer through fees that MCA companies collect upfront. Syndicators don’t just bring in money; they pay to participate in your deals. Typically, they compensate the funder in one of four ways: paying an upfront fee (usually 3-5% of the RTR or 5-7% of the principal), paying part of the fee upfront and the rest as the deal is repaid, covering a portion of the origination fee, or splitting the profits at the end of the deal. These fees give MCA companies immediate cash flow, which helps offset risk before repayment even begins.
Consider this: if you fund a $100,000 deal and syndicators take on 50% of it while paying a 4% fee, you’ve immediately reduced your exposure. You’re technically in for only 48% of the deal, not 50%, because that fee cushions your position. On a larger scale, this compounds into significant risk reduction. If your default rate is 15% and syndication lowers your risk by just 5%, that’s a major improvement. A 10% default rate instead of 15% can be the difference between profitability and loss.
Origination fees further sweeten the deal. Some MCA companies split origination fees with syndicators, while others keep the entire portion from the syndicator’s investment. For example, in a $200,000 advance where the syndicator puts in $100,000, a 10% origination fee would total $20,000. If the funder keeps the entire 10% from the syndicator’s portion, that’s $10,000 of instant income—reducing risk right away. This means that even before payments start coming in, the MCA company is in a stronger position.
Profit-sharing models also offer advantages, particularly for MCA companies that want to keep more control over the deal structure. In these setups, syndicators don’t pay an upfront fee but instead share in the profits at the end. This allows funders to leverage external capital while still maintaining higher margins on successful advances. Some models even combine a profit split with an upfront syndication fee, offering the best of both worlds—immediate cash flow and long-term upside.
The bottom line is simple: syndication makes MCA portfolios stronger. It adds a layer of protection, reduces risk, increases deal volume, and injects capital upfront. A stronger, more diversified portfolio leads to more stability and, ultimately, higher long-term earnings.
For any MCA company serious about growth and sustainability, working with syndicators isn’t just an option—it’s a necessity. Overlooking these benefits in the name of not wanting to share profits shows a short-term mindset that may cost more in the future.
