There has been a surge in the Merchant Cash Advance market in recent years. The amount of attention and focus on this alternative lending solution makes it feel like a new or fresh concept, even though the product itself was explored in an article by The Green Sheet in 2005.
This perception has led to a sudden increase of internet articles discussing the topic and product, as more people search for alternative financing solutions.
What is a Merchant Cash Advance? Am I eligible?
How does an MCA compare to a loan?
These are common questions one might expect, but there is a thread of conversation which also attempts to paint a stigma against MCAs - leading to cautionary content and clickbait titles that play off people's fears. While important points are often made, one can't help but walk away from these articles with a feelings of Fear, Uncertainty and Doubt about a Merchant Cash Advance.
It's important to recognize that the authors of these articles are often lenders themselves, or aligned with alternate financing solutions - which calls into question the motives and honesty of their findings.
Some are quick to point out situations where MCAs are detrimental - while holding up their product as a viable, perfect solution for everyone. Our advice is to be wary of those that deal in absolutes, while also casting fear and criticism. In the world of business, the term "one size fits all" is not applicable, because everyone does business differently.
There are always risks to business - no matter what you do - and Fear, Uncertainty, and Doubt do not make the best companions on this journey. An intelligent businessperson would rather look towards Freedom, Understanding, and Nuance when faced with decisions pertaining to running their enterprise.
We live in a free market and free speech lies at the heart of it. But not all speech is equal. There are often ulterior motives and hidden agendas as competitors smear each other's products and look to promote their own.
Honest content steers clear of this approach. The sharing of unbiased information aims to help readers reach educated ideas and decisions about how to move forward. Rather than force an opinion in editorial fashion, it should be up to the reader to draw their own conclusions.
We are often overloaded by so much information that reaching conclusions poses it's own unique challenge. As a result many of us do comparative research to get a broader spectrum of data and opinions on a given topic.
When researching and reading any of these articles you should ask yourself a simple question... is this piece trying to educate me, sell me or manipulate my emotions?
As a direct lender, who also helps businesses find funding if they do not meet our specific requirements - We have a vested interest in securing business from potential clients. However, we do not hesitate to tell Merchant’s that MCAs are not for everyone.
There are a specific cases and scenarios where this product shines and there are times when a standard loan may be a better course of action. All of this depends on a number of variables that can't be ignored. Without nuance and context, blanket statements are often made where the truth becomes blurred and Merchants can be mislead.
To be clear, if you run a small business that can produce on daily, high volume sales, which may fluctuate seasonally, and you don't have the time, credit, or collateral for a traditional loan - then a Merchant Cash Advance might be the best solution for your business.
Notice our use of the word "might". Anyone who claims that it definitely is for you, without looking at your business history and talking with you personally, should be approached with great skepticism and caution.
Financing a business is a highly customized affair that requires a certain level of trust which is built on open communication and truthfulness. The fact is, you will not know if a Merchant Cash Advance is the right choice for you until we review your business and present you with some customized financing options.
Do your research and talk with multiple providers and get a feel for how they relate to you and the business. Even if you call us and think we are great, we encourage you not to settle. Dig more. Find out about each company's payment terms - but most importantly, pay attention to how they address and relate to you and your business’ needs. This is your future revenue we are discussing and you should be working with people that make you feel comfortable.
Here are a couple of things that any Merchant Cash Advance provider on the up-and-up will discuss with you once you have expressed interest.
1. Requirements: The duration and the amount of payments you make will depend entirely on your income and business history. They will no doubt ask for several bank statements to get an idea of your revenue stream. They will also look at the past to know and verify how long you've been operational, as well as look towards the future to gain a full understanding of your business goals.
2. Payment Terms: Most MCAs arrangements typically last from a few months to a year. But within that spectrum, they should be totally flexible with you paying on your terms. Once they've reviewed your business history they should also have a clear number and timeframe for your payment schedule. Anyone unable to deliver this information within 24-72 hours of you submitting your information is simply not worth your time.
Don't fall victim to Fear, Uncertainty, and Doubt. MCAs are a completely viable way to finance an enterprise and millions of businesses are thriving today because of a Merchant Cash Advance.
As we mentioned earlier, this particular financing option may not be ideal for everyone, so it is important that you evaluate your company's needs and decide if a Merchant Cash Advance is the best solution for your business.