The Wall Street Journal blog section published an interesting article yesterday about how the merchant cash advance industry is growing, especially as banks continue to deny loans to small businesses.The article is really informative and you can read the comments posted for even more depth on how MCA's work - http://blogs.wsj.com/in-charge/2011/08/10/cash-advance-demand-rising/What are your thoughts on MCA's? Has your business used one? Would you consider it when you need additional working capital?
The recent economy seems to be affecting businesses of all sizes, geographies and industries, spurring interest in alternative working capital products. Of course, increased marketing has also built awareness. But another reason accounting for the industry's growth is the increasing interest among larger companies, including financial institutions, to explore innovative ways of satisfying their customer's need for capital - even if they have to partner with another capital provider to get the transaction completed. GIven that the ability to say "yes" to a request for capital often drives the institution's abiltiy to retaiin and cross-sell, thereby increasing revenue and lifecycles, or a vendor's ability to make a sale, it is a smart startegy.
The WSJ is a bit behind with this article.
Business cash advances or merchant cash advances have been growing in popularity and use since the mid-2000s. Its not just that bank loans have dried up but merchant services companies and their representatives and affiliates have really been marketing their MCA products.
Further, even during the financial market's heydays just a few years ago, business cash advances offered many business owners with limited cash flow or limited/bad credit to secure working capital either for their business or for personal use - businesses that banks would never touch.
I now ask you the question since you are selling merchant cash advances - have you seen an increase and if so, is it an increase in the number of deals, the dollar amount, or both? Plus, is it new or relatively new business or older, established businesses that are seeking these advances?
The WSJ is a bit behind with this article.Business cash advances or merchant cash advances have been growing in popularity and use since the mid-2000s. Its not just that bank loans have dried up but merchant services companies and their representatives and affiliates have really been marketing their MCA products.Further, even during the financial market's heydays just a few years ago, business cash advances offered many business owners with limited cash flow or limited/bad credit to secure working capital either for their business or for personal use - businesses that banks would never touch.I now ask you the question since you are selling merchant cash advances - have you seen an increase and if so, is it an increase in the number of deals, the dollar amount, or both? Plus, is it new or relatively new business or older, established businesses that are seeking these advances?
Hey Phanio - Thanks for your response.
Yes, over at our company Entrust Cash Advance, we have seen an increase in the number of deals as well as the dollar amount being requested by small businesses over the last couple years. As for the types of businesses that apply for cash advances, we have worked with older businesses as well as new businesses. So the increase in merchant cash advances does seem to be diversifying across different types of businesses as well.
Hope that answers your question.
Thanks!
MCA | Performer | 8/19/2011 - 4:22 pm
phanio | Contributor | 8/11/2011 - 4:33 pm
LilyEntrust | Rising Star | 8/17/2011 - 2:20 pm
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