Saturday, December 1, 2007
Merchant Cash Advance Industry Affected By The Subprime Mortgage Bust?
Many people have been asking me if the merchant cash advance industry has been affected by the recent subprime mortgage bust. We have found both a positive and negative scenario within the merchant cash advance industry. The negative thus far has been much poorer quality applicants for a merchant cash advance that we are unable to provide funding for (e.g., many people whose houses are being foreclosed on). The positive effect has been that we are also seeing some better quality applicants who in the past might have used traditional financing such as tapping into the equity in their home to help fund their business or a straight business loan from a bank. With the recent credit crunch and the decrease in real estate value in many areas of the country, many business owners are no longer able to use their home equity as a source of working capital for their business. It will be interesting to see if the positive is outweighing the negative for merchant fundings.
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3 comments:
With a database of over 50 signed mortgage brokers, one thing is for sure-they don't know how to sell this product! No offense, but, they can't get passed APR/Interest rate dialogue when trying to sell this product. Also, they have VERY unrealistic commission expectations. Most come in wanting $20K or more per month in commissions. This is not a get rich scheme. They have to build it to that level overtime. It is in my opinion, these folks are hit/miss with our product and not the best resource to target to resell the product.
Business Cash Advances are the best alternative to small unsecured business loans
The recent sub prime meltdown will alter the credit industry as a whole. I have hear both sides of the argument...ex-mort. brokers are GREAT for the industry, they are not good for the industry. I guess it comes down to the individual....but it is true that this is NOT your traditional lending vehicle. As a sales rep in the Cash Advance insudtry, I find myself conintually reminding the merchants this is NOT a loan. ("Whatever your pre-conceived notions of a loan or credit card, please put them aside")
Or, you can just be up fornt...we are buying your future sales a 73 cents on the dollar
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