Monday, February 2, 2009

BusinessWeek Article On Vetting A Merchant Cash Advance Provider

While many mainstream press publications have focused on the cost of the merchant cash advance product compared to a traditional loan product (and for the most part not indicating the benefits of the merchant cash advance product and/or the fact that traditional loans are very challenging to come by these days for small businesses), BusinessWeek recently published an article called How To Vet a Merchant Cash Advance Provider.

The fact that a main stream business publication like BusinessWeek is giving advice to small business owners on how to choose a merchant cash advance provider, further demonstrates how alternative financing solutions are becoming more and more popular for businesses.

While I feel the author of the article, John Tozzi, tried to be fair and balanced as far as indicating some of the pitfalls to look out for, I think it needs to be pointed out that the examples of complaints indicated in the article, probably make up less than 1% of the overall transactions done by the merchant cash advance providers, which is an excellent record for any industry.

I also believe that the industry has taken great steps to weed out the unscrupulous providers of this product and many of them have fallen by the waste side, mainly due to the economy and has taken a positive and successful approach to self regulating itself, especially with the creation of an industry association, The North American Merchant Advance Association.

1 comment:

Anonymous said...

the low barrier entry in the mca space has caused a lot of the bad practice selling that has and is going on. its starting to get better, but, there seems to always be a funder who will turn an eye to get that extra deal or funding that month. until every mca is on the same page, the broker practices will continue. but, let's not only blame the broker- many funders install bad practices to its channels as well from day1.