Monday, June 29, 2009

AmeriMerchant Launches Merchant Cash Advance Portfolio Servicing Program

AmeriMerchant, one of the oldest merchant cash advance providers in the industry, announced today its new Merchant Cash Advance Portfolio Servicing Program. This program is designed for companies that are funding merchant cash advances and looking to reduce their overhead associated with the MCA business. In addition, this program can be used for creditors / investors / lenders of Merchant Cash Advance providers that are looking to preserve their capital and are interested in exiting the business as well as generating additional revenue in the future.

Editor's Note:The author of this blog is also the President & CEO of AmeriMerchant

Saturday, June 27, 2009

Merchant Cash Advances A Solution For Advanta Cardholders?

According to bloomberg.com, Advanta Corp, a leading provider of small business credit cards, recently terminated its customer credit-card accounts due to a reported astounding 20% bad debt rate. For those former Advanta customers that need access to working capital in this challenging credit environment, perhaps a merchant cash advance can be an excellent alternative solution to a traditional business credit card which requires a personal guarantee unlike a traditional merchant cash advance.

Merchant Cash Advance 2009 Update - Amazing What 12 Months Can Do

The merchant cash advance industry has certainly taken a 180 degree turn from where it was 12 months ago. Due to the economic climate and the tightening of the credit markets has resulted in many cash advance companies that have ceased operations, are only funding renewals and/or were forced to liquidate their portfolios by their credit providers. Furthermore, a good portion of merchant cash advance agents (specifically the large "phone rooms", that received much negative press in 2007/2008) have ceased operation as well. A large portion of these agents were born out of the mortgage industry. The merchant cash advance industry is maturing and there were 10s of millions of dollars worth of advances given in 2007/2008 that never should have been advanced. This may have been industry types that don't work well with this product, holdback %s that created too much risk for the MCA provider and/or providing capital to people that didn't have the credit worthiness to pay it back. Unfortunately, many new merchant cash advance providers learned the hard way that this is not an easy business at all.

The good news is those players that have been established for a while and have strong distribution channels that aren't "pumping junk paper" into their company will reap the benefit as the economy turns around. While banks are still tight with their business lending requirements, many businesses are also hesitatent to take on additional debt / obligations in this economy, which can cause a decrease in demand for alternative financing products.

I think we will see a few more players close up shop in 2009, but those merchant cash advance providers that can ride out 2009 will emerge in 2010 even stronger and the "boat will have left the dock" for any new players trying to make a major penetration into the merchant cash advance market.