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.