Today's Wall Street Journal has an article entitled Credit Scare Spreads in U.S., Abroad that discusses how banks are making it even harder now for small and midsize businesses to obtain business loans.
This appears to be an exciting time for the merchant cash advance industry as it will potentially raise the credit criteria of the average applicant since borrowers who would normally goto a traditional lending source such as a bank for a business loan, may no longer be able to and will explore alternative financing solutions such as a merchant cash advance.
At AmeriMerchant, we have seen a huge increase in demand for our product over the past 60 - 90 days and I expect this trend to only increase. Merchant cash advance providers still need to make sure they are only providing working capital to those that truly qualify for it. I believe with the recent credit crunch, we will see more qualified applicants.
And for those that are keeping track, I predicted this back on my December 1st posting Merchant Cash Advance Industry Affected By The Subprime Mortgage Bust where I indicated:
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.
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2 comments:
Anybody read the Forbes article? "Vampires"!!! Can you believe how far off this guy is?!
I thought we were providing a service!
Guys we need to regulate our space, we need to do it quick, do it well and be fair to everyone involve, I want to create a merchant guideline, a certification program for sales entity and best practices for MCA providers... Our little trade association isn't working we need everybody to join in... can we start by inviting a delegate from all the MCA that would join in and have a face to face meeting... We need to bring everybody in for this to work we need to include the good little guy and the evil empires alike. . .Delegates don't have to be CEOs! This way ego's can be checked at the door!
this may be why things have gone south-
# 1- you let everyone resell your product as a 1099 , your going to get some bad representation. does any funder do background checks on the brokers/agents? i bet some have criminal backgrounds! each iso should really look into who will resell under them carefully and terminate all the bad eggs quickly. a bad distribution channel leads to bad practices- this must be corrected top/down-
a lot of this pain has been experienced in the processing industry- it takes time to correct-
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