North American Merchant Advance Association (NAMAA) announces New Members And Officers

The North American Merchant Advance Association (NAMAA), a 501c non-profit industry association that provides guidance and helps influence and shape the merchant cash advance industry through leadership, education and the sharing of information, announced today the addition of four new members to its organization as well as the election of new officers. For more information on this story, click here.

NAMAA is the only industry voice for the merchant cash advance industry and currently represents 80%+ of the largest merchant cash advance providers in the industry. NAMAA also offers risk management tools to allow merchant cash advance providers to reduce their default rates from merchants that have previously defaulted with other merchant cash advance providers.

Note: David Goldin, editor of this blog is also the President of the North American Merchant Advance Association.

North American Merchant Advance Association Announces Merchant Cash Advance Best Practices

While merchant cash advances have been around for quite some time, like many industries it has seen its share of scrupulous and unscrupulos providers. The North American Merchant Advance Association (NAMAA) recently released it's recommended Best Practices for the Merchant Cash Advance Industry.

As a founding member of NAMAA, I commend our co-members which make up the majority of the players in the merchant cash advance industry for coming together to ensure the merchant cash advance product is sold and executed properly so that it helps the merchant and doesn't hurt the merchant.

For those merchants reading this blog, proceed with caution when doing business with a non-NAMAA merchant cash advance provider. NAMAA members who bear the association logo on their website have taken the time, capital and commitment to ensure their offering is made in a standup way and helps them stand out from certain providers in the industry who have used tactics that the industry and the association look down upon.

Buyer beware, stick with a NAMAA member and look for the following logo:

2008 Merchant Cash Advance Predictions - 1/2 Way Follow Up

In December 2007, I wrote a post entitled 2008 Merchant Cash Advance Industry Predictions and being that we are now just halfway through 2008, I wanted to follow up on this previous posting.

It looks like it's only 1/2 way through the year and I went 3 for 4 on my merchant cash advance industry predictions with 6 months to go for the fourth one to come true.

Here is a recap:

1) Underwriting will tighten up / approval rates will go down - this one I definitely hit on the head. Between a combination of a down economy, merchant cash advance providers working together to prevent fraud and many merchant cash advance providers that have either lost or in jeopardy of losing their credit lines, it's common knowledge that while merchant cash advance submissions are way up as a whole, the industry approval % is down double digits %s. This low approval rate has actually driven many large, high overhead MCA brokers to either lay off employees or completely shut down because some of the "junk paper" that was approved in 2007, simply no MCA provider will accept now.

2) Sales Agent Commissions will stabilize and/or decrease - in 2007 we saw some companies paying extravagant sales agent commissions that simply didn't make sense. One would think they were trying to buy marketshare. I would imagine after they reviewed their financials / profitability, they realized they couldn't make money paying out the type of commissions they were, hence the marketplace has adjusted accordingly. Some merchant cash advance providers / merchant cash advance agents have actually raised their cost to the customer to maintain some of these commissions.

3) Self Regulation - In December 2007, I had indicated that:

"The industry has grown to large and has too many providers to not have best practices / industry standards in place. In 2008, I believe you will see a group of the key merchant cash industry players come together to announce a set of best practices for not only the merchant, but practices to protect the merchant cash advance providers as well."

In April 2008, a merchant cash advance industry trade association called the The North American Merchant Advance Association was announced to promote best practices as well as allow the leading merchant cash advance providers to work together to introduce various risk tools to combat merchant fraud.

4) Mergers & Acquisitions - In 2008 I believe we will see the first major merger and/or aquisiton in the merchant cash advance industry.

While we haven't seen any significant US merchant cash advance provider merge with or acquire another US based provider, I still think we have some time to go. There is a huge upside in the merchant cash advance industry for private equity firms looking to enter this space. We did see a private equity firm make an investment in one leading merchant cash advance provider so far this year and I expect there will be some other deals done this year as well.

Merchant Pleads Guilty To Merchant Cash Advance Fraud

A Virginia merchant committed fraud on several merchant cash advance providers and is facing up to 20 years in prison, $1 million in fines and had to surrender his house, car and motorcycles. The story can be found here.

This merchant fraudulently took a business cash advance from several MCA providers in his customer's names. One of the missions of the recently announced North American Merchant Advance Association is to prevent fraud like this from occurring.

Merchant Cash Advance Association - Another Article In The Green Sheet

The North American Merchant Advance Association has been receiving positive press in all the trade publications since it was publicly announced on April 15th that the leading merchant cash advance providers have come together. The Green Sheet has just written a story about it titled, Cash advance leaders advance.

Merchant Cash Advance Product / Association Featured In Online TV Show - SBTV.com

SBTV.COM - Small Business Television appears to be the first video broadcast about the merchant cash advance product as well as the recently announced North American Merchant Advance Association. You can view the story on MCA providers as well as the merchant cash advance industry association at sbtv.com - Small Business Television approximately 1:07 into the clip.

Merchant Cash Advance Association Mentioned In American Banker

An article about the North American Merchant Advance Association was recently written in American Banker (You will need a subscription to American Banker to view the article). In addition to The Green Sheet story, this is the second article about the merchant cash advance industry association specifically about how the industry has come together to create merchant cash advance underwriting / risk tools as well as establish best practices. This association is already starting to get recognition in all the leading industry publications.

The article features some nice quotes from NAMAA's President, Jeremy Brown of Rapid Advance. The North American Merchant Advance Association is currently in discussions with some other leading merchant cash advance providers to join and those announcements will be made shortly. I encourage all merchant cash advance providers to join this group.

Merchant Cash Advance Industry Comes Together

It was just announced today that the leading companies of the merchant cash advance industry have come together to form an industry trade association called The North American Merchant Advance Association.

This trade association will allow merchant cash advance providers to share industry education and professional development, ethical standards and best practices guidelines, the development of industry relevant products and services, and the engagement in regulatory and legislative advocacy.

An important focus of NAMAA is the creation and maintenance of a database of merchants that have engaged in unethical or fraudulent practices in securing past merchant cash advances.

I believe this association (Editor's Note: AmeriMerchant is a founding member of the North American Merchant Advance Association) will benefit the merchant cash advance providers, sales agents / representatives as well as merchants by establishing self regulation and best practice guidelines.

Any merchant looking for a merchant cash advance, I would strongly recommend working with a provider that is a member of the North American Merchant Advance Association.

Any merchant cash advance providers interested in joining, can contact me at dg@amerimerchant.com.