SBA Loan Article Indicates More Opportunity For Alternative Financing Such As The Merchant Cash Advance Product

According to a recent article on CNNMoney.com, titled A grim year for small business lending, "The SBA Loan volume plunged 36% in 2009 as banks slammed their vaults shut to small businesses."

This is yet another example of how an alternative financing program such as a merchant cash advance is starting to be looked at by business owners who in the past utilized traditional loan products such as a SBA loan or a small business unsecured line of credit from their bank.

As the media is reporting time and time again, small businesses can not get access to the necessary capital they need to drive their business. This will lead to an increased opportunity for those in the merchant cash advance industry as we are starting to see an increase in applicants who in the past utilized their local bank as their source of capital.

Furthermore, the lack of traditional loan products readily available in the marketplace can be a tragic situation for many small businesses if they can not get access to capital for the upcoming holiday season - which can amount to 50% - 75% of many retailer's annual sales.

It will be interesting to see the demand levels in the coming weeks for the merchant cash advance product as retailers looking to borrow from their banks are being shut out.

Merchant Cash Advance Provider CEO David Goldin of AmeriMerchant Featured Again In The New York Times

I want to thank Brent Bowers again of The New York Times for featuring me in a follow up article in today's business section of The New York Times. I believe AmeriMerchant is the first and only merchant cash advance provider to be featured in The New York Times.(now twice). The original article was in August 2007 regarding the AdvanceMe patent situation. This article features four entrepreneurs, myself being one of them, that were previously featured in the paper and following up to see how they are holding up and prospering in this challenging economy. An online version of the article can be found here

Even More Positive Merchant Cash Advance News - Survey Indicates That Consumers Plan To Increase Their Restaurant Spending

Restaurants are probably the most common industry that utilize the merchant cash advance product. The amount of working capital a business can receive with a merchant cash advance is based on their sales levels of credit card / debit card sales. Since late 2008 and most of 2009, restaurants have been for the most part hard hit by the economy as consumers were eating out less at restaurants.

However, Nation's Restaurant News, a leading news provider for the foodservice industry, is reporting today that Atlanta-based RBC Capital Markets' September restaurant spending survey, indicated that consumers plan on spending 14% more in restaurants compared to September 2008.

This can only help the merchant cash advance industry as it will not only help build restaurant owner's business confidence, but will also increase the amount of working capital they will qualify for in a few months if there credit card sales increase due to an increase in consumer spending at restaurants.

Merchant Cash Advance Demand - More Positive News - Small Business Confidence Rises To Highest Level In 18 Months

As I've pointed out previously, in order for the merchant cash advance industry and/or traditional business loan products to see an increase in sales, there has to be business owner demand for the product.

What drives demand? One key factor is a business owner's willingness to take on additional debt or obligation. What drives this willingness? Economic Confidence - they have to be confident they can pay it back, they have to be confident they can do something productive with the money, they have to be confident it makes sense to open a new business, market/advertise, renovate, etc. In most cases, be on "offense" rather than "defense."

The good news is according to the latest Discover® Small Business WatchSM, economic confidence among small business owners jumped to the highest level in in 18 months in August as more owners expressed faith that the U.S. economy is on the rise and gave signs that they are more willing to invest in advertising and new inventory. While we aren't out of the forest yet, this is all good news and what I predict will be a large demand for retailers to stockup with inventory for the holiday season. If a retailer isn't properly stocked for the holiday season with inventory to sell, they may as well close their doors....

Can Merchant Cash Advance Demand Be On The Rise As Small Business Confidence Rises For Second Consecutive Month In Spite of Cash Flow Concerns?

The nature of the merchant cash advance product requires business owners to have a positive need for this alternative financing product. What consititues a "positive need"? Typically functions associated with "expanding" such as opening up a new business / new location, buying additional inventory, advertising / marketing, renovating, etc. which obviously does not occur as frequently in a down economy. The merchant cash advance industry has seen a decrease in demand for the product since early 2009 which I attribute to a lack of small business owner confidence.

One positive sign that may show this trend flattening out or even reversing slightly is that economic confidence among small business owners rose for the second consecutive month, although concerns about being able to pay their bills jumped significantly in July as measured by the latest Discover® Small Business WatchSM. The index rose to 82.1, up from 80.9 in June.

One part of the report that I found very interesting was:

"Those who are borrowing aren't using traditional sources. When asked if they have applied for new credit cards, lines of credit or loans, 82 percent said they had not, while 17 percent said they had and 2 percent weren’t sure. Of those who did apply for loans or credit, 44 percent said their applications were approved, 31 percent were rejected, 7 percent were pending and 18 percent weren't sure."

While I don't think 82% of the people utilized a merchant cash advance when indicating they weren't using "traditional sources" - it reiterates the need for alternative financing solutions such as the merchant cash advance.

It will be interesting to see what happens if small business confidence continues to rise. My theory is there will be a direct correlation to business owners looking to "expand" again and thus seeking alternative financing options such as a merchant cash advance as traditional business loan products are still very challenging for business owners to obtain.

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

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.