Approval Rates For MCA At An All Time High

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In the past 60 days approval rates for Merchant Cash Advances are at an all-time high. American Finance Solutions is currently running a 70-plus percent approvals for new clients. There are a couple of reasons for this.

First reason is the state of the economy and almost total lack of traditional funding. Everyone knows the last 18 months have been some of the toughest on record of business owners. Banks have tightened up their lending activities in response, but to make matters worse the banks are now left with devastated portfolios of commercial loans.

Merchant Cash Advances are filling a huge void in the market place by supplying desperately needed capital to marketplace. If you are in the business of offering MCAs, there has never been a better time to build a portfolio of clients.

A second reason has been the maturation of the MCA-industry. Now the MCA product is evolving to offer various products that fit certain business-types or situations. A good example of this has been the fixed-repayment schedule. At AFS you can choose between paying a contract as a split percentage of credit card sales or a fixed weekly or daily payment. Another product is the "starter advance" where clients are offered smaller funding amounts with quick repayment times to limit risk to the funding company. This allows clients to build lender history and graduate up to more financing and improved terms. AFS launched its FAST CASH product in this niche in August of 2009.

I firmly believe that the combination above will last for at least three more years and continue to give merchants access to capital and provide agents with strong customer service skills a chance to develop a great clientele list.

Bad Credit = No Small Business Loans

As business confidence begin to return the world of small- and medium-sized businesses, many entrepeneurs are lacking the capital to take their successful operations to the next level. A recent CNN video highlights just how severe the access to capital is.

A restaurateur who has proven he can thrive even in this challenging economy cannot find the funds he needs. Yes, he has less than perfect credit, as most successful business owners do. They boot-strap, borrow on personal credit cards, take loans from family members then work 80-hour weeks and make it happen.

This theme is occurring again and again across the country from large cities to rural areas in almost every business type. For many of these business owners a Merchant Cash Advance is one alternative financing method to take their business to the next level.

Alternative Finance Companies Here To Stay

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Business week recent wrote an article on entrepreneurs accessing alternative finance companies. You can read the entire article here. It confirms what most of us already know, banks have virtually shut their doors to all types of financing for small business! Credit lines (both secured and unsecured), equipment financing and even personal credit cards to business owners are all being denied.

The articles highlights the fact that alternative lenders, such as traditional factors, reverse equipment leasing and merchant cash advance financing is becoming the mainstream for business owners out of necessity. All of the above and more expensive than traditional bank financing since they involve the financing company taking on more risk.

As for merchant cash advance, it seems that we have finally made it out of the infant-stage of our new product and are now entering the mainstream. For our agents selling the product, now is the time to expand into new business types that have not used the MCA before and target clients with very good credit who would not have considered the product before.