If you sell or market Merchant Cash Advances, Insperity's recent report on small business outlook is music to your ears. Small-business owners are hiring more workers and boosting compensation in anticipation of increased business in 2011, according to the recent Business Confidence Survey released by Isperity. Of course this translates into the same businesses needing working capital to supply this expected growth and a willingness to take on financing.In the survey conducted April 19-21, when asked how they are managing the number of company employees, 37 percent of owners said they are adding new positions (a huge gain from the previously reported 24 percent). In addition, 23 percent said that an economic rebound is under way, 40 percent expect it to occur in 2011 and 35 percent remain unsure.
While the optimism is up, the same business owners are still taking a conservative approach to employment decisions. Commissions to sales staff were down , overtime pay was only 8 percent of regular pay down from 8.9 percent in November.
This survey reflects what most of our agents and referral partners already know. Our clients outlook on the future is improving, but they are still very cautious. We are seeing this reflected in a significant increase in applications for funding. However, the requests are starting to change some. Instead of seeking maximum funding, most clients are now seeking reasonable funding amounts with reasonable rates and lower withholdings to protect cash flow.
This change is welcomed by MCA funders. With lower funding amounts and withholdings the risk is dropping rapidly with bad debt ratios falling by 50 percent in the past few months. Business owners are also having a better experience with the MCA product since they are not struggling with high withholdings and/or lack of buyers remorse from high factor rates.
The end result is building a very profitable client portfolio for both funding companies and agents for the long term as these clients will becoming back for more and more funding.
