Small Business Failures Up 48%

The number of small businesses going bankrupt jumped by 48 per cent over the last 12 months according to Dunn & Bradstreet. More alarming is that small business start-ups fell by 95 per cent over the same period.

Dun & Bradstreet's analysis found that across the economy, business failures were down 10 per cent on the September quarter 2011, but up more than 40 per cent for the year. This coincides with Dun & Bradstreet's downgrades during the December quarter of more than 128,000 firms that are likely to experience financial distress over the coming twelve months.

According to Dun & Bradstreet CEO, Christine Christian, business failures have trended steadily upwards since 2008, growing over 30 per cent in the last three years.

You'll notice in the D&B supplied graphic that the segment of MCA-target market (businesses with less than 20 employees) has seen the greatest hit in business failures.

Key findings of the D&B Business Failures and Start-ups Analysis for the December quarter 2011:

• Nationwide, insolvencies rose 42 per cent year-on-year while the number of new businesses fell 11 per cent over the same period;
• Small business failures grew 57 per cent over the year among firms with less than five employees and 40 per cent over the year among firms with six to 19 employees;
• Small business start-ups among firms with less than five employees fell 95 per cent in the year;
• Start-ups during the December quarter in the manufacturing, service and finance sectors fell by nearly 100 per cent.

This type of data will continue to keep the big banks out of the small business financing arena. Which is good for Merchant Cash demand. However, if a current client or agent selling the MCA product, you have to be concerned with the stability of your current MCA funding company. A few recent failures/reorganizations by a some mid-sized funding companies are just the start of more to come.

Ask the difficult questions of your funding partner? What is their source of funds? What are their delinquency rates? How long have they been funding for? The more experience, the better the funding company is at measuring risk and pricing across their portfolio of contracts for long-term profitability and sustainability.

If you sense you're getting the run around when asking the above, you better start running in the other direction!

As always, American Finance Solutions is here to fund our clients and ensure our resellers/partners are always compensated!

2012 Outlook For Merchant Cash Advance

2012 is definitely shaping up to surpass 2011's record sales pace. Not only will the demand continue, according to the latest market surveys we expect it to increase dramatically. The latest Wells Fargo/Gallup Small Business Survey conducted in January shows that small business assessments of the US economy grew to its highest mark since before the financial crisis hit in 2008. Most importantly this renewed optimism coincides with other improved economic news, such as lower jobless claims and higher equity markets.

Strengthening revenues, both in the current and future expectations of business owners will greatly influence small business's upcoming decisions about investment, hiring and most important for us financing. While a net percent of companies reported a decrease in capital expenditures over the past 12 months, the gap has been narrowing.

Specifically, small business expecting to hire mew employees over the next year jumped from 15 percent to 22 percent, while the number of small business expecting future employment to decrease fell to its lowest rate since the 2007 recession began. FYI, our MCA client-base, businesses with less than 50 employees account for nearly half of the total expected employment!

The other factor that will drive demand is the Federal Reserve's renewed commitment to keep the cost of borrowing at record lows for all of 2012. This means almost guarantees that traditional lending will continue its severe constriction. Many expect the Fed to keep rates low through 2013 and even into 2014.

For 2012 we'll have the best of both worlds with the same supply constraints of 2011 coupled with drastically increasing demand. If you thought 2011 was a good, hold on because 2012 will be great!

As always, we look forward to funding all of your deals, and a prosperous New Year.

AFS Opens East Coast Office

AFS is proud to announce that after five years in sunny Los Angeles, we have finally opened our first East Coast office. More importantly, we have added another valuable member to the AFS team.

We are pleased to announce that Mike Steeneck, an industry veteran with years of experience in the payment processing and alternative funding arena has joined AFS as Vice President of Business Development. Many of you know Mike from his last position as EVP/COO of OnePay. Mike has also held positions as President of Business Development at AdvanceMe and Senior Vice President of Sales and Acquisitions at First Data where he successfully launched many newly formed business units.

Mike's focus will be on building relationships with East Coast ISOs and processors nationwide. In addition, Mike will be instrumental in crafting sales strategy and product development as AFS enters new markets and diversifies its sales channel. Most importantly, Mike will work closely with our existing and new ISO partners to increase sales and help AFS build on its reputation as the funding source of choice.

Mike brings tremendous experience and expertise to AFS and we're thrilled to have him. Mike can be reached directly at 800-760-5516, ext 141 or by email at msteeneck@americanfinancesolutions.com

Tis' The Season For MCA!

The Fourth Quarter holiday season is finally upon us! Starting in October you'll begin to hear the seasonal songs in every mall across America. If you are an Agent or Reseller of Merchant Cash Advance now is the time to boost your marketing and target retailers and other merchants that benefit from the Holidays.

Banks still have their coffers shut to small business according to the Wall Street Journal and business are curtailing on spending. This will mean that the majority of MCA business will be seasonal as most businesses will be reluctant to take on new debt. Here's a couple of tips to make the most out of this opportunity.

1. When targeting these merchants, get 12 months of processing statements! American Finance Solutions will use the upcoming months for payback calculations. This will allow you to obtain pricing that maximizes funding amounts or lowers factor rates since expected payback times will be shortened.

2. Maximize Fast Cash deals! With our Fast Cash program, AFS funds in 48 hours most of the time (some deals take 72 hours since we are waiting on the merchant to download with a new processor). Now that merchants qualify for 50% of their processing average, we can use the foretasted four months going into season, rather than the previous four months.

3. Don't forget about non-retailer merchants. There are so many other merchants that benefit from the Holiday Season! E-commerce are great target market that AFS funds when established. Day spas sell tons of gift certificates! The list is endless, think outside the box and you'll be rewarded!

We look forward to funding all of your deals and filling up your stockings with cash.

American Finance Solutions Official Media Sponsor Of WSAA

American Finance Solutions is proud to announce that it is the Official Media Sponsor of the 2011 Western States Acquirers Association. This year's conference will be held at the San Francisco Hyatt Regency in Burlingame, California on September 21st and 22nd.

The two day event features the Field Guide for ISO's Seminar and tons of breakout session focusing on the future of the payments industry. Marketing with Social Media, Mobile Payments and International Markets will all be highlighted. In addition, there will be plenty of time to visit with vendors and sponsors during breakfast, lunch and cocktail sessions.

AFS will be using the venue to launch its new Agent Portal, enhanced Fast Cash funding program offering $20,000 in 48 hours for merchants without personal credit pulls and an industry first equipment-secured Merchant Cash Advance with low factor rates starting at 1.15.

Make sure you stop by and see us if attending.

Welcome To New North American Merchant Advance Association Members

American Finance Solutions welcomes the addition of five new members to the North American Merchant Advance Association (NAMAA). The recent addition increases the amount of total companies by almost 50 percent and now NAMAA includes almost all reputable players in the industry. The one lone dissident continues to be Advanceme.

Now if you're selling or marketing merchant cash advance or work for a funding company, you may be asking yourself, "What's the big deal?" There are quite a few reasons why this is significant step for the whole industry:

1. Robust "bad merchant" database - If you sell the product, the first thing NAMAA members do when receiving an application is check it against the database. This saves you and your staff from wasting time and resources on known fraud and defaulted merchants.

2. Unbiased communication lines between funding companies - All NAMAA members have made a pledge to exchange true information on merchants and play fair. So often when American Finance Solutions calls a little player for a payoff amount confirmation, we get the run around. Mean while the small funder is desperately trying renew the client immediately. NAMAA members all have a designate contact that gives the real scoop on a client (weather they were even in collections, slow pay, etc) and don't compromise the payoff process. This means if you're selling for one of the companies, you don't have to worry about losing a deal at the 11th hour.

3. Best practices are adhered to - Knowing that you represent or work for a NAMAA member company, you can confidentially market this to your clientele and assure them that you represent a reputable industry player that conducts business ethically.

I believe this marks a turning point for the MCA industry. We've have officially started to move out of the early growth stage and are also quickly beginning to move into the mainstream financial marketplace.

Again, welcome to Strategic Funding, Genesis, Merchant Advance Funding, Merchant Capital Source and Swift Capital.

Let The Second Selling Season Of 2011 Begin!

Now that the kids are back in school and Summer vacations are over, it time to gear up for the Merchant Cash Advances second selling season of the year! Historically the Spring and Fall have turned out to be the prime sales seasons and we are expecting the same for 2011.

More than ever, merchants have the upper hand over suppliers when they have cash. Many of our existing clientele are renewing to take advantage of opportunities. Many are receiving large discounts or other incentives by pre-ordering and paying in advance.

One of our retailers reported a savings of 40%. He pre-paid for this October and November deliveries and is receiving $20,000 of clothing. Given that his mark up is 100%, that means he'll generate $40,000 in sales for a total cost of $15,600 ($12,000 plus the $3,600 in factoring fees). Now that's a smart use of a Merchant Cash Advance!

Restaurants are reporting that they are getting similar concessions from their liquor distributors. Gift and novelty shops are reporting discounts of approximately 30% for pre-ordering and of course speciality toy and hobby stores are squeezing their suppliers for 30% to 50% discounts. If you're marketing and selling MCA, now is the perfect time to adjust your target market and message to capitalize on this selling season. Don't forget to focus on the right types of business and who their market demographics are as well. You want applications from merchants that have the highest chance of getting approved for funding.

At American Finance Solutions, we expect more record funding months in our busiest season. Both high- and low-end retailers should benefit the most in our current macro-economy; and be the most attractive to AFS and other funding companies. (Those with money will continue to spend at the upper-end, while the rest of us move down; and the middle retailers will really feel the squeeze this holiday season!)