Here is a good article that hit Forbes Forbes.com today!
"When credit gets tight, the vampires come out.
Now feasting on small businesses is a cadre of "merchant cash advance" (MCA) shops. These "lenders of last resort"--which started popping up after the tech crash in 2001--give small businesses cash today in return for a percentage of their future credit card sales. Annualized cost of that precious capital: in the neighborhood of 70% to 90%."......
Click Here to read the full article...
Finally an honest article by a major press organization that covers the usurious practices of the MCA Merchant Cash Advance / Business Loan industry.
"And it's not just California. Kennesaw, Ga.-based AdvanceMe, one of the first and largest MCA shops, claims a 75% uptick in new customers during the same time frame, while Manhattan-based Merchant Cash & Capital boasts a 20% increase.
"Demand is off the charts right now," says David Goldin at AmeriMerchant, another MCA based in Manhattan. "We're not even directly marketing to people. They're finding us now."
Business is so good that hedge funds are piling in, too. Greenwich, Connecticut-based Patriot Group owns a stake in Merchant Cash & Capital, for example. Other players rumored to be investing in the MCA business are Goldman Sachs (nyse: GS - news - people ), Deutsche Bank (nyse: DB - news - people ), Plainfield Asset Management and Silverpoint Capital.
"We've had unsolicited offers from at least six hedge funds," says Irish. Goldin says he receives at least one call a day from interested investors."
When credit gets tight, the vampires come out.
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4 comments:
I would like to first say, I have been in this business for 4 years... it is a great way to make money as an up and coming sales agent. But, you will find MCA brokers that give the biz a bad name. Don't make the good guys wear the black eye people... Just because one guy charged a merchant a 10% broker fee in top of making 8% commission DOES NOT mean we all do THAT... Also, if you were loaning $10K to a business owner with a 500 fico, tax liens on record and a bankruptcy in his last 5 years for 8 months WITHOUT collateral, do YOU mean to tell ME that you wouldn't want $13K back!?!?!?! Pull your head out from your hippy haze and give a listen, don't be a hypocrite... EVERYONE knows d*** well they would want some good return on THaT investment, so lets be real here. Just because a guy takes money and defaults doesnt mean its the advance providers fault... In most cases, it means the business owner WAS NOT prudent with the investment... Do you blame a dog for being bad? NO, there is no such thing as a bad dog, there are BAD OWNERS!!!
Oh, and I would like to add one more defining factor in that hypothetical deal... THERE IS NO FIXED REPAYMENT SCHEDULE... If it takes a merchant 2 years to repay the advance then so be it.. Granted, that lender will no longer provider for him/her, but on the flip side, interest is NOT going to accrue... So, this being said, who is holding the bag here? me or them???
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