Merchant Cash Advance Forums Goes Quiet
March 31, 2011
The Merchant Cash Advance Forums is an old discussion board for those working within or looking into the Merchant Cash Advance industry. On March 25th, 2011 the Forums implemented stricter account policies that now require members to submit detailed information about who they are and who they represent. This includes:
- Real name
- Company you work for
- Company’s address
- Your phone number
A public notice on the forums states “For the sake of adding value and integrity to the MCA Forums, an additional layer of moderation as well as basic data collection have been implemented. Members MUST now complete their private profile with their basic contact information. This required information is confidential, and other members will NOT be able to view it. Data collected is NEVER sold to third parties remains strictly confidential.”
And since this went into effect, the bustling discussion board has been for the most part a ghost town. While a few active participants proudly make their company affiliations known, most users hide behind a nickname for privacy. This certainly makes sense from a personal standpoint (the internet is dangerous!), but it also helps protect employers from liability should one of their employees openly discuss their opinions.
For example: John Doe states his affiliation with ABC Funding Co. upon registering with the site and posts “tHe iNdUsTrY iS dOoMeD!” Many of the other forum members may interpret that to mean ABC Funding Co. is in serious trouble or because of the way John Doe posts, that ABC Funding Co. does not employ very intelligent people.
Though there is an explicit promise of confidentiality, this industry has bred many stone cold skeptics over the years. If Facebook can get someone in trouble, anything can.
Of course, we may be wrong completely and the dull conversation could be a result of more time spent working, there being little to talk about, or an unwillingness to talk as the news of what is happening in California spreads.
This is by no means an attack on the MCA Forums. We used to check in on it pretty often. We recommend anyone in the MCA, payments, or banking industry to sign up to for DailyFunder.com now as of 2013. Just be careful. Anything you post on the internet can be linked back to you by someone, somehow.
The Direct Funder Model is Sooo 2009
December 1, 2010Originally posted on Dec. 1, 2010
We touched on this in a previous post and think it’s important to expand on it. The Merchant Cash Advance industry has evolved over the last several years. The clear line between Broker and Funder is becoming incredibly blurred.
Many Direct Funding companies are now offering brokers the opportunity to contribute their own funds towards an advance and share in the profits(And the risk!). On the same token, many big name brokers seem to have filed a handful of UCCs as a secured party, an indication that they have funded accounts all by themselves.
Some industry vets have taken things to another level and are calling on multiple parties to share in a single advance. For example: A broker contacts several other brokers/funders and requests if they want to all chip in. One firm usually takes the lead and services the account to reap a management fee. This collaborative group financing acts like a mini hedge fund but we believe this signals an evolutionary move towards the Peer 2 Peer(P2P) Lending model. In essence a P2B model that looks like this:
This is an an altered picture of the Prosper.com P2P Lending Site.
Prosper boasts of having funded $210,000,000 since their inception. The Merchant Cash Advance industry has put out more than that in just the previous 6 months. So the concept is similar and it fits the mold. Merchants submit documents and an application to a P2B Network. The Network posts the business profile, processing history, personal credit score, reference information, and publicize it on the site. Anyone can then peruse businesses and choose which to contribute funds towards. Once the total advance amount that the P2B Network recommends has been raised, the P2B Network converts the processing, transfers funds to the merchant, and maintains the account for a fee.
While we don’t anticipate the entire industry to convert to this model, nor do we predict if it will actually work, this will inevitably become a segment of the market. The Merchant Cash Advance industry received much criticism back in 2007 and 2008 but the tone has changed dramatically. The phrase “banks aren’t lending” is so worn out that people should be fined for saying it. Self regulating industry practices, the recent mass exodus of devilish sales brokerages, and the banking problem, have not only brought the Merchant Cash Advance industry legitimacy but also made it one of the preferred and most credible funding options available to small business.
A P2B network could do all of the underwriting, complete with a final say on approvals or they could present a business as is and allow everyone in America to be their own underwriter and make the determination themselves. How tempting would be it to invest $100 to a business in your community and buy a percentage of their future credit card sales? We like the concept and the industry is halfway there. Who’s going to start this first?
– An Opinion by the Merchant Cash Advance Resource
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UPDATE 12/23: P2P MARKETPLACE FOR MERCHANT CASH ADVANCE FOUND ALREADY TO EXIST, READ HERE
