The Merchant Cash Advance (MCA) Business Is Not A Nascent Business— By Any Means
Written by: Thomas J. Kent Jr., Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
But it still holds a certain level of mystique to new clients. There are quite a few that are familiar with this business and yet, a whole lot more that are not.
On the surface, it seems improbable that future sales receipts are viewed and processed to determine how much to give to a singular business entity. But essentially, that is what happens. An MCA lender calculates how much to give a business owner based on the number of deposits, the balance on each day, the credit report showing all business owner inquiries (to figure out how many places the owner approached before sending in their information), and most importantly whether they were making revenues despite the ongoing pandemic concerns. The credit score is rarely considered as the repayment ability, and the character of the client is of more pressing concern.
Is this a doomed market? No. And that now has a resounding echo since business-to-business lending can be viewed and studied after the fact but never stopped. There will always be a modicum of silent acquiescence in the industry since banks are not expected to be the final stop for anyone requiring funding to grow or steady their business. Alternative lending sources are always going to be sought out and utilized due to their ease of use and satisfaction with interim financing needs.
How will this market adapt for the future? In dire circumstances, any entity can change and meld into its surroundings. However, the MCA field is not suited for adaptation since each company is run by groups of individuals who look to satisfy their basic needs. This is a question of character, not finance. A person with an overwhelming sense of greed at others' expense will always act in a coarse manner to make sure they are the only ones benefiting from any transaction. The methods of delivering service will change, but the greed will always remain. If an MCA company is run by ruthless individuals, then their service and provision will be ruthless to the point of eventually hurting themselves. But that happens only after they visit undue harm to the clients they serve.
This industry does not need regulation; it needs self-intervention. This is for each individual to reflect on internally. Long existent companies with decades of experience should wake up to the fact that hurting a business owner is never a good idea to survive in the long run.
Thomas J. Kent Jr., Executive Contributor Brainz Magazine
Mr. Kent is the founder, C.E.O., And Chairman of Kent Global LLC. Kent Global LLC is a boutique investment firm based in New York City. Mr. Kent has helped over 300 companies raise over 1 billion USD.
