Size of the Merchant Cash Advance Industry - 3rd Quarter, 2011

Share Article quantifies the Merchant Cash Advance industry's third quarter of 2011.

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The Merchant Processing Resource has released their findings on the size of the Merchant Cash Advance (MCA) industry in the 3rd quarter of 2011. A little over $150 Million was funded to small businesses in the form of MCAs. That puts the industry on pace for $600 Million this year, a figure that would surpass 2010.

The State of the Industry
A lot of factors have affected the landscape. California, the state that houses the most MCA transactions in the country, experienced a slowdown in funding due to temporary regulatory hurdles. As they have been mostly resolved, we expect the 4th quarter to show additional growth.

Alternatives to Alternatives
MCAs have been popularized by their alternative nature. Unlike a loan, a MCA is the sale of future card payments. In 2011 there has been an emergence of "micro-lenders", financial firms that cater to the same niche as MCA but with programs configured with all the bells and whistles of a loan. These alternatives to the alternative have created a highly competitive marketplace, forcing many funding providers to offer multiple forms of financing.

Diversifying the method of financing has actually caused the rate of growth for the true MCA product to slow. This can be best illustrated by AdvanceMe, the firm that has dominated the MCA market for over a decade. Their recently launched spin-off, NewLogic Business loans, is infringing on the market that would normally choose MCA.

As such, industrywide claims that MCA transactions are totaling $1 Billion annually are likely overstated due to the inclusion of micro-loans.

The Revolution
The Merchant Processing Resource team has pledged to continue creating awareness of Merchant Cash Advance, a mission we started a year ago. Congress and the big banks do not have the will or the means to support small businesses, the backbone of the American economy. The MCA industry is a pure private sector machine, a system that best symbolizes capitalism. With MCA, it is the American people that directly finance the growth of American small business. The nastiness of collateral, credit ratings, and unconditional indebtedness are byproducts of big bank lending and have no place in the world of MCA. While this financing is not perfectly suited for everyone, business owners have the right to know that it is an option and where to turn for information.

Funding ranges from $750 to $500,000 and terms vary widely. The pure volume of MCAs (Over $400 Million in three quarters of 2011) is a testament to the value this transaction can create. Purchasing inventory, advertising, hiring, and repairs are prime examples of its use.

MCA funding providers and their affiliates have not endorsed this press release or the Merchant Processing Resource. Any use of a company's name, image, or likeness serves simply as a point of reference for our opinions. We strive to remain the only independent outlet for information and will continue to serve the public.


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Sean Murray, Founder
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