@mscreditfix wrote:Hello everyone,
I just wanted to post something on this topic because I did not find much about merchant cash advance lenders here. I recently needed quick cash for my business and I tried to find different posts about merchant cash advances since I process about $20,000 to $40,000 a month in credit card payments. Since this is a slow time for my business I needed cash right away for working capital. I decided to use Coastal Capital Group out of NY which was able to fund me within an hour $30,000. It was a soft pull, with no collateral however they do a daily ACH withdraw from my banking account and the loan is for 7 - 8 months. Coastal Capital is not a direct lender which I did not know at the time and as a result I found out that they use Everest Business Funding who also is a broker and not a direct lender. Everest Business Funding get their funds from Alpine Funding Partners out of Florida. If I only knew all of this upfront I would have gone to Alpine Funding from the beginning. I did call Alpine and they said that I cannot go through them until I pay back the money to Coastal Capital and if I need more funding come to them directly and they will give a better rate.
Hopefully, someone can use this post to him them if they need a merchant cash advance in the future.
Merchant cash advance deals are no good. The only reason they exist is to charge exorbitant amounts of interest which are illegal under the criminal usury laws. They try to couch the loan as a "purchase" of the borrower's receivables, and the interest as one of their various "fees".
My advice is to stay away from them at all costs.
Here's an interesting article on the subject:
@mscreditfix wrote:So what do you recommend when a business is in need of fast cash to keep the lights? I would love to just walk into a bank and fill out a lengthy application and get $50k - $100k in working capital but that is not realistic for some of us. There are many alternative financing options out there because there is no such thing as one-size fit all. So I was hoping that this post would also allow people to offer other solutions for financing for others that may not have the 700 - 850 credit scores. They are out there and I just wanted to start the conversation to help someone and myself that's all.
I don't have experience with business lenders, so I'm not the one to give you recommendations. The only personal experience I have in that area is (a) business credit cards and (b) a piddling $5k line of credit from an incompetent business banking department at NFCU But I'm sure other folks will be able to give you advice. People are frequently sharing information here about different business lenders. So if you'll be patient, I'm sure they will chime in. You could also just look through the posts here under "Business Credit" and you're bound to find posts about different business loans and lines of credit from a whole panoply of lenders.
But one thing I do know is that the merchant cash advance people are not like ordinary predatory lenders; they are worse. They are the bottom of the barrel. Getting money from them is a deal with the devil.
I'm positive that it's better to get a high interest loan from a subprime business lender, if that's the best you can do, than it is to get a Merchant Cash Advance.
Someday, if you do get a business loan from an actual business lender, compare the total interest under such a loan with the total "fees" you paid the MCA company, and you'll see what I mean.
These guys, for a $30,000 advance, you might have to pay them back $42,000, so you paid $12000 in "fees". Since the money is being paid back to them on a daily basis, you've only got, on average, the use of $15,000. Think about it. Since the average money in your hands is only $15,000, it's like you're paying $12,000 in interest on a $15,000 loan..... or 80%... but it's only for 2/3 of a year, so it's like paying 120% APR.
And they don't have to disclose that to you because they're pretending not to be lenders.
Usually, because they're sucking their customers' blood, their customers are even more desperate than they were when they took out their first advance, so they keep coming back for more because they're going down the drain. The best thing is to stay far away from them.
If you can't get a loan anywhere, then just don't get a loan. Getting a merchant cash advance is not a lifeline, it's a deathline.
I get a lot of mail from subprime commercial lenders, so I know they're out there.
You could put up a post here in "Business Credit" with something like "Ideas for business lenders for non-stellar credit scores?"
@webrobby wrote:I had dealt with this industry and it does seem to serve a purpose. Know that as a business owner - once you've had one - your name will be targeted and solicited by brokers until the end of time. They have services that look at public records (UCC filings) and determine that you're likely a MCA customer and will endlessley resell all your contact information to hungry brokers. I doubt the direct lenders do any marketing - they have armies of highly paid brokers to do it for them.
Finally a source of authoritative information on this industry is: DeBanked magazine/website. Go read about it from the brokers perspective and you start to understand it more.
I understand it fine. It's a predatory industry that charges exorbitant interest way beyond what the criminal usury laws permit.