The Merchant Cash Advance industry was not created as a result of the 2007-2008 crisis, although many believe it was. Indeed, the industry was booming well before then. But that recession did prompt growth in the industry.
The ability of a business to access cash in a hurry is a vital one. Every business runs into hard times every now and then, especially during a recession. But what do banks do when that happens? They close their coffers.
Times of high inflation and economic downturn mean that credit checks become hard and the vital lifeblood that a small business needs to survive — cash — is the first thing that banks cut them off from.
It is somewhat ironic, that the very solution to reviving the economy — easy access to funds in times of greatest need — is what becomes most difficult to attain.
This is what makes the MCA industry special. As with every industry, we have our good and our bad players, our ethical and unethical actors. What makes this industry particularly unique, however, is that the bad actors can actually make the industry better during a recession.
To understand that, we need to look at the history of MCAs.
So long as an MCA business operates ethically and within MCA guidelines, the recession will be a boon to those businesses. For those MCA funders who intend to swindle customers and make a “quick buck,” the recession is going to drive them under — which is good for the overall industry.
It plays out like this:
The simplicity of how MCAs began goes back to businesses needing cash in a hurry but being denied that cash by a bank.
Let’s imagine the hypothetical company of Joe’s Plumbing. Joe is a one-man show with a strong client base. Above all else, he needs his vehicle to get to his clients.
One day, Joe’s truck broke down and the repairs will come to $5,000. If Joe doesn’t get the vehicle repaired, his business will go under. His credit isn’t great because of a few unpaid bills a few years back (times were tough, but he paid them as soon as he could) and so the banking sector denies him the credit he needs.
That’s when MCA rolled in. The MCA funder looks over Joe’s business and sees that Joe has a going concern. He has clients. He has business coming in. He needs a vehicle to get that business done. Giving Joe money for his vehicle which Joe can pay off through a small percentage of his future invoices is a no-brainer.
In this way, the MCA industry has helped countless qualifying businesses survive tough times, which is exactly what is needed to recover from a recession.
Disruptive MCA operates actively and ethically in the MCA industry. We go through a rigorous check to ensure that the businesses we fund are qualified and hence able to pay off their MCA easily over time.
From Day One, our purpose has been to help small businesses succeed, both Buyer and Seller Members. We’re not out to make a quick buck, or to get into the dubious practice of aggressively funding companies in a way that would not be beneficial for them.
That’s why Disruptive MCA has so many satisfied Buyer Members on its books. Ultimately, a recession is good for the MCA industry and Disruptive MCA is one of the players set to succeed and come out even stronger.