Alternative Business Financing: Cash Advance

Capital can be one of the main reasons that small businesses fail. While credit remains tight for some entreprenerurs and business owners, this has only given rise to innovation within the finance industry. One of these companies is Merchant Cash and Capital, a cash advance provider. Merchant Cash and Capital (MCC) has extended more than $600 million in small business financing to over 20,000 business owners of various sizes.

Rescue a CEO had the opportunity to speak with Steve Sheinbaum the CEO of MCC to discuss alternatives to small business financing.

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Why did you start your business?

I was helping restaurants and other businesses raise money and came across the concept of a merchant cash advance. I recognized that these merchants needed help in a quick turnaround fashion and that traditional lenders simply weren't positioned to meet their needs and weren't likely to be interested in their business. I represented many large credit card processing companies, this was a natural fit. I understood the way these small business operators were doing business and the shortfalls and issues they were running into one after the other. It made sense to come up with more flexible financing options that could meet their short term needs.

I saw enormous potential growth in the industry. Considering that small business has always been the engine running the economy, it makes sense to find means by which these businesses can be supported to meet their short term needs and for future growth. If you've been an established business with a documented success history why not make the investment and take the very calculated risk to help that business. If it's been working for a prescribed period of time and there are issues but not issues that would threaten the eventual success of the business and its ability to pay back a financial commitment, it seems like a good opportunity.

Tell us about your industry and future changes you anticipate?

Gaining wider acceptance. By shear volume of business, for MCC and for others, we can see the tremendous growth and need for this type of financing. It is also interesting and an affirmation of what we are doing to see other major players/investors coming into the sector to provide additional capital. Players such as Amazon, Amex and PayPal have jumped into this field and it's because they see the need and the opportunity. Of course, their involvement helps validate the sector for those already in it and for the small businesses considering its use.

Peer-to-peer is a new avenue within the business finance industry. We are seeing growth in the economy and businesses are starting to pick back up. Technology, I believe, is going to play a major role in our industry. The technology far exceeds the flexibility and speed that the traditional lenders can implement. We get to observe at a grassroots basis and on a regular basis what small business need and exactly how they operate and we can quickly create the technologies, mostly in the form of software, they can address those needs. We are simply in a position to act more speedy than big banks.

What advice would you give to entrepreneurs and business owners?

Can you interject? I can speak best from the perspective of financing and my advice would be to do what you can to be properly financed from the beginning. That is of course easier said than done. However, if financing for equipment, staff, expansion, taxes, etc. becomes an issue, shop around and see what financing solutions are available because there are many options out there to meet the specific needs of most small business situations. Our industry is built on providing flexible, quick and a wide variety of financing options that put funders in a position to say yes more often.

How is your industry helping entrepreneurs and business owners?

Many of our clients are using funds to grow/expand. Many business owners, especially in franchises, have goals of opening multiple locations – our funds give them the ability to do that, especially when the bank says no. Our industry is not only helping small business growth, also contributing to growth by providing new jobs and opportunities within the work place – MCC is expecting to double its workforce in the short term.