Merchant cash advance overview
Upcoming SlideShare
Loading in...5
×
 

Merchant cash advance overview

on

  • 532 views

What is Merchant Cash Advance (MCA) and how MCA works. This document describes the players and what is involved in setting up a merchant cash advance deal.

What is Merchant Cash Advance (MCA) and how MCA works. This document describes the players and what is involved in setting up a merchant cash advance deal.

Statistics

Views

Total Views
532
Slideshare-icon Views on SlideShare
531
Embed Views
1

Actions

Likes
0
Downloads
18
Comments
0

1 Embed 1

https://twitter.com 1

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Merchant cash advance overview Merchant cash advance overview Presentation Transcript

    • Copyright 2013. Five Components, Inc. All Rights Reserved www.mcasuite.comMerchant Cash AdvanceOverviewApril 2013
    • What is Merchant Cash Advance?§  A Business (“merchant”) receives upfront cash by signing over its future sales.§  Terms are usually less than a year – 3 to 9 month terms.§  Merchants repay cash advance on a daily basis.§  Merchant cash advances (“MCA”) are not loans in the US.§  MCAs are processed faster than traditional business loans.§  Most MCA deals do not require business owners to offer collateral.Copyright 2013. Five Components, Inc. All Rights Reserved 2
    • Merchant Cash Advance PlayersCopyright 2013. Five Components, Inc. All Rights Reserved 3Broker FunderMerchant CollectorBusinesses that will takea lump sum cash today inexchange for future sales.Companies that connectMerchants with Funders.Companies that helpFunding Companiesretrieve future receivablesfrom Merchants.Companies with cash tobuy future receivablesfrom Merchants.
    • How Merchant Cash Advance Works?Copyright 2013. Five Components, Inc. All Rights Reserved 4Broker FunderMerchant CollectorApplicationApplicationCommissionDaily SalesFundsFundsContact Contract
    • Broker contacts MerchantCopyright 2013. Five Components, Inc. All Rights Reserved 5BrokerMerchantContact•  Broker contacts a Merchant to offer a$10,000 cash advance in exchange for$11,000 of future sales (10% interestrate).•  The Broker will need the Merchant tocomplete a simple Merchant CashAdvance application.
    • Merchant completes Merchant Cash Advance applicationCopyright 2013. Five Components, Inc. All Rights Reserved 6BrokerMerchantApplication§  Merchant returns application with thefollowing documents:»  Owner’s personal information (i.e., DoB, etc.);»  Business related information (i.e., EIN, etc.);»  Six months of Business’ bank statements;»  Six months of Business’ credit cardprocessing history;»  Existing liens or judgments against thebusiness or owners;»  Tax returns for the business and its owners.§  Merchant is current generating $30,000 amonth in sales.
    • Broker seeks Funder for Merchant Cash AdvanceCopyright 2013. Five Components, Inc. All Rights Reserved 7Broker FunderApplication§  Broker takes Merchant’s application to its network of Funders to getthe Merchant a $10,000 cash advance.
    • Funder evaluates the MerchantCopyright 2013. Five Components, Inc. All Rights Reserved 8Broker FunderCommission§  Funder will evaluate the Merchant’s credit worthiness by putting itthrough a rigorous underwriting process, which includes:»  Confirmation of $30,000 monthly sales.»  Owner and business credit scores.»  Existing loans, liens, etc.§  Funder will pay the Broker a commission for introducing theMerchant.
    • Funder funds the MerchantCopyright 2013. Five Components, Inc. All Rights Reserved 9Funder§  Merchant agrees to the terms.§  Merchant and Funder will alsoneed to agree to a Collector tohelp divide the daily sales.§  Funder provides a $10,000cash infusion to the Merchant’sbusiness.Merchant§  Funder makes the followingoffer to the Merchant:»  $10,000 for $11,000 (10% rate).»  Merchant must sign over 50% ofits daily sales to repay theadvanced amount.
    • Funder contacts CollectorCopyright 2013. Five Components, Inc. All Rights Reserved 10§  Funder shares Merchant Cash Advancecontact with a Collector who will beresponsible for collecting and distributingthe Merchant’s daily sales.§  A Collector can be one of the followingcompanies:»  Credit card processor;»  ACH processor;»  Lockbox provider;»  Bank; or»  Funder itselfFunderCollectorContract
    • Merchant’s daily sales are collected by the CollectorCopyright 2013. Five Components, Inc. All Rights Reserved 11CollectorMerchantDaily Sales§  Merchant generates $1,000 in daily credit card sales.§  Daily sales are collected by the Collector per the Merchant CashAdvance agreement with the Funder.
    • Collector disburses funds to Funder and MerchantCopyright 2013. Five Components, Inc. All Rights Reserved 12FunderMerchant§  The Collector collects $1,000 per day fromthe Merchant at sends $500 to the Funderand $500 to the Merchant.§  Based on current re-payment rate ($500 aday), Merchant repays the $11,000 in about22 days.CollectorFundsFunds
    • MCA Suite Value PropositionCopyright 2013. Five Components, Inc. All Rights Reserved 13Broker FunderMerchant CollectorApplicationApplicationCommissionDaily SalesFundsFundsContact Contract§  Manage underwriting process§  Track financial transactions of all deals§  Administer commissions§  Manage contacts§  Manage merchantcash advanceapplications andrelated documents§  Track daily remittance and deal status§  Alerts and reports to manage collections§  Tie dailyremittance todeals§  Integration withpayment gateways
    • MCA Benefits to Brokers & FundersCopyright 2013. Five Components, Inc. All Rights Reserved 14Features Brokers FundersContact Management ✔ ✔Document Management ✔ ✔Deal Tracking – from underwriting to fund tracking ✔Deal Refinance ✔Payment Gateway Integration ✔Commission Administration ✔ ✔Reporting ✔ ✔Workflow and Task Management ✔ ✔
    • MCA Suite Contact InformationTo learn more about MCA Suite and how we can improve your merchant cashadvance operations, please contact us for a demo:www.mcasuite.cominfo@mcasuite.comtwitter.com/MCASuiteCopyright 2013. Five Components, Inc. All Rights Reserved 15