Just how expensive is Merchant Cash Advance Really??- David C Barnett

Tom says I don’t love small business people.

If I did, I wouldn’t be so hard on Merchant Cash Advance he claims.

You see, I made a video 3 years ago about how small businesses with credit card terminals could effectively sell a portion of their future cash flows to get money today.

I said that this was a very expensive way to finance a business and that people need to be fully informed about the actual costs.

Tom thinks that I got my numbers wrong and that we should be rejoicing that this financing option exists in light of apathy and searing hatred on the part of big evil banks.

I made a new video where I explain how expensive merchant cash advance can really be and the difference between APR and ‘payback.’  Payback is a new financial term created by this industry to try to confuse unsophisticated small business owners.

Check it out here: https://youtu.be/kCLS09fXUE4

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The True Cost of SmallBiz 'Loans' -Square, Paypal, Kabbage by Morgan Blake

I came across this great article on Medium.com by Morgan Blake which outlines the true cost of borrowing from Merchant Cash Advance Providers. Read it here: https://medium.com/@trendline/the-true-cost-of-small-biz-loans-square-paypal-kabbage-89d7b465a683#.4al6xjje9

It relates to this video I did a few years ago where I describe how one of my clients used this type of lending product: https://youtu.be/R4SXiFQHhNo

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[VIDEO] News: Square raises more cash to increase its merchant cash advance lending business

Square, the credit card processor that fits into your smartphone has been an easy to deal with supplier to small businesses.  Many of whom have had difficulty in the past getting credit card merchant accounts.

Square is now taking advantage of this relationship with small business to grow their merchant cash advance lending business.

Entrepreneur.com reports:

Square, the Silicon Valley payments company, is expanding its loan program to small businesses. The company announced on Tuesday that Square Capital, its loan-making division, has raised an additional investment from previous backer, Chicago-based Victory Park Capital (which tripled its original investments) and new investor Colchic Capital.Square, co-founded by Twitter’s Jack Dorsey, says that its Capital arm has been growing at a fast clip. It has loaned more than $100 million to more than 20,000 businesses over the past year. In April, Square Capital advanced nearly $25 million in capital.

This is big news for small businesses but also serves to highlight the magnitude of the small business lending opportunity that I explore in my book Invest Local.

If you forget how merchant cash advance works, check out this video from last fall.

Big Money is going after small business deals, maybe you should too...

I subscribe to many newsletters that fill my inbox daily.

Today I was interested to read this announcement that Square, operator of the tiny credit card terminals that plug into smartphones, has entered the merchant cash advance business.  

This is another example of the 'smart money' chasing after the opportunity in small business lending.  

I detail several deals that you can do yourself to get big returns in my book, Invest Local.

Learn exactly what a Merchant Cash Advance is by viewing my video below...

SQUARE BEEFS UP MERCHANT CASH ADVANCE BANK ACCOUNT

By PYMNTS @pymntsWhat's Next In Payments®
7:30 AM EDT August 20th, 2014
Square Inc. said Tuesday (Aug. 19) that it has secured an unspecified investment from Victory Park Capital and that it plans to use the money to expand its Square Capital small-business financing program.
Through the initiative, Square helps businesses grow by giving them access to funds quickly and simply. The investment will enable Square to extend hundreds of millions of dollars to tens of thousands of additional sellers who need capital to grow, the company said in the funding announcement.
“We are pleased to be partnering with Square and believe they are uniquely positioned to serve their merchant base with another best in class product,” Brendan Carroll, Victory Park Capital partner and co-founder, said in a statement. “We’ve been tremendously impressed with Square Capital’s data-driven approach to merchant finance, and we are confident they will achieve substantial growth in a dramatically underserved market.”
Square said it has extended nearly $50 million in Square Capital to more than 10,000 independent businesses and it said the opportunity for continued growth within the small-business financing space is significant. More than a third of merchants who have completed their first Square Capital advance have renewed for a second round of capital to make additional investments in their business, the statement said.
Square Capital merchants thus far have processed more than $1 billion with Square and have used funds from the program to buy equipment and inventory, hire more employees, and to add new stores, Square said. Follicle Hair Salon, for example, used Square Capital to move into a larger space and add 12 new salon chairs, with each chair bringing in between $5,000 to $8,000 a month.
Last week week, Square published a blog post noting the top 10 myths about the company. go to full article

One of my videos where I explain how merchant cash advance works.

[VIDEO] Merchant Cash Advance- an option for small businesses that aren't 'bankable'

In this video, I discuss the 'merchant cash advance' lending product that is available from several providers in both the USA and Canada.

The program works based on 'selling' a future stake in your credit and debit card transactions.

To learn more about private lending, personal finance, and earning money from local deal-making, buy my book; Invest Local.

If you have borrowed in this way, send me the details.  I would love to do a follow-up video about the actual cost of the capital.