Merchant Cash Advance's Impact on Factoring

A little more than two years ago, the International Factoring Association voted to ban merchant cash advance companies from membership, citing loose underwriting standards and competitive pressure.

On Wednesday, at the NACLB conference in Las Vegas, Craig McGrain, President of factoring company Durham Funding, hinted on a panel at just how strong that competitive pressure has become. According to him, about 70-80% of their applicants today already have a merchant cash advance. Five years ago, it was only 5% of businesses, he said. He thinks a lot of that has to do with small businesses not knowing what all of their available options are.

The numbers may not be all that shocking considering that Funding Circle VP Michael Rabil also said at the conference that 30-40% of their applicants already have an MCA. Funding Circle provides small business term loans.

That’s a lot of merchants turning to MCA before finding their way to another product.

Sean Murray, "Merchant Cash Advance’s Impact on Factoring" DeBanked.com, October 6, 2015. Accessed via: http://debanked.com/2016/10/merchant-cash-advances-impact-on-factoring/

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