Investing in MCA Industry: Q&A

2022 is the best year to invest in the MCA industry due its high growth rate. Debanked portal research estimated the MCA market at over 20 billion dollars worldwide.


In this context, alternative lending has become an excellent option for capital companies and investors in the last few years.

The following Q&A will provide you with the essentials about participating in one or more Merchant Cash Advance’s Originators in 2022.

Q: Why are more and more Participants needed in the MCA Industry?


A: Based on the growing demand for advances, MCA originators face the need for additional funds to cover Merchants’ requirements, which may go beyond their capital availability.

Q: Do you know how Funders screen Deals?


A: Each Originator has its proprietary method of evaluating merchants. The typical items that Funders look at to determine whether to offer a cash advance to the Merchant is:

  • Time in Business,

  • Percent of funding request to annual sales (the lower, the safest),

  • Last few month’s bank statements,

  • Electronic Background checks,

  • FICO Scores.

 
Even with all these checks, some merchant fundings will not pay in total – the percentage of default in the industry is around 18% -, and others will pay earlier than terms, so the third question is:

Q: What can the Investor do to minimize the risk of participating in some MCA Deals?


A: You must make investment decisions based on data, and integrating historical information with Business Analytics is the 2022 way. With this, you can explore the possible paths you can take, ‘what–if’ scenarios and build your portfolio to reduce default rates, minimize risk and optimize cash flow. 

Also, as a former president famously said, ‘Trust, but verify’: If you are Syndicating with various funders and receiving performance information from them, it is an excellent option to have a third party digest the data and produce an unbiased qualification on your investments.

One of the difficulties of investing with various funders is the need to receive or enter into multiple systems and websites or receive plenty of emails; you risk being buried by information and losing sight of the big picture. 

How can we build a portfolio with the help of Business Analysis?


At NISO, we can help participants invest in MCA funders to improve their performance radically.

Our services cover everything from bookkeeping, performance analysis, and portfolio modeling. Most importantly, we can integrate an unlimited amount of platforms and information sources and produce a unified view.

With over twelve years in the MCA Industry, and the integration of knowledge from IT specialists, Process Engineers, and Business Analysts, we have developed our systems and business analysis models to accurately and efficiently serve you. 

Go beyond Financials and dive into actionable information! Investing in the alternative lending industry without the right team and tools is not a worthy risk.


As technology evolves, alternative lending is not a blind-eyed investment anymore. Now, you can use data to predict scenarios and build a portfolio. This way, you can mitigate the risk and improve your performance year by year. 

By implementing NISO BI tools, you can answer questions such as:

  • What are the different scenarios we can predict?

  • What is the most probable cash flow projection?

  • How should I distribute my investment into different MCAs?


Are you participating in different MCAs?

Want to talk in-depth?

Book a no-cost meeting with our specialists, and we will be glad to have a chat with you!

 

23 thoughts on “Investing in MCA Industry: Q&A”

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