Running a Merchant Cash Advance Business is very challenging for many reasons: you get to deal with small businesses, participants, and brokers. There is nothing easy about it. So, what does it take to run a successful MCA?
In this post, four factors that are vital contributors to success.
1. Leads
Without a doubt, getting Leads is one of the most critical points for any business. That will be one thing that will quickly inject revenue into it, allowing you to grow and expand the capabilities of the MCA.
There are many ways to get leads, but sometimes MCA lead generation companies are selling the same leads to your competitor. For this reason, if you are looking for qualified MCA leads, you should also make sure to trust experienced agents.
An experienced agent is the critical part of lead generation provided they can find out real business owners. That is helpful for qualified and real-time leads. In this industry, it is not about the number of leads, but their quality and the ability to keep them is what matters.
2. Relation with ISO and brokers
ISO (Independent Sales Organizations) and brokers are essential to gain successful operations. MCA Brokers use their connections with various direct funders to connect business owners with the right one as seamlessly as possible. Business owners get the funding they need; direct funders make a profitable transaction and ISOs make a commission for being the matchmaker for the transaction. An ISO is only paid their fee or commission once a loan or other product is closed. Independent Sales Organizations have played a vital role in the growth of the small business lending industry as they often act as the eyes and ears of direct funding companies helping them with underwriting or adapting to market changes. Some of their most impactful roles are:
- Establishing trust with the business owner and then leveraging that trust to sell them on a direct funder in the best position to meet their business loan needs. The goal being a long term client that renews several times.
- Being the main communication channel between the business owner and the direct funder, whether it be in respect to specific documents needed, questions about the business that need to be answered, or negotiating the terms of the offer to be a win-win for the customer and the funder.
- Working with the funding company in post-funding issues, such as missed payments, especially if it is still within the commission clawback period or early payoff requests, and most importantly, a good loan broker who is honest and does the best for the business owner and the direct funder becomes a positive ambassador for our industry at large which will only help all of us in the long run grow and become more profitable over time.
We understand we have been apparent when listing why it is necessary to have a good relationship and communication with ISOs, right? The best way to do it is through ISO reporting including a daily Funding Summary and a daily Payments Summary. For this reason, there are companies that provide this service so that you do not have to take care of anything but your business.
3. Access to capital
If you own or represent a merchant cash advance funding company, you need to get more access to capital to fund more businesses. Apart from accessing capital and interested participants, it is crucial to report daily to participants and keep them informed on their returns.
4. Proper interim financials and Performance tracking
Do you know your performance, overall? Are you satisfied with your present reporting structure? As a last factor, keeping information up to date and organized can be the most critical factor to achieve your company’s growth.
It is vital to provide updated and precise information to those who finance the MCA Industry, from portfolio tracking, to daily status reports and the often underestimated bookkeeping.
The lack of a good tech tool can cost MCAs money. Financial technology plays a significant role in the development and growth of this industry’s players.