While business loan availability for small business owners has been thawing in the early months of 2014, the fact remains that business owners who are able to reliably get funding from banks are usually more established, have collateral and a workable credit score. Outside of this group are thousands of entrepreneurs who cannot obtain capital from banks because their credit is derogatory or they fail to meet strict underwriting criteria.
The MCA industry attempts to service this market with a financial product that is simple to access and available without minimum credit requirements or a need to put up assets against the amount funded. The fact that this industry has been largely successful is a testament to the desire for legitimate sources of bad credit business financing on the part of under-served business owners, as well as a ringing endorsement of a relationship centric approach to providing financing for businesses that are classically regarded as “high risk.”
A relationship-based approach to funding means providing business owners with the chance to get to know a company through an introductory round of funding followed by an opportunity for a renewal. A renewal will typically feature a larger approval amount, better term or rate or a combination of these aspects, creating a real incentive for a merchant to develop a positive history with their MCA provider.
Because of the emphasis on continuing relationships and renewals, both small business owners and MCA providers benefit. Business owners are able to get the capital they are looking for with the chance to establish a long-term financial ally. And MCA providers mitigate the risks of funding new accounts while still being able to do business with entrepreneurs who are ready to put capital to work but have no traction applying for traditional loans. As relationships between MCA providers and their clients mature, real growth can be exhibited by these businesses.
Demonstrating the potential of this strategy, Pearl Capital has worked with one realty company 18 times in the last two years, funding them for a total of 650K, an auto company 13 times in last two years for 305k, and a flower shop 12 times in last two years for 210K, exhibiting both the wide range of businesses merchant cash advance can work for and the growth over time that can occur through a successful relationship.
The future of business financing is simple to use, fast to obtain and able to account for the subtlety inherent in individual business models and owner histories. It is this last point that necessitates real relationship building as a matter of course as opposed to a tertiary benefit of a merchant cash advance.
Pearl Capital merged with Rivis Ventures in 2011, forming Pearl Capital Rivis Ventures, LLC. PCRV is one of the fastest growing providers of merchant capital in the US, with our core commitments being speed, efficiency and the creation of quality relationships with our ISO affiliates and their merchants. Exponential year over year growth has been the calling card of our company, allowing us to work with an ever expanding network of ISO brokers and small business owners while continuing to deliver the services our clients expect from us. After surpassing $100 million in funding in 2013, we have set our sights on the loftier goal of $1 billion in funding by 2017, and invite prospective partners to join us as we continue to improve and grow.