Merchant cash advances (MCAs) are a type of a short-term financing that provides businesses with a lump sum of cash in exchange for a percentage of their future credit and debit card sales. MCAs can be a good risk free investment for businesses that need quick access to capital and don’t qualify for traditional bank loans.
There are several reasons why MCAs can be a good investment for businesses today. First, MCAs are typically much faster to obtain than traditional bank loans. This is because MCA lenders do not require the same level of documentation. As a result, businesses can get the money they need quickly and without having to jump through a lot of hoops.
Second, MCAs can be a good option for businesses that have good cash flows while the owner may have poor credit. Banks are often reluctant to lend money to people with bad credit, but MCA lenders are more willing to take on the risk. This is because MCA lenders are not concerned with the borrower’s credit score. Instead, they focus on the borrower’s ability to repay the loan based on their future sales.
Third, MCAs can be a good way to improve a business’s cash flow. When a business receives an MCA, it can use the money to pay for expenses, make investments, or grow its business. This can help to improve the business’s cash flow and make it more profitable.
Looking at the following chart; banks have been and are expected to continue to tighten their lending standards and nearing the peaks of the Great Financial Crisis and COVID periods. Businesses will be cut off from necessary funding and will need someone to turn to.
Source: St. Louis Federal Reserve (Condensed Time Frame)
Source: St. Louis Federal Reserve (Condensed Time Frame)
Of course, there are risks associated with MCAs. One of the biggest risks is that the business may not be able to repay the loan. This could happen if the business’s sales decline or if they experience other financial difficulties. If the business defaults on the loan, the MCA lender may take possession of the business’s assets.
Overall, MCAs can be a good investment for businesses that need quick access to capital and don’t qualify for traditional bank loans. However, businesses should carefully consider the risks associated with MCAs before taking out a loan.
Investors, however, can capitalize on the increased tightening of lending standards, coupled with our partners’ selective underwriting to capitalize on this mismatch in lending while participating in the returns of an asset class that has averaged 30%+ returns over the last five years.
We’ve selected this asset class as an opportunity for our investors due to the asymmetrical risk-return profile and the opportunity to provide you with passive income and the potential for upside growth depending on the share class you choose.
To reserve your spot, please go to https://pantheon.investnext.com , and submit your soft reserve. Please let us know if you have questions or would like to schedule a one-on-one conversation about this opportunity.
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