Investing in the Future: Merchant Cash Advances Offer a Win-Win

April 15, 2023

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Investing in the Future: How Merchant Cash Advances Offer a Win-Win for Businesses and Investors

As banks tighten lending criteria in the aftermath of the collapse of Silicon Valley and Signature Banks, small business owners are struggling to secure financing, leading to missed growth opportunities and potentially exacerbating an economic slowdown.

However, an alternative financing solution has emerged to help keep businesses afloat: Merchant Cash Advances (MCAs). This solution not only offers a lifeline to businesses but also presents a unique investment opportunity with robust potential returns for those who choose to become MCA investors.

Small businesses are already feeling the squeeze

The impact of the banks’ failures can be seen across almost every industry. NPR recently reported that businesses like Piper Whitney Construction in Houston and SouthCo Insulation in Florida are experiencing difficulties in securing loans to grow and expand their operations.

The tighter purse strings are a result of increased caution by lenders due to the recent bank collapses and the Federal Reserve’s aggressive interest rate hikes.

MCAs bridge the gap

This is where MCAs come in. By providing businesses with a cash advance based on their future credit card sales, MCAs offer a flexible financing solution that doesn’t rely on traditional bank loans. As banks become more risk-averse, MCAs are stepping up to help businesses get the funds they need to expand their operations and take on new projects.

Person sliding a stack of hundred dollar bills into a jean pocket Investing in the Future
MCAs bridge the gap left by banks. Photo by Sasun Bughdaryan on Unsplash

But MCAs aren’t just a saving grace for businesses—they also offer a fantastic investment opportunity. If you feel like saving main street whilst also adding welcome diversification to your portfolio and potentially seeing some solid returns, MCA investing might be for you.

Demand is growing

With banks cutting back on loans, the demand for alternative financing solutions like MCAs is likely to keep growing. We are already seeing this over at Supervest. Demand for our capital is going up which means more investors are needed to meet that growing demand.

And, increased demand could lead to higher returns for those who choose MCAs when Investing in the Future, making it an attractive option if you’re looking to diversify your portfolio and maybe bring in some extra cash flow.

The nitty-gritty of cash flow uplift through investing in MCAs is covered in detail in our recent ‘Ultimate Guide to Investing During a Recession’.

However, we also think it’s important to acknowledge that investing in MCAs is not without its own risks – just like any investment. The main concerns are around if businesses fail to generate enough revenue to pay back the advance. In this case, some businesses might default on their payments.

A dandelion head with hundreds of seeds
MCAs have the potential to help keep a lot of businesses running. Photo by Aaron Burden on Unsplash

The actual rates of default vary, and we also have strong loan collection procedures in place for delinquent deals. You can talk to us about this in detail whenever you like. We take a lot of pride in being one of the most transparent MCA investment platforms in the industry.

Huge potential

The current economic landscape, with the ‘R-word (recession) looming large, has created a really favorable environment for MCAs to thrive as a financing solution for small businesses.

With banks continuing to tighten lending criteria, the demand for alternative sources of funding is only set to grow, offering a potentially lucrative opportunity for MCA investors to reap substantial returns Investing in the Future.

While the current economic climate may be uncertain, one thing is clear: MCAs have emerged as a vital lifeline for businesses in need and a promising investment prospect for those who want to seize the opportunity.

If you want to get started with MCA investing, you can do that here.

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