One of the biggest items that we stress when you try to find merchant cash advance leads is that any info is good info. Is every MCA lead going to turn into a revenue stream? Of course not. But you never know when reaching out to someone and providing info could pay off down the line. Just because a business can’t (or won’t) take funding now doesn’t mean they won’t in the future.
Another reason to appreciate any and all MCA leads is because of the networking factor. Businesses might belong to a Chamber of Commerce or other trade organization. Once again, just because Company A isn’t in line for funding right now doesn’t mean their friends over at Company G couldn’t use some instant capital.
While any lead could turn into a potential client – should you put in some requirements to protect yourself when you find merchant cash advance leads? When a company like MCALeads Pro provides you a quality lead it means the company meets certain criteria. That being said, are you limiting your lending options and potential revenue by being too stringent? As stated, you never want to lose your money by being too free lending and open minded. You also don’t want to miss out on profit because you were afraid to take a risk.
What requirements you choose to look for in a potential borrower are completely up to you and may change on a case by case basis. Here are a few of the criteria that some of our past clients choose to value:
One of the criteria that always screams out when consumers try to find merchant cash advance leads is length in operation. It makes sense, the longer a company has been in operation the more established they likely are. Having been in business an extended period of time usually builds up a regular customer base. The company has proven to understand their niche and has worked out the kinks that come with new ownership.
Is providing a merchant cash advance to an newly established company a deal breaker though? Once again, this is what becomes a personal preference. Many of the established companies might not have seen the light of day if not for some early funding. Every detail for success could be in place (business plan, market niche, creative development) except for capital. It’s a slippery slope but nobody said the merchant cash advance niche would be easy.
Are you going to lend more towards small businesses or do you want to provide capital to larger scale operations? This is another important criteria for those who want to find merchant cash advance leads. You might receive faster payback times with smaller scale companies, but of course the amount won’t be as high. There’s less risk with smaller revenue companies, but less profit as well.
You shouldn’t necessarily eliminate small revenue merchant cash advances. After all, the reason the lower scale businesses may need capital is for growth. Lower revenue now doesn’t necessarily mean it’s going to stay that way. At the same time, you have to ask why a company with high revenue needs to round up extra capital? It’s not necessarily a negative, but you should do your homework nonetheless.
A company’s revenue is one identifier when you find merchant cash advance leads. After all, money coming in has a direct correlation to the money going back out. Along those same lines, another criteria you might want to know with a merchant cash advance company is if they have existing loans. The great thing about MCA is that you are paid back directly from credit card transactions. That being said, funds can get stretched thin for the business when you are just one of 12-15 creditors.
One thing you want to make sure of when providing a merchant cash advance is that the business is a separate entity. This means they should ideally be an LLC, have separate business accounts, etc. Bankruptcy regulations are in place to protect corporate lenders. You can potentially get into some tense situations if you provide a loan to a business operating under a sole proprietor / individual status.
Merchant cash advances are repaid automatically based on credit card payments. That being said, some lenders might require some sort of collateral to be put down just in case the sales do not come through. Once again, this is another entirely personal decision but it’s one that should be evaluated nonetheless.
How much do you factor in a company owner’s history when you find merchant cash advance leads? For some MCA lenders, credit score presents a magic number where certain minimums must be met no if’s, and’s, or but’s. Other MCA entitities prefer to judge a merchant on their plans and their future instead of their past. In many cases a low credit score is the reason that the merchant couldn’t obtain funding from a financial institution. This is why many in the MCA niche have found that they might need to be a bit lenient when it comes to evaluating a business owner’s credit score.
One of the last major criteria you can set out when you go to find merchant cash advance leads is the payback terms. Are you going to give a company up to 36 months to pay back the loan so that they can continue to build and expand their organization? Did you provide the advance for more immediate short term revenue? For minimum / maximum payback terms you need to understand your own goals.
As you can see there is a lot that goes into qualifying a lead. MCALeads Pro is here to help you through the process.