One in 10 Small Businesses Trapped by High APRs of MCAs

Share This Post

Eight percent of small businesses applying for funding choose merchant cash advances, but the annual percentage rate (APR) on a merchant cash advance (MCA) can reach 300 percent

EL PASO, Texas - January 12, 2023 - (Newswire.com)

Leading invoice funding company Viva Capital says more than 160,000 small businesses sought funding through merchant cash advances last year, a decision that could prove costly and hinder their growth prospects going forward. Viva's latest report, "What is a Merchant Cash Advance (And Why You Might Want to Avoid It)," provides a cost breakdown and alternatives and is now live on VivaCF.net.

Viva pulls data from the latest Small Business Credit Survey, which finds that eight percent of small businesses applying for financing choose merchant cash advances. The figure held steady year-on-year after making a five-percent jump two years ago. 

"There's a clear link between the surge in MCA applications and denials for loans and lines of credit," explains Armando Armendariz, Director of Business Development and Partner of Viva Capital. "Approval rates for traditional funding methods plummeted by 15 percent in the same time span."

Armendariz notes that just 68 percent of those applying for loans and lines of credit are approved, and more than half of all small businesses don't receive all the funding they need. Merchant cash advances can seem like a simple solution due to the easy approval process, he says. 

"When a business owner hears that they'll only lose a small percentage of sales going forward in exchange, it sounds straightforward and affordable," Armendariz continues. "But, if they do the math, they'll see they're paying up to 300 percent APR. Other funding options top out at around eight percent. MCAs are considerably more expensive and can damage growth potential going forward."

Armendariz encourages businesses to examine the true cost of their funding options and find alternatives if their intended choices aren't a good fit for their growth objectives. Invoice factoring, for example, also has an easy qualification process and accelerates payments on B2B invoices instead.

Those interested in learning more about invoice factoring and other MCA alternatives are encouraged to request a complimentary consultation at VivaCF.net.

ABOUT VIVA

Founded in 1999, Viva helps B2B businesses of all types accelerate cash flow through specialized funding solutions like factoring, accounts receivable financing, and asset-based lending. Our simple qualification process makes it easy for small and mid-sized companies to get vital funding despite lack of credit or time in business. Additional information is available at VivaCF.net.

PRESS CONTACT
Armando Armendariz
915-615-6664


Contact Information:
Armando Armendariz
Director of Business Development
armando@vivacf.net
915-490-8773


Press Release Service by Newswire.com

Original Source: One in 10 Small Businesses Trapped by High APRs of MCAs

Related Posts

Statement from U.S. Secretary of Education Miguel Cardona on CDC Test-to-Stay Data

Statement from U.S. Secretary of Education Miguel Cardona on...

Carl Brown, TikTok Sensation and President of SimplyRFiD, to Host ‘Transforming Inventory Accuracy’ Retail Roundtable

Carl Brown, founder of SimplyRFiD and making inventory fun, hosts a weekly online roundtable where retail colleagues meet, learn, and contribute in a world class discussion on achieving inventory accuracy. The next roundtable is February 7 at noon, Eastern.

Carl Brown, TikTok Sensation and President of SimplyRFiD, to Host ‘Transforming Inventory Accuracy’ Retail Roundtable
Inventory Accuracy Roundtable with Carl Brown

Retailers meet in an discussion on Inventory Accuracy with RFID hosted by Carl Brown, President of SimplyRFiD

Carl Brown, founder and President of Simply RFiD, TikTok wonder, and RFID expert, hosts a weekly online roundtable "Transforming Inventory Accuracy." This roundtable brings up to six top retailers together to discuss how accurate inventory enables today's omnichannel supply chains - and, how to get there from here.

Quarterly inventories are obsolete. To compete today, inventories must be done daily or weekly.

Before RFID, the only choice was manual barcode counts that took days and were only 75-85% accurate (Source: Gartner Contemporary Retail Report, November 2021). Still, when RFID became viable around 2008, the value of RFID wasn't there because the concept of how to use a global accurate inventory didn't exist. Omnichannel and e-commerce are driving requirements for retailers. Store inventory must be connected to the web and it must be accurate.

This weekly roundtable explores the best practices for achieving 99% levels of inventory accuracy. "Store managers often think they have 95%+ accuracy - but, how do they know? Once RFID goes in, the truth is closer to 70%," says Carl Brown. "That's normal. It's impossible to measure without RFID - in this roundtable we discuss how to move from the unknown to the known, in an open format of sharing best practices and outcomes."

Retailers in previous roundtables include:

  • Nike
  • Adidas
  • Macys
  • Carters
  • Ralph Lauren
  • Urban Outfitters
  • Wal-Mart
  • Crocs
  • Dollar Tree

The next roundtable is February 7 at noon, Eastern. Roundtables are closed door. Press may apply to attend and audit, along with retailers at https://www.simplyrfid.com/mtb.

Carl can be reached for comment on TikTok, LinkedIn, and Twitter.

Contact Information:
William Montalbo
Vice President, Marketing
william.montalbo@simplyrfid.com
+1 703.343.1689


Original Source: Carl Brown, TikTok Sensation and President of SimplyRFiD, to Host 'Transforming Inventory Accuracy' Retail Roundtable

U.S. Department of Education Invites Applicants for Javits Gifted and Talented Program

U.S. Department of Education Invites Applicants for Javits Gifted...
green agriculture project
- Part of VUGA Media group -best seo company