Alternative lending has been redefined by merchant cash advance providers. Their prompt and reliable nature has attracted many of the small business owners to consider them for financial bailouts. Direct money lenders, who provide MCA loans to small businesses, have increased in number but they are yet to reach all small businessmen who need MCA loans. This can be bridged by the independent sales organizations (ISO) which form a key link between the direct money lenders and the small businesses.
Independent Sales Organizations
Independent sales organizations usually bag sizeable and decent commissions for the deals they broker between the small businesses and the direct money lenders. This could be explained by the high-interest rates that are charged on the MCA loans. Interest rates on MCA loans usually range from 10 to 40% depending on various factors, and from this the ISOs are given a decent amount of the total interest rate. Besides this most of the direct money lenders cover all the costs during linkage and to the point of issuance of the MCA loan.
How Does Merchant Cash Advance Work?
For a business to qualify for an MCA loan, they need to have been in business for more than a year. The revenue the client’s ISOs refer to direct money lenders can generate is a key determinant of whether their MCA loan applications will be considered or not. Most of the direct lenders prefer to work with small businesses that can generate at least $10,000 on a monthly basis.
The loan application process will require that the small business that the ISOs has the linked the direct money lenders with provides their; financial statement, a copy of the history of their credit sales as well as their estimated credit sales in the near future. It is good to mention that most of the cash advance direct lenders don’t require any form of collateral during the loan application process. They also make room for the business with bad credit which most of the lenders will shy away from.
The repayment period for the MCA loans is pretty sustainable. ISOs need to see to it that the small business will be comfortable with repayment period which ranges from at least 3 months to about 12 months. During this time, the small business will have to remit at least 10% of their daily credit sales. The beauty about this schedule is its sustainability as the business will be left with enough cash to keep going through this will be expensive in the long run.
ISOs have a critical role of connecting small businesses with direct money lenders; they are closer and have a wider access to many small businesses which are needy. They can also find suitable and prompt direct money lenders to provide the much needed financial assistance to these businesses. The commission rates that they will earn are quite attractive and they don’t even spend a dime while making the MCA loan deals.