Merchant Cash Advance Guide

AdvanceMe Review

2009-02-15T16:20:00.000-08:00

AdvanceMe is a merchant cash advance provider that pioneered the business more than 10 years ago. In this review of AdvanceMe, we'll look at the company's history, its management team, and review the financial products it offers to small businesses.

AdvanceMe's Corporate History

AdvanceMe was founded in 1998 as the first merchant cash advance company. Since then, it has supported more than 20,000 business in transactions from all 50 states and involving companies in more than 500 different SIC codes. Here's how AdvanceMe describes its transactions:

Your business sells us a portion of its future credit and debit card sales at a discount. Through an automated process, we retrieve our portion of each credit card sale as it is settled. The percentage we retrieve from each sale is fixed for the life of the funding - we get paid when you get paid.

AdvanceMe's Management Team

Glen Goldman is the Chief Executive Officer of the company. He joined the AdvanceMe in 2001 and has over 15 years experience in the finance industry. Other management team members include:

Tom Burnside, President and Chief Operating Officer. Burnside had 11 years of experience in the credit card processing industry prior to joining the company in 2000 from the Hogan Services Division of First Data Corporation where he was General Manager.

Mark Lorimer, Chief Marketing Officer. Lorimer joined the company in 2006 from Alchemy Business Group, a business services and investment firm he founded, which focuses on business development and organizational alignment strategies.

Rich Ferrante, Chief Financial Officer. Ferrante joined AdvanceMe in 2002, serving as Controller of the company prior to his promotion to CFO in 2003. He is responsible for all accounting, treasury and tax concerns, including Sarbanes-Oxley. He is also the CFO of CAN’s subsidiaries, AdvanceMe and AMI Merchant Solutions.

Franck Fatras, Chief Technology Officer. Fatras joined the company in 2000 and brought AdvanceMe more than 13 years experience in system and network architecture; building network infrastructure and applications for national and global use. He is responsible for directing information technology, information systems, information security and facilities.

Parris Sanz, Esq., Chief Legal Officer. Sanz joined the company in 2004 with more than 11 years of experience as a corporate, securities and transactional attorney. Before joining AdvanceMe, he was a senior executive and General Counsel of a specialty pharmaceutical company, where he was responsible for all legal matters, including securities offerings, corporate transactions, patents/intellectual property and commercial agreements.

AdvanceMe's Merchant Cash Advances

According to its website, a business can qualify for a cash advance if, among other things, it has a minimum monthly volume of $5,000 in credit card transactions. This is required because the cash advance is repaid by directing a certain percentage of credit card sales to AdvanceMe each month. In addition, to qualify a business must have been in operations for at least one year.

Merchant Cash Advance Industry Standards

AdvanceMe has been an advocate for industry standards for some time. In 2007, it published a White Paper calling for the industry to regulate itself, or risk being regulated by others. Much of the paper dealt with the retrieval rate.

The retrieval rate is the percentage of monthly credit card sales paid to the merchant cash advance provider. AdvanceMe advocates a cap on the retrieval rate of 9%. Businesses in the market for a cash advance should pay special attention to the retrieval rate and the circumstances under which the provider can change the retrieval rate.

List of Merchant Cash Advance Providers

2009-02-05T09:39:00.001-08:00

The merchant cash advance industry is growing, particularly in difficult financial times. Due in part to the industry's ability to streamline the loan application process and the lack of collateral required, merchant cash advance providers are garnering more and more of the small business short term loan market.

On this page you will find a comprehensive list of merchant cash advance providers. We will continue to update this page as new business cash advance providers enter the field.

AmeriMerchant LLC
www.amerimerchant.com
475 Park Avenue South, 16th Floor
New York, NY 10016
Telephone: (800) 267-3790
Fax: (646) 349-3272

Business Financial Services LLC
www.businessfinancialservices.com
5852B Faringdon Place.
Raleigh, NC 27609
Toll Free: 877-411-6691
Fax: 866-234-8797

Capital for Merchants LLC
www.capitalformerchants.com
(866) 506-8568

First Funds LLC
www.firstfundsonline.com
Phone: 800.221.8991
Fax: 646.744.0670
E-mail: CustomerCare@firstfundsonline.com

Greystone Business Resources Corp.
www.greyco.com
Greystone Business Resources
665 Molly Lane
Suite 130
Woodstock GA 30189
Phone: 866-813-0616
Fax: 678-813-4701

Merchant Cash and Capital LLC
www.merchantcashandcapital.com
450 Park Avenue South
11th Floor
New York, NY 10016
Toll Free: 1.866.792.9366
Phone: 212.545.3180
Fax: 212.656.1080

Merchants Money Tree LLC
www.merchantmoneytree.com
Merchant Money
2855 Mangum Rd #303
Houston, TX 77092
Phone : 888-290-0617
Fax : 877-517-7472

RapidAdvance LLC
www.rapidadvance.com
RapidAdvance LLC
7316 Wisconsin Avenue
Suite 450
Bethesda, MD 20814
Phone: 1-877-467-2743
Fax: 240-514-2010

Reach Financial LLC
www.reachfinancial.com
Reach Financial, LLC
2 Soundview Drive
Greenwich, CT 06830
Phone: 203.862.9400
Toll Free: 800.506.3154
Fax: 203.549.0440

Sterling Funding LLC
www.sterlingfunding.com
P.O. Box 20427
Tampa, FL 33622-0427
(866) 456-5638

AdvanceMe, Inc.
www.advanceme.com
2015 Vaughn Road
Kennesaw GA 30144
Telephone: (770) 590-9822
Fax: (770) 590-1335

Merchant Cash Advance

2009-02-05T04:24:00.000-08:00

A merchant cash advance is a short term business loan typically secured by the company's future credit card sales. Sometimes referred to as MCA, the basics of these short term business loans are fairly simple. An MCA provider extends cash to a business in return for an agreed upon percentage of future credit card sales. For example, a business may get a $20,000 advance at a cost of $27,000. The cost is repaid generally over six to ten months through the business' credit card sales.

The percentage of credit card sales that a merchant cash advance company will take to repay the advance varies from one provider to the next. One factor that an MCA provider will consider is the profit margins of the business receiving the loan. For those companies with thin margins, the percentage of credit card sales taken each month often is less. Regardless of the percentage, however, the full cost of the advance must be repaid.

Typicall, merchant cash advance lenders collect between 8% and 10% of gross credit card sales until the cost of the advance is repaid. With companies operating with thin margins, however, the percentage can be as low as 1%. According to a Business Week article, AdvanceMe has a self-imposed limit of 9%.

Like most short-term loan providers, the merchant cash advance industry has not been without its opponents. Many believe that these purchases of future sales are really loans at illegal interest rates. In 2007, for example, a federal court in California granted summary judgment against a company, ruling that the advances were really loans subject to California's interest rate cap for unlicensed lenders (10%).

Recognizing that the industry is not currently regulated, some merchant cash advance providers have formed the North American Merchant Advance Assoication. The NAMAA website describes the organization as follows:

The North American Merchant Advance Association (NAMAA) is a not-for-profit trade association representing organizations in the United States and Canada that are in the business of providing working capital advance products based on credit, debit or other card and electronic payment-related revenue streams to small and mid-sized businesses (currently referred to as a "Merchant Cash Advance"). NAMAA provides guidance and helps to influence and shape the merchant cash advance industry through leadership, education and the sharing of information.

The board of directors of NAMAA is made up of executives from four Merchant Cash Advance providers: Reach Financial, LLC, RapidAdvance, LLC Business Financial Services, LLC, and Amerimerchant, LLC.

Ccash advances to businesses began about 10 years ago with with a company called AdvanceME, then located in Georgia. In its first year of operations, AdvanceMe advanced less than $10 million to businesses. Today there are 50 or more MCA providers, who advance a combined total exceeding $700 million a year.