subject: Checking Out A Merchant Cash Advance Agent [print this page] One aspect to comprehend about the practice of providing a merchant cash advance is that it isn't as tough as normal bank lending is. When you take out a merchant cash advance, you are basically selling a percentage of the future Visa-MasterCard sales from your business. As such, this is viewed as a business-to-business arrangement, which is off the hook from rule by ordinances such as the Fair Debt Collection Practices Act, Electronic Funds Transfer Act, and the Truth in Lending Act.
With that being mentioned, the merchant cash advance product is a industry that is able to provide merchants funds that in other ways may be hard or impossible to get. But since it is still a pretty unregulated product, you must take precautions on your own to avoid predatory companies. The North American Merchant Advance Association (NAMAA) has been formed by a consortium of merchant advance companies as a self-regulatory organization (SRO), like the Financial Industry Regulatory Authority is an SRO.
Before doing business with a merchant cash advance company, refer to the NAMAA to find out if they are a member, or if NAMAA is aware of any unsavory things about them. You may also want to check with with the U.S. Federal Trade Commission to view if there have been any bad reviews or cases brought against the provider.
Before you agree to the terms of any contract with a merchant cash advance provider, be certain to read and comprehend the language of the agreement. If you accept a arrangement with unfavorable terms, you will have very little opportunity to fight it. Most often, you will fill out an application with a broker that will work to find a provider with the most favorable terms for your scenario.
This application, or even an application directly with a merchant cash advance provider, is no replacement for your contract; be sure to get a copy of your merchant cash advance contract before you agree to anything. Armed with this ammunition, you will be most able to determine for yourself the fairness of any arrangement you enter into.
by: Daniel Samoohi
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