Merchant cash advances (MCAs) have become a popular funding source for small businesses looking for working capital. MCAs provide businesses with access to funds from their future credit card and ACH sales. However, to sell merchant cash advances as an agent or broker can be complicated.
How To Sell Merchant Cash Advances- Perfect Guide
It is critical for anyone getting started in the MCA sales business to fully understand the product, application process, and key factors that lead to deal approval and funding. Can you effectively educate business owners on MCAs, determine if they qualify, and help them obtain the capital they need?
While the MCA market has grown substantially in recent years, it remains a niche industry with some complexity. This makes specialized knowledge and expertise essential for success as an MCA sales professional. You must stay up-to-date with the latest MCA types, average funding amounts, approval rates, fees, and more.
Developing deep relationships in the network of MCA providers, small business service professionals, local chambers of commerce, and business communities is also key. But building knowledge and connections is not enough. You must build a professional sales process to generate qualified leads, educate your potential clients, provide them with options to choose from, handle comprehensive applications, and negotiate the best possible deal.
Build Your Knowledge
To sell MCAs effectively, you must build a deep foundation of knowledge about the product and process. You need to understand the different types of MCAs, including straight advances, factoring, portfolio advances, and more. Know the pros and cons of each so you can recommend the best option for a business’s needs.
Familiarize yourself with how MCA funding amounts and fees are calculated based on the business’s credit card and ACH sales. Stay up-to-date with average funding amounts, fees, approval percentages, and other metrics in the MCA market. Only then can you qualify leads properly and advise them on realistic funding possibilities.
Develop expertise in the MCA application process and underwriting criteria. Know what businesses need in terms of financial statements, taxes, bank statements, personal guarantees, and more to be approved. Recognize the key metrics funders use to evaluate eligibility and creditworthiness.
Learn to identify the characteristics of businesses that typically qualify for MCA funding and those that do not. Some industries like restaurants frequently use MCAs while others rarely do. Build profiles of the ideal and non-ideal candidates to guide lead prospecting and recommendations.
Understand the implications and rules around MCA repayments, fees, interest rates, terms, and penalties. Educate business owners on these obligations before pursuing funding so there are no surprises later on.
Keep learning through ongoing research, networking, and staying up-to-date with the latest legal and regulatory changes impacting MCAs. The MCA field continues to evolve, so constant knowledge-building is important for success as an agent or broker.
Build Your Network
Networking is key to generating quality leads and closing MCA deals as an agent or broker. You need to establish strong relationships with multiple reputable MCA providers, CPAs, attorneys, accountants, and other professionals that support small businesses.
Pitch to be listed as a preferred partner or preferred agent on the websites and marketing materials of reputable MCA providers. Get referrals from them when dealing with candidates who do not currently have an accountant or less significant financial advisors. Having multiple providers allows you to provide options to suit different client needs.
Develop close ties with local CPAs, accountants, attorneys, and other financial service professionals. Market your MCA services to their small business clients. Offer to co-host education events on financing solutions and credit requirements. Look for partnership opportunities like revenue sharing or lead generation programs.
Join your local chamber of commerce, SCORE mentoring program, women’s business center, and other networking groups focused on small businesses. Position yourself as a financing solutions expert and resource to members. Build brand awareness and acquire new leads through sponsoring or volunteering at events.
Cultivate relationships with editors and journalists focused on small business and finance. Pitch MCA industry perspectives, statistics, trends, case studies, or other content that would be valuable for their readers. Include links or calls to action driving people to connect for more information on MCAs or funding their companies.
Attend industry conferences and events focused on MCA providers, alternative financing, technology, brokerages, and related fields. Meet new partners, learn from speakers, get exposure through sponsorships or presentations, and take invaluable knowledge back to enhance your business.
Strong, strategic networking is how new opportunities and deals materialize in the MCA sales field. By developing relationships with providers, allies, communities, and industry players, you build connections and credibility, gain exposure, improve education, uncover new partnerships and ultimately drive more business. Networking, when done professionally, helps build an MCA career.
Generate High-Quality Leads
To achieve success selling MCAs, you require a steady stream of high-quality leads. Quality leads are those that are truly ready and interested in an MCA, have a reasonable chance at approval, and can convert into clients. They do not come easy and require consistent effort and the right lead-generation strategies.
Networking, cold calling, partnerships, and search engine optimization can drive potential new leads. However, the majority of your quality leads will ultimately come through personal recommendations and referrals from your professional network. Build your network actively as dedicated partnerships with advisers, providers, community groups, and businesses provide access to more referrals and introductions over time.
Develop a professional lead generation funnel to process potential new leads efficiently and help them become clients. Provide helpful information on financing solutions to educate them before formally qualifying as candidates. Stay in regular contact with promising leads to build rapport and ensure their availability when ready to move forward.
Not all leads will convert to deals. You need a comprehensive qualification process to determine if a lead is really a good candidate for an MCA based on their finances, credit, funding needs, goals, and commitment to move forward. Have a survey, discussion, or even a site visit if needed to gather enough information to make an assessment. Only qualify and dedicate resources to those leads with a high likelihood of success.
Educate qualified leads on different MCA options, requirements around each, fees, funding amounts, terms, penalties, and the process. This ensures their expectations and motivation are realistic before applying. Provide comparisons so they can choose the best fit, then handle the entirety of their application, documents, and approval process.
Some leads may require additional screening or research to strengthen before pursuing approval with a provider. Look for new partnership programs or promo rates for your leads from providers that can attract even hesitant or marginal candidates. Apply additional incentives only when anticipating enough lift in conversion to offset extra costs.
Close More Deals
Once you have qualified, educated leads ready to move forward, it is time to close deals by helping them obtain MCA funding. Close more deals by staying patient yet persistent, providing options to choose from, negotiating the strongest terms possible, and continuing support even after funding is approved.
Do not abandon leads if their application is initially denied. Work with underwriters to determine what is needed to strengthen the application and try again. Look for new providers with different criteria or requirements to potentially approve the lead. Stay in regular contact with the lead, provide additional guidance, and re-submit applications until funding is secured.
Present multiple MCA options based on the lead’s needs, credit, funding requested, and goals. Compare fees, rates, terms, and eligibility requirements of different providers so the lead can choose the best overall deal. Having options shows you are acting in their best interest, not just pushing one particular product.
Negotiate the most favorable terms possible, especially fees, before any final approval or signing of documents. Do small businesses any service by securing the lowest costs and impact on their finances? Experienced providers and underwriters know there are opportunities for negotiation and will work with you to earn the business.
Continue supporting leads even after an MCA is approved and funded. Check-in regularly, help them utilize the funding appropriately, reassess if more capital is needed in the future, and look for ways to expand the partnership. Assisted deals lead to repeat clients and strong referrals that fuel ongoing success.
Building a reputation as the most trusted resource for MCA funding through unparalleled support and value will make closing more deals a reality. Stay focused on lead and client success, not just individual transactions. With experience, your ability to navigate complex underwriting criteria, negotiate optimal terms, and turn funding into long-term partnerships will grow significantly.
Close and Future Outlook
Success in the MCA sales field, like any industry, takes dedication, hard work, and commitment to constant learning and improvement. Build knowledge, strengthen networks, craft a professional sales process, and maintain persistence through challenges as you work to grow an MCA career and business. With diligence, the rewards of a thriving, successful practice can be achieved.
The future of MCA sales is bright, but also uncertain, requiring close monitoring of trends. Technology innovations may introduce new MCA products, reshape underwriting criteria or transform how deals are generated and approved. Economic cycles could raise or lower average funding amounts, approval percentages, and demand for MCA solutions. Regulations may impose new rules impacting fees, terms, disclosures, or licensing. Stay at the forefront of changes to keep offering options and support your client’s needs.
While MCAs remain a niche opportunity, new segments within the industry likely await development. Areas such as international MCAs, portfolio MCAs for businesses with multiple locations, MCAs for nonprofit organizations, or MCAs combined with business cash advance solutions could emerge. Partnerships with companies providing complementary services also pose the potential for bundling MCAs with other financial, advisory, or business services. Look for innovative ways to expand the MCA solutions and value you provide clients.
Despite changes on the horizon, MCA sales will likely always remain an option for businesses seeking short-term working capital. For agents and brokers able to adapt to shifts while maintaining a focus on education, relationships, quality over quantity, and long-term partnership, the future of MCA sales as a career is extremely promising. With discipline and determination, you can build a thriving practice, achieve success and establish yourself as a trusted resource for business funding well into the future.