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Education

Fintech + MCAs: the savior of flexible financing tool based around
projected cash flow. So it makes sense
small business lending? to track this evolution against the
future of fintech.

In this article, I'll share insights
on how fintech will allow MCAs
to become more mainstream. I'll
also explore how—and why—SMBs
need to take advantage of the rise of
fintech-driven MCAs.
About MCAs

Creditworthiness and time in
business are major issues in SMB
By Chad Otar lending. MCAs allow lenders to focus
Lending Valley Inc. on another area: revenue. Whether a
business is established or has been
t can be tempting to put merchant cash advances (MCAs) in the "old operational for only a few months,
news" box and deem them unfit for the future-forward fintech sphere. revenue trumps longevity with an
And yet, here we are. MCAs are going stronger than ever, with a three- MCA.
I year growth in U.S. sales of $6.7 billion, according to Pymnts.com.
Lenders can examine the cash flow
MCAs might have emerged as a way to smooth the peaks and troughs of history of a business and use this as a
small and medium business (SMB) cash flow, but they've evolved to become a barometer of how much cash they can
advance. Because these figures are
instantly verifiable, the turnaround
time from MCA application to cash-
in-hand can be as little as a few hours.

REIMAGINE THE ART OF USAEPAY.COM Repayments are made directly from
credit card transactions—or in some
TRANSACTION cases, total cash sales—on a daily or
weekly basis, as a percentage of that
E-COMMERCE
RETAIL
MOBILEOBILE
M
period's gross sales.
The impact of fintech on MCAs
Fintech, AI, blockchain and IoT play
variable roles in all areas of lending—
none more so than with merchant
cash advances. In the digital era,
disruptive innovation bubbles up
from the bottom—a product with a
minimum viable feature effectively
grows its way up the food chain.
The MCA is this type of product: it
began as an inferior alternative to
traditional lending. It did, however,
have two major draws: speed and
flexibility.

Through various fintech applications,
lending speed and flexibility have
skyrocketed. Automated credit
models can be crafted around
machine learning, meaning raw
source information is translated and
analyzed in record time. Alternative
data sources can be mined to enrich—
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