The merchant cash advance industry seems to be nearing some sort of transformation period if you will... I've been looking at the industry from two lenses and the picture doesn't look that pretty.

The two drivers of what I presume to be the ultimate "transformation" of the industry are:

1. Failure to Grow.

According to Bloomberg in 2015, market penetration stood around 1%. This is the same number as 2013 and 2011. However, the industry size has expanded - a ton. How do you grow an industry while the market fails to expand? We all know the answer.

Additionally, fewer and fewer businesses are starting. So, supply of merchants in this market that has failed to expand is dwindling. Finally, there's a massive recession nearing I think Goldman pegs it at a 50/50 shot, I think it's more like 100%


2. Low Grade "Professionals."

Anybody off the street can become an MCA broker almost literally. That has attracted some pretty shady characters. I get an e-mail from a scumbag a day, almost literally. Nonetheless, the average independent MCA broker relies on the following devices to survive:

  • Lying & Con Games: In this case they're mostly trying to con merchants out of fees, other brokers out of deals, and marketing companies / lead vendors out of leads.
  • Inflated Egos: When you have no real skill or anything of real value to offer society, you inflate your own ego I guess. Most small time, mom and pop brokers rely on ego to maintain their self worth. So in this sense, they actually take pride in stealing, conning, or lying to folks. When this scum bag behavior works, it boosts their ego. "My scumbaggery just got me a buck! I'm good at this scum bag stuff, man did my ego just take a boost!" It's a sick and pernicious cycle.


To be fair, not all small time brokers have egos. They have no pride and thus they will beg, plead, and offer all sorts of things that have no value for help getting ahead. These are often fun for me to deal with.

They'll beg me for leads and I've recently been telling brokers like this to send me a video of them on all fours barking like a dog, and tag it with their ISO name / logo. Then, I'll send them leads. I know for a fact that AT LEAST one will take me up on this because it seems everyday the desperation level is getting higher and higher..

What do you guys think? Where do you see the industry in 2 years?