PIRS Capital talks about cash advances to traders

Small business use of alternative financing platforms is slowly on the rise. While Federal Reserve data shows banks big and small still dominate online lending platforms when it comes to small businesses seeking financing, the Fed has seen a steady increase in the percentage of entrepreneurs who first look to an alternative lender.

Merchant cash advances (MCA), however, are not at the top of the list. Only 7 percent of small businesses that applied for financing last year have turned to a merchant cash advance, a loan product known for its high interest rates and a quick source of cash for businesses on the verge of collapse. financial ruin.

Today, however, Andrew Mallinger, COO of the merchant cash advance platform PIRS Capital, said entrepreneurs are seeing the MCA in a new light.

“People were wary of what it was, but over the past five years customers have told us about using [financing] for expansion and growth, hiring, inventory – rather than “I need $ 50,000 in my account by Friday or I’ll close my doors,” Mallinger told PYMNTS in a recent interview. “It’s cool for us because we have a better choice of people we work with in terms of clients. He’s a more sophisticated merchant, not one who’s in a panic or frantic, but one who has an opportunity and might just need a little more money to get them overboard.

Today, a new challenge is emerging for the MCA market – and for alternative lenders of all kinds.

Alternative lenders have emerged as more agile businesses than traditional banks when it comes to digital innovation, offering self-service portals and online application processes. But small businesses value the relationship they have with their banks – and, according to Mallinger, alternative lenders must meet that need for advisory services.

“Not every month is the same for these small businesses, and the closer we have to them, the more they trust us,” he said.