Andrew Altschuler, Vice President of Sales at AmeriMerchant, was the first employee hired at the merchant cash advance (MCA) provider when it was founded in 2002. Back then, only AmeriMerchant Chief Executive Officer David Goldman and Altschuler were on board; now the company has a staff of 75 based mainly in New York, with a satellite office in San Francisco.
MCA is a relatively simple proposition: in exchange for providing, say, $75,000 in upfront capital to a merchant, AmeriMerchant is paid back $100,000 over time from the merchant's bankcard receivables, Altschuler said. AmeriMerchant gains a 15 percent profit on the investment, and the merchant enjoys working capital that doesn't involve interest rates, fixed monthly payments and the penalties that come with bank loans.
"To me, it's that flexibility," Altschuler said. "We're taking a percentage of a merchant's sales to pay us back. So if they do slow down significantly, the pay-back slows down significantly. ... That's the most paramount of the benefits of the program."
Because merchants do not have to put up collateral to get MCA financing, AmeriMerchant shoulders the risk. It is why the company does its homework. "You name it; we've seen it," Altschuler said. A merchant whose bank statements show $1,000 withdrawals to pay off gambling debts "typically isn't a good candidate for our program," he noted.
A merchant who calls on a Monday looking for a cash advance to pay employees that Friday is also not a good prospect, Altschuler added. "It's the guys that call us on a Monday and they say, 'Hey, Friday there's a shipment coming in of shoes from Italy that I can buy for $15,000, and I know that I can turn around and sell them in six months for $30,000. ... That makes a lot of sense for us."
Altschuler said selling MCA is a different animal: it's not selling processing services; it's "selling money." MCA agents need patience and persistence, as the sales cycle is typically longer than a bankcard processing sales cycle.
"It takes a little bit of a special personality in following up because every business needs money at some point in the given year," Altschuler said. "You have to keep following up with these merchants. But, at the end of the day, the agents really have a great opportunity to make a very nice commission upfront by getting the deal.
"About 50, 60 percent of the merchants renew. So there's always the residual component on the re-up that the agents can make."
It's the success stories Altschuler loves. He said, "We always hear about a guy that has one or two locations, and then he wants to get that third location. ... If he can just get into that third location, now he really is starting to get himself to that next level. If we can help guys like that, that's exciting."
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