Making $$$ Off The Credit Crisis
Forbes:
When credit gets tight, the vampires come out.
Now feasting on small businesses is a cadre of “merchant cash advance” (MCA) shops. These lenders of last resort–which started popping up after the tech crash in 2001–give small businesses cash today in return for a percentage of their future credit card sales. Annualized cost of that precious capital: in the neighborhood of 70% to 90%.
Usurious as that sounds, the MCA business is booming. These lenders typically attract entrepreneurs with tattered credit ratings, but with money tight all over, the quality of MCA borrowers is on the rise.
“In the past three months, we’ve been working with customers that would have had other means in the past,” says Tim Irish, owner of Chula Vista, Calif.-based Global Swift Funding. “They’ve been coming to us because [traditional lending] sources have dried up.”
Here’s what all the fuss is about: Unlike a loan–which comes with a fixed coupon […]
Original post by Rich and software by Elliott Back