ANAHEIM, Calif., Jan. 7, 2013 /PRNewswire/ -- Wrapping up a year of impressive growth, American Finance Solutions (AFS), one of the fastest growing merchant cash advance companies for small- and mid-sized businesses, announced today its 2013 predictions for small business financing. AFS predicts that the merchant cash advance (MCA) industry will grow by approximately 40% with the South and West regions experiencing the higher growth rates, banks will slowly open their vaults and MCA practices will shift to a client-centric model focused on integrity and ethics.
The company experienced record growth in 2012 with a 60% surge in revenue. Considered a relatively new industry, AFS and other MCA companies have experienced growth due to their ability to offer more accessible financing than traditional institutions to a variety of small businesses. Banks typically turn down more than 85% of small business loan candidates and require stringent criteria such as numerous assets and high personal credit scores, factors many small business owners do not have. Alternatively, AFS applies a holistic approach to determine an approval and financing amount based on a business's overall health.
"When banks stopped lending to many small businesses during the recession, our business grew," said Scott Griest, chief executive officer, American Finance Solutions. "AFS sees many indications that the economy will continue to improve gradually in 2013, which means that small businesses will need capital for expansion, repairs, marketing and inventory. We believe that the merchant cash advance industry will see explosive growth in the next year."
AFS' predictions for small business financing in 2013 include:
1. The MCA industry will continue to see explosive growth over the next year.
- AFS estimates that the MCA industry grew by roughly 40% this past year and expects the same if not higher growth in 2013.
- Many growing business types are seeking alternative financing solutions such as health care providers, IT services & outsourcing and temporary staffing agencies.
- MCAs are doing a better job of evaluating risk parameters than traditional lenders. They are also offering more competitive, palatable costs for the businesses to receive funding.
- Consolidation and emergence of dominant players in the MCA space are the theme for 2013. Larger players have the capital to invest in systems and processes that better measure client risk to lower bad debt. The larger institutions can also lower their internal cost of capital to aggressively price their product offering and capture market share. For clients, this means a faster application process, competitive rates and better customer service.
2. Banks are slowly opening their vaults to small businesses.
- The good news is banking institutions will slowly increase funding to small businesses, however they are still very risk averse. They usually require that a business has a successful track record for multiple years and that the owner has a high personal FICO score of 680 or higher.
- If a business is new or the owner does not have a high credit score, an MCA remains a more viable option for financing. Other factors that MCA companies consider include: type of business, financial health of the business, previous months' cash flows, and seasonality of the business.
3. The West and South regions are experiencing the most small business growth nationally.
- Western and Southern businesses are experiencing the highest growth within AFS via applications, an indication of the overall small business growth climate nationwide.
- The South experienced the most growth with an average of 36% in AFS applications during 2012. Western businesses averaged 30% growth. The regions are based on the 2010 U.S. Census map.
- Conversely, the Midwest and Northeast are showing slower signs of growth with 20% in the Northeast and 15% in the Midwest.
4. Sales tactics & resellers have become more client-focused and ethical.
- The industry has changed due to the recession. Brokers who take a consultative approach and align their needs with the client are succeeding. Brokers that sell merchant cash advances are now expected to be committed to their business, well versed in all products, professional and ethical.
- The days are over when any broker or sales rep could sit in a seat, make phone calls, and close cash advance deals with only basic knowledge of the products. Big boiler room call centers are closing. As competition heats up, the days of big commissions with little effort are gone. Success will go to the sales professionals who take the time to understand the small business owner's needs and focus on providing a financing solution that will endure not only for today but for years to come.
About American Finance Solutions
American Finance Solutions (AFS) in Anaheim, CA is a top provider of merchant cash advances to small- and mid-sized businesses. Since 2006, AFS has provided thousands of business owners in all 50 states with working capital. Business owners in the restaurant, retail and other service-based industries use AFS capital to renovate, purchase new equipment and supplies, fund marketing campaigns, and manage unexpected or seasonal expenses. For more information about American Finance Solution's innovative working capital solution, call toll-free 1-800-760-5516 or visit www.AmericanFinanceSolutions.com.
JCUTLER media group
SOURCE American Finance Solutions