Strategic Funding Source Names Stephen Lerch Chief Financial Officer
March 10, 2015NEW YORK (March 10, 2015) – Strategic Funding Source, Inc., a New York City-based provider of financing options to small and midsize businesses (SMB), today announced that Stephen E. Lerch has joined the company as Executive Vice President and Chief Financial Officer.
In this role, Lerch will be responsible for all aspects of the company’s financial operations, including enhancing fiscal capabilities, identifying new investment opportunities and executing growth plans. He will report to Strategic Funding Source Chairman and CEO Andrew Reiser.
With more than 17 years in various C-suite roles with technology-based companies in both the public and private sectors, Lerch brings an extensive range of expertise in finance, revenue generation and operations management to Strategic Funding Source. Most notably, he is a veteran of the small business finance and marketing industry, having worked for more than seven years as CFO and COO of Rewards Network where he helped pioneer the early successful growth of the alternative lending marketplace. Prior to that, Lerch was a Partner at Coopers & Lybrand, now PwC. He is a graduate of the University of Notre Dame.
“We are thrilled to welcome Steve to the Strategic Funding Source team,” said Reiser. “With his immense financial, operational and industry specific experience, Steve will play a key role in advancing the way we do business and drive the company’s growth.”
“I am extremely pleased to be joining Andy and the talented management group at Strategic Funding Source,” Lerch commented. “With the best reputation in the industry, the premier underwriting and syndication platform and an excellent equity partner in Pine Brook Partners, Strategic Funding Source is extremely well-positioned to take advantage of the tremendous growth opportunity already underway in small business financing.”
About Strategic Funding Source, Inc.
Strategic Funding Source finances the future of small businesses utilizing advanced technology and human insight. Established in 2006, the company is headquartered in New York City and maintains regional offices in Virginia, Washington state, and Florida. The company has served thousands of small business clients across the U.S. and Australia, having financed over $800MM since inception. Visit www.sfscapital.com to learn more about Strategic Funding Source, its financing products and partnership opportunities.
2014 Starts off With a Case of Red bull
January 10, 2014
Woah, slow down there fellas. Let us digest one thing at a time. We’re not even 2 weeks into the new year and already we’ve learned that:
CAN Capital raised another $33 Million (but that they didn’t need it?)
Merchant Cash Advance was the the feature story on the front page of the Wall Street Journal. Seriously…
Bloggers are learning about this industry for the first time. They’re having a bit of trouble getting it right.
PayPal, which just recently kicked off its own merchant cash advance program (or as they call it, their Working Capital Program) has already issued 4,000 advances.
Regulators are freaking out over the use of social media information in loan approvals.
DailyFunder will begin mailing out the first alternative business lending magazine a week from today. It’s free so sign up!
The Debit Interchange Fee Battle Continues…
February 7, 2012It’s the story that won’t ever die. First it was Dont Make Us Pay and now it’s Where’s My Debit Discount? It’s the latest campaign in an epic struggle between the big banks and congress. Unless you’ve been in a coma for the last two years, the Wall Street Reform and Consumer Protection Act passed on July 21, 2010 and it granted the Federal Government authority to regulate debit card interchange rates. In the year that followed, billions were spent by lobbyists to either diffuse the law or make it stick.
The law has been in effect for several months now but it seems the war isn’t over. The Electronic Payments Coalition is back on the campaign trail to repeal the Durbin Amendment. This time they’re offering proof that consumers are not receiving the savings they were promised.
Without recapping all of the particulars, the news was rampant with misinformation and the chronology of events is difficult to remember. That’s why we have memorialized it with articles that covered the developments of it since December, 2010. How did the war play out? Read below:
Electronic Payments Industry Changing Forever – All points bulletin | December 17, 2010 | In it, we slammed the Federal Government and Senator Dick Durbin for a law we believed would lead to the extermination of the entire banking system. We predicted that rewards on debit cards would immediately disappear, as would the entire concept of debit cards themselves over time. We also surmised that quality, fraud protection, and assurance would suffer.
Debit Card Costs May Be Put on the Consumer – Don’t Make Us Pay | February 18, 2011 | We discovered Dontmakeuspay.org, an organization representing consumers in the fight against debit fee regulation. We encouraged people to sign up.
Congressman Steve Israel Replies to Our Concerns About Debit Card Reform | February 22, 2011 | We signed the dontmakeuspay.org petition and received a letter back from Congressman Steve Israel.
Say Goodbye to Debit Cards | March 11, 2011 | We acknowledged that our predictions were coming true. JPMorgan announced that consumers would likely face a spending cap of $50 – $100 per purchase when using their debit cards.
Debit Interchange Fee Study Act: A Few Good Senators Try to Stop the Madness | March 17, 2011 | At this point our inbox had filled up with emails from people accusing our website of being a secret front for the major banks. The term ‘astroturfing’ came up more than a few times. In our article on this day, we reminded the public that banks employed millions of average Americans, and that they would likely be the ones to suffer if regulations forced monetary losses. We praised the Senators who were trying to muster up support for a bill to put the Durbin Amendment on ice for a few years, while the impact of reform could be studied further. The bill was not successful.
Debit Card Rewards Go the Way of the Dinosaur | March 23, 2011 | JPMorgan announced they will terminate rewards on debit cards for all of their customers as a result of the Durbin Amendment. This affirmed one of our original predictions.
Wells Fargo, Chase, SunTrust Cancel Debit Rewards Program | March 28, 2011 | More of the big banks followed suit.
Interchange Regulation and Reduction | April 16, 2011 | We presented evidence that reform would fail by outlining what happened in Australia when they enacted similar regulations ten years earlier. Small businesses did not save money and consumers did not benefit.
Debit Card Fee Reform is Gaining Steam in Canada | April 18, 2011 | Inspired by the U.S., The Canadian Government Begun Taking Another Crack at Limiting Debit Interchange Fees.
Save My Debit Card Video Finalists | May 9, 2011 | We covered the results of the competition held by dontmakeuspay.org. Some of the videos made by consumers to save their debit cards were pretty funny.
Debit Card Fee Reform to be Finalized June 29 | June 28, 2011 | We made our final prediction on what the interchange cap will be.
Blackjack! 21 Cent Debit Card Interchange Fee Plus 5 Basis Points | June 30, 2011 | Regulations were written as Federal Law. Many sections of the original legislation were clarified, specifically that the fee cap is limited to interchange, the amount card issuing banks make per transaction. There is no cap on the fees that retailers pay at the point of sale. The only party that appears to have been affected are the card issuing banks. Acquiring banks and merchant service providers are not required to lower fees or to pass down the savings to retailers.
And the Misinformation Continues | July 12, 2011 | BusinessWeek had just featured a story about a small restaurant owner that was thrilled that her debit card fees would soon be only 21 cents per transaction. We blasted the story as being factually incorrect since the law did not place any cap on the point of sale. We highlighted the fact that so much misinformation had gone around, that retailers did not realize that interchange fees are the fees acquiring banks pay to card issuing banks. Merchant service providers still control the amount retailers pay. They are not required to share the savings at all. Our e-mails to BusinessWeek did not receive any response.
15,000 Exempt From The Debit Card Interchange Fee Standards | July 14, 2011 | 15,000 banks were apparently exempted from the debit card reform law because they had less than $10 billion in assets. It becomes evident that the law will have strange consequences since it only applies to the largest banks.
Don’t Make Us Pay Goes Quiet | August 7, 2011 | The dontmakeuspay.org consumer movement appeared to have been a secret front for the major banks. A closer look revealed that there may never have been a consumer movement at all.
Revenge for the Durbin Amendment | October 3, 2011 | Bank of America announced a plan to charge their customers a $5 monthly fee to use a debit card.
Don’t Make Us Pay is Back At it Again | October 21, 2011 | Months after the “consumer movement” disappeared, it appeared to rise again when they sent out a mass e-mail.
Where’s the Debit Discount? | December 11, 2011 | The Electronic Payments Coalition (EPC) released a report that illustrated consumers were not experiencing the savings that retailers had promised they would pass down when the debit card fee cap went into effect. The EPC is the same group behind the dontmakeuspay.org movement.
Law to Reduce Debit Card Fees to Retailers Has Opposite Effect | December 12, 2011 | The new law was found to have caused certain retailers to pay higher debit card fees than previously. Retailers began learning that they may not be getting the savings they thought they had won.
Still Curious About a Merchant Cash Advance? The Last Article You Will Ever Need to Read
August 23, 2011
You’ve seen the advertisements, received calls with offers for it, researched it online, but you’re still not sure about Merchant Cash Advance(MCA). Every business needs capital but bank loans just aren’t available. Alternative funding sources are out there and they spend millions of dollars every year trying to reach you. The word “alternative” usually causes business owners to put their guard up. Basically, all non-bank loans warrant skepticisim until proven innocent. We here at the Merchant Cash Advance Resource understand your concerns and would like to answer your questions once and for all. We are not a funding source, reseller, or advertiser and thus maintain an independent perspective on the the MCA industry.
image is the sole property of www.merchantprocessingresource.com
- How Legitimate is it?
- Who is Really Using it?
- How Big is the Industry?
- How Widespread is it?
- What is the Application and Underwriting Process?
- Who are the Most Well Known Providers of it?
- Who is Regulating it?
- What Happens if you Default on it?
- How does it Compare to an SBA Loans?
How Legitimate is a Merchant Cash Advance?
The purchase of future credit card sales(Merchant Cash Advance or MCA) has been mainstream since 1998. At that time, Kennesaw, Georgia based funding source AdvanceMe, held the patent rights to a process known as split funding. The patent was later invalidated and AdvanceMe was immediately joined by industry veterans AmeriMerchant, First Funds (now Principis Capital), Merchant Cash and Capital, Business Financial Services, and Strategic Funding. All of these firms have been operating since before 2006. As of 2011, there are now nearly 40 documented direct providers of capital.
MCA funding providers are backed by big name hedge funds, a few at one point by well known investment bank, Goldman Sachs. MCAs have frequently popped up in the news and are openly endorsed by some of the largest payment networks in the world. See for yourself:
Feb. 11, 2011 – 10 Reasons to Start a Business This Year
Sept 1, 2009 – Enterpreneurs Turn to Alternative Finance
Apr. 2009 – Merchant Cash Advance Financing: The Good, The Bad, and The Ugly
Brochure and advertisement directly From First Data, the largest merchant acquirer in the world.
Advertisment and endorsement directly from Chase Paymentech
Program is offered by NAB, one of the nation’s largest credit card processors and the 2008 Detroit Regional winner of Ernst & Young Entrepreneur of the Year Award. 
Who is Really Using a Merchant Cash Advance?
Nearly every major national retail or restaurant franchise has used a Merchant Cash Advance. A small sample of the names include the following:
- Burger King
- Domino’s Pizza
- Hooters
- Subway
- Dunkin Donuts
- Taco Bell
- Denny’s
- Wendy’s
- Meineke Car Care
- Maaco
- Aamco Transmissions
- Curves Fitness
Data was obtained directly from Secretary of State UCC-1 filing records. More information on franchise funding can be read in one of our previous articles, “Who is Really Getting a $250,000 Merchant Cash Advance?“
How Big is the Industry?
Experts have predicted that more than $1 Billion in MCAs are being provided to businesses every year. We conducted independent research and was able to validate the size to be greater than at least $500 Million in 2010. Check out the study at, “Complete Merchant Cash Advance Statistics 2010“
How Widespread is Merchant Cash Advance?
The MCA product is not limited to the United States. This product is actively growing in:
- Canada
- United Kingdom
- Australia
- Hong Kong
- Singapore
For a list of international funding providers, take a peek at our article at, “Merchant Cash Advance – Canada, UK, and Beyond!“
What is the Application and Underwriting Process Like?
EASY! We recently released a guide for merchants that breaks the process down step by step. Download the guide here.
Who Are the Most Well Known Direct Providers of Merchant Cash Advance?
The biggest names are compiled in our Funding Directory. Many are BBB accredited and a few are Ernst & Young Entrepreneur of the Year award winners.
Who is Regulating the Merchant Cash Advance Industry?
Since MCAs are a purchase/sale of future credit/debit card receivables, lending laws do not apply. However, most firms belong to a self-regulating body known as the North American Merchant Advance Association. As stated on their website, NAMAA’s purpose is to promote competition and efficiency throughout the industry by:
- Providing education and professional development to its members
- Developing ethical standards and best practices guidelines for the industry
- Evaluating and providing education regarding the development and enforcement of intellectual property rights that affect the industry
- Evaluating and developing improvements to existing business methods and practices
- Developing industry relevant products and services
- Engaging in regulatory and legislative advocacy
What Happens if You Default on a Merchant Cash Advance?
In the case of a legitimate business failure, the merchant’s assets tend to be protected. There is significantly less at stake than a bank loan. We covered this topic once before in an article here, “What Happens When you Default on a Merchant Cash Advance?“
How Do Merchant Cash Advances Compare to SBA Loans?
The Small Business Administration protects banks from defaults for up to 90% of the losses. Despite this wildly generous guarantee, SBA Loans are considered to rank lower than a MCA. How is this is possible and what specific proof is there? Check out our analysis in, “SBA Loan vs. Merchant Cash Advance.“
Conclusion
The Merchant Cash Advance financial product has been in existence for more than a decade and is legitimate, mainstream, endorsed by reputable names, has been used by the most popular franchises in the U.S., is easy to obtain, offers asset protection that loans cannot, is self regulated, and is in many ways BETTER than a loan guaranteed by the SBA. A MCA may not be right for every business, but if it was just uncertainty that was holding you back, fear no more. This thing is for real…
-The Merchant Cash Advance Resource
http://www.merchantcashadvanceresource.com
webmaster@merchantprocessingresource.com
Interchange Regulation and Reduction: Proof it will fail
August 23, 2011Originally Published on April 16, 2011.
As proponents and opponents debate debit card fee reform, few seem to be aware that interchange regulation has been
implemented before and the results were disastrous. In 2000, The Reserve Bank of Australia (RBA) published a 90 page report (A STUDY OF INTERCHANGE FEES AND ACCESS) that outlined their assessment on card payment interchange rates and the impact. It’s central thesis was this: “The study is concerned with the economic efficiency of these [payment] networks. Most importantly, are they delivering the best possible service at the lowest cost to end-users?”
Eerily similar to the U.S. Federal Reserve’s 2010 analysis, the RBA reached the following conclusion: “While a pricing system based on interchange fees still seems to be the most practical arrangement for the credit card network, the levels of interchange fees are high relative to costs and fees of this magnitude are not essential to the continued viability of this network.”
Bolstered by the findings, consumer activitsts groups pushed for regulation and by 2002, the RBA announced that 4 party payment networks such as those operated by Visa and MasterCard would need to make serious changes. Lobbyists groups fought to rally against regulation but came up short. In 2004, strict measures to limit costs became law and with that a series of unintended consequences.
The U.S. should examine the outcome in Australia, a country whose values and economic system is much like our own. 3 years before the Durbin Amendment came to pass, MasterCard did just that. In early 2007, it researched the impact and side effects of regulation in a report titled “Interchange Regulation: Lessons From the RBA Intervention in Australia.” We reviewed the rules that most closely resemble those of the Federal Reserve and have republished MasterCard’s findings below:
Regulatory Measure #1: Reduction of Interchange Costs
Intended Consequence #1: Merchant fees would be reduced, which would then be passed onto consumers, resulting in lower prices for all.
Actual Outcome: 70% of merchants did not realize that any changes had been implemented and thus did not make an effort to pass on savings to consumers. Annual reports actually showed that retailers pocketed the difference instead. This issue has been largely debated in the U.S., with many retailers openly stating that they would not pass on any savings. Proposed New Debit Card Rules May Not Help Consumers Much
Intended Consequence #2: Debit card usage expands while credit usage declines.
Actual Outcome: Debit card usage declined instead. This appears to be the same path the U.S. is on already as implementation of the law approaches. JP Morgan Chase, Bank of America and Citigroup Might Limit Debit Card Purchases
Regulatory Measure #2: Elimination of The “No Surcharge” Rule
Intended Consequence: Merchants would judiciously surcharge for accepting credit cards; and in so doing, make credit usage less attractive than debit usage; which would in turn encourage higher debit card usage.
Actual Outcome: Where surcharging actually occurred, it appeared to be mainly by brand, applied in a way that is not disclosed to consumers, and done mainly outside of retail markets. As of July 2010, the U.S. implemented a similar law under the Durbin Amendment that is already in effect. See an article we wrote on the subject back in December titled “Take Your Rewards Card and Get Out My Store!.”
The outcomes seem to answer questions that we in the U.S. are spending too much time debating. Regulation in Australia was a failure. “Contrary to the RBA’s intention of making the payments system more efficient and increasing competitive intensity, the exact opposite has happened in Australia. In addition, the payments system has actually become more expensive for the average cardholder. While there is no evidence of retail price reduction by the merchants (so confidently predicted by the RBA), there is widespread acknowlegement that issuers have actually increased fees to cardholders to compensate for lower interchange fees since the RBA regulation.”
Consumer rewards programs are already disappearing as reported by CBS News. “Banks to strip debit card rewards; What next?” This is the exact sequence of events that happened abroad. MasterCard addressed this in their report, but did not offer any hard statistics. “For the most issuers, the rewards programs have been downsized, and in some instances very substantially.”
Many believe the shortsighted push for reform has less to do with savings for retailers and consumers and more with to do with a desire for Americans to punish the banks for their role in the financial crisis. The banking industry employees millions of people so the harm intended for rich CEOs is more likely to affect the jobs of the middle class.
There is still hope. A few Senators have proposed the Debit Interchange Fee Study Act of 2011, which seeks to delay regulation for two years. This will allow the Federal Reserve to properly assess the goals they hope to achieve, come up with a better plan of action, and study the likely consequences.
While two years seems fair, we can’t help but point out the chain of events in Australia should be all the evidence we need. Ignorant disdain for the electronic payments industry is a major distraction from the real issues facing our country today. The unemployment rate, the national deficit, and the educational system all lose our full attention every time we quip about debit card fees.
Customers spend more when they pay with plastic. Consumers don’t need to carry bundles of cash in their pocket. Banks employ millions of workers. Everybody already wins. AltFinanceDaily’s advice? Let’s move on to fix a different system that’s actually broken. We’ll all be better off.
– AltFinanceDaily
The Interchange Debate: A Political Mess and a Waste of Time
August 23, 2011
The Huffington Post published a lengthy article today, titled “Swiped: Banks, Merchants And Why Washington Doesn’t Work For You.” While it reiterated the talking points for both sides of the Durbin Amendment debate, it made the case for neither. Rather it highlighted the dirty business of Washington politics. Millions of dollars are being spent on an unrelenting battle, which frankly will result in no winner.
Debit interchange reform was enacted in Australia in 2004 after an exhausting four year debate. The outcome? No savings were passed on to consumers and debit card use declined nationally. We broke down the findings in a previous article: Interchange Regulation and Reduction, Proof it Will Fail.
We will not make our case here again, but instead would like to point out the refreshing perspective by the Huffington Post:
“As swipe fees dominate the Congressional agenda, a handful of other intra-corporate contests consume most of what remains on the Congressional calendar: a squabble over a jet engine, industry tussling over health-care spoils and the never-ending fight over the corporate tax code.
The endless meetings and evenings devoted to arbitrating duels between big businesses destroy time and energy that could otherwise be spent on higher priorities. In America today, over 13 million people are out of work and millions more are underemployed. One out of every seven is living on food stamps. One out of every five American children lives in poverty. Yet the most consuming issue in Washington — according to members of Congress, Hill staffers, lobbyists and Treasury officials — is determining how to slice up the $16 billion debit-card swipe fee pie for corporations.”
We don’t remember debit card fees causing the Great Recession. We do remember the corrupt mortgage brokers, the exotic derivative securities, the overly leveraged investment banks, and the deficit spending at all levels of government. Repeal the Durbin Amendment or support the Debit Interchange Fee Study Act so we can undo the damage already caused and move on to more important matters.
– AltFinanceDaily
Blackjack! 21 Cent Debit Card Interchange Fee Plus 5 Basis Points
August 23, 2011Originally Published on June 30th, 2011.
After holding their breath for six months, card issuing banks finally exhaled today after the Federal Reserve announced the finalized debit interchange fees. The original proposed 12 cent cap was vehemently opposed, sparking an ugly battle that pitted large retail chains against banks. The end result?
A 21 cent interchange cap
BlackJack!
This is complemented by an additional 5 basis point variable charge that can be assessed to recover losses from fraud. Though nearly double the original proposal, card issuing banks still stand to lose billions in revenue. And as for the retailers? Well they’re not likely to experience any savings. It’s the law of unintended consequences, an outcome already proven by similar legislation in Australia. [Interchange Regulation and Reduction: Proof it Will Fail]
So billions may be lost but at 21 cents, it’s enough to turn a profit. That means we’re unlikely to witness the end of debit cards altogether, a scenario that reform opponents predicted (including us) would happen if a cap went into effect. But of course we can’t be sure. When the free markets are regulated with price controls, things start to get funky.
The original July 21st implementation deadline has been pushed back to October 1st to allow banks and acquirers to prepare for the change. It’s fair considering the actual regulations and rules are outlined in a lengthy 307 page snoozer of a document.
But while we’re taking our time to fully digest the final law, keep this in mind:
A retailer is not going to be paying 21 cents a transaction at the point of sale. Rather that’s the maximum a credit card processor/acquirer can pay to the card issuing banks.
So the retailer may be in a contract with their processor to pay 1% per debit card transaction. A customer purchases a $100 item with their Bank of America Visa Debit Card. $1 (which is 1% of $100) is charged to the retailer. Only 21 cents of that can be paid to Bank of America (the card issuing beneficiary of interchange fees). The rest is retained by the processor.
So the card issuing bank is limited, and to some degree the payment network such as Visa as well, but the other parties do not appear to be affected, including the ultimate cost that retailers will pay. Doh! And that my friends, is what all the intense fighting has been about since December 28th, 2010.
We’ll keep you updated.
– AltFinanceDaily
Image by http://www.123rf.com
