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Merchant Hash Advance

July 16, 2011

Short on capital? Your business may benefit from a Merchant ‘Hash’ Advance. Restaurants, retail stores, and auto repair shops can easily obtain funding, but medical marijuana dispensaries need love too.

A few cannabis related deals have floated around the Merchant Cash Advance (MCA) industry before, but rarely do they close. At best they elicit a few chuckles from underwriters, who will likely make a few juvenile jokes before turning down a viable, serious, and legal business. The store owners walk away frustrated but neither side is to blame.

In states like New York, where many MCA powerhouses reside, marijuana of any kind is illegal. That makes the sale of it for medicinal purposes in states where it’s legal a foreign concept. We spoke to an underwriter of one Long Island, NY based MCA firm who shared this: “I’ve eaten dinner at a restaurant and I’ve bought flowers from a florist. I understand what makes both businesses tick. I’ve never been to, nor met anyone who has been to a medical marijuana dispensary. I don’t really know what the transaction is like, what risks they face, what their profit margins should be. It’s a big unknown. Is it easy for a dispensary to lose their license and suddenly go out of business? Are there laws that prohibit outside financing? Do we need to keep tabs on where they obtained their inventory from? We typically call a restaurant’s vendors prior to funding to ensure they’re in good standing. I would feel a little weird calling up a weed farm for a reference.”

And he’s not the only one that feels that way. Banks do too. Funding aside, evidence shows cannabis related businesses stuggle to fulfill basic needs such as opening a bank account or accepting credit cards. According to a report by creditcards.com, it’s not uncommon for their checking accounts to be closed without warning, sending the business scrambling for help elsewhere.

But the situation isn’t all grim. We interviewed Nick Emerson, the Managing Director of 420 Card Processing in Campbell, CA (420 CP), a firm that’s changing it all. 420 CP not only provides card acceptance services to medical marijuana dispensaries but can also connect them with access to capital.

Using the concept of MCA, 420 CP and their funding partner will provide actual loans based on credit/debit card processing volume It’s a joint partnership. (Sorry couldn’t resist!). And there’s great news. The typical easy criteria that made traditional MCAs so popular still applies. So long as the license to sell medical marijuana can be proven, dispensary owners have the same odds of being approved as a restaurant would.

So the oportunity is there and the target market is bigger than most people think. According to Nick, “Medical marijuana is legal in sixteen states and DC to the best of our knowledge. Those states are: AK, AR, CA, CO, DC, DE, HI, ME, MI, MT, NV, NJ (still pending), NM, OR, RI, VT and WA. Some of these states are in the throes of evaluating how to implement the ballot measures that were passed and they do not all enjoy the same structures.” But once the ground rules are in place, it’s business as usual. “We have faced no problems as our company is dedicated to providing credit card processing services solely to the medical marijuana industry. As you can imagine, our clients love us.”

Add that to the ever growing list that the Mechant Cash Advance concept is being applied to.

Damaged Credit? Funded!
Short Time in Business? Funded!
Restaurants? Funded!
Retail Stores? Funded!
Auto Shops? Funded!
Las Vegas Casinos? Funded!
E-Bay Stores? Funded!
Medical Marijuana Dispensaries? Funded!

Short on capital? If you accept electronic payments, someone somewhere is willing to provide cash against those future sales. No matter what you do…

– The Merchant Hash Advance Resource

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About 420 Card Processing

420 Card Processing was founded by card processing professionals, with decades of combined experience, who are committed to equal access and opportunity for those involved in all aspects of providing medical marijuana to patients in states that have legalized its use. 420 Card Processing provides services to retailers, wholesalers, suppliers of gardening equipment, and physicians. 420 Card Processing is a member of Americans for Safe Access, California NORML and the National Cannabis Industry Association.

For more information on obtaining a merchant account or funding from 420 Card Processing, contact Nick Emerson:

Sales@420cardprocessing.com

(800) 579-1675900 E. Hamilton Ave.

Suite 100

Campbell, CA 95008

http://420cardprocessing.com

Financing Business Startups: What ISOs Should Know

December 22, 2010

Article by: Sean Murray

This is the exact title of an article published in December’s issue of The Green Sheet. It informs the merchant processing industry that businesses have several financing options available to them and wait for it…. wait for it….. it talks all about bank loans. Thank you Green Sheet for neglecting to state the most feasible, obvious solution for both businesses and merchant processing reps, Merchant Cash Advance (MCA).

The author advises that ISOs should partner up with bankers to help their merchants obtain loans and then contradicts his argument by saying that partnering up with banks is a far fetched idea that isn’t likely to work. An excerpt: “One of the best contacts you can cultivate as an ISO or MLS is a local lender who specializes in Small Business Administration financing. Generally, this will be a “community bank,” typically a small, local financial institution. A small business will almost always start at a community bank and only graduate to a larger bank because it needs a line of credit that is bigger than the bank’s legal lending limit. But even a community bank SBA officer may not be able to make a loan happen…”

So what is a processing rep to do? The article reads; “Find one that does these loans – and does them well. The bank has to “sell” loans to the nearest SBA district office, and banks get a semi-permanent reputation there for either understanding or not understanding credit risk. Required documents include a written document stating the reason for the loan request, history of the business, lease agreements, percentage ownership breakdown, estimated profits and cash flows, and projected opening day balance sheet. An existing small business applying for an SBA loan needs to include three years’ financials, aging of accounts receivable and accounts payable, and debt schedules. Keep in mind that most small businesses do not want to pay taxes, so they minimize profit – not good when you are applying for a loan. For the same reason, they will not have audited financials.”

That can be summarized as “Go find someone who can help and helps you well.” Not very informative, nor does the rest of the paragraph inspire any confidence in being able help solidify financing for your merchant.

The Green Sheet is very familiar with the MCA Industry. Therefore the idea that MCA would be left out of a small business funding discussion for processing reps was hopefully an intentional omission. The article seems to be one overextended segue to promote “The Receivables Exchange,” a live online marketplace for Accounts Receivable factoring. Not that we have anything against it, but if the article is going to be titled What ISOs Should Know, then they Should Know that MCA is the the easiest, fastest, and most flexible financing product you can offer to a merchant.

A relationship with a community bank is great but if you can’t leverage that relationship to actually get your client the capital, you’re not adding any value. A MCA carries no fixed payment terms or collateral. The underwriting process is quick and credit is not a major factor.

You may now think that our long winded bashing of The Green Sheet article was just a segue to promote the Merchant Cash Advance industry. Ironically you’re right, but then again if you’re in the merchant processing industry and need to know about financing young businesses, then MCA is What ISOs Should Know.

AltFinanceDaily

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