I hope you are having a great month. There seems to be no summer slowdown and so far, July has been a very busy month for the industry. As you know, I speak with many MCA brokers throughout the course of the day as well as industry insiders. Here are a few things that I was hearing this week that could impact the industry going forward.
Cherry SMS
This texting platform was a staple from any iso shops over the past several months. As I mentioned last week, Cherry has recently sent out an email, letting their subscribers know that they will no longer be able to offer text messages for financial services. This leaves a massive gap in the industry. Many teams who have establish their own texting platforms are not missing a beat, but those who rely on Cherry have had their SMS campaigns interrupted. I will continue to send updates when I hear of platforms that are excepting MCA brokers and a viable option for SMS campaigns.
Defaults
Because of a massive amount of over stacking, line of credit bait-switch and debt settlement, defaults have skyrocketed. I had a conversation this week with a well-known establish funder who told me he woke up last week to a large portion of his book they have either stop payments or have enrolled in debt settlement. This long-term player in the industry indicated to me that his business is decimated, and he is looking to exit the industry. I hear these stories almost weekly. Defaults originate through merchants who have existing payments. Brokers and debt settlement get a hold of these people, capitalize on their desperate circumstances, and then make their situation worse. I realize brokers prefer to speak with people who have existing payments as opposed to educating merchants on how MCAs work. Going forward ISO owners and brokers may have to become open to the idea of looking for more first position deals and educating new clients on how this funding process can benefit them. This practice may slow down defaults and facilitate more deals Getting done.
Pre IPO
In the past month, I have received a staggering number of calls from people entering the MCA industry that were formally in the Pre-IPO business. Pre IPO is the business of offering shares to investors and companies that will hopefully come public at some point in the future. Some of those companies have been well known names, such a stripe, SpaceX and Plaid. Many Pre IPO Brokers have chosen to go to the route of committing fraud by lying to investors and making obscene hidden commissions that in some cases have exceeded 100-200 percent. Recently several major players in the industry have been arrested. I am very familiar with this industry and feel as though this is just a start of many more arrests and federal indictments. I believe the way it is impacting the MCA industry is many brokers who are talented in sales in Pre IPO and have large marketing budgets are now entering the MCA industry and increasing competition. This will ultimately lead to more over stacking and more defaults as these players are likely to bring the same behavior to MCA
Based on my conversations daily with funders and ISO teams that are still seeing enormous success, I continue to believe that acquiring quality leads, implementing strong technology, establishing lender relationships, and continued sales training, will lead to a long-term approach in this industry and will allow you to build a massive book, regardless of short term, blips of technology, and increase competition