Ethics in the Business Cash Advance Industry
Thanks to the growing small business industry, improved accessibility through the Internet and public search engines, and a solid reputation for customer satisfaction, the business cash advance industry is growing every day. What started as a specialized service offered by a handful of private companies almost half a century ago has become a widely utilized business tool offered by dozens of established service providers today. This expansion is good news for merchants and providers alike as it provides new opportunities on both ends. But as with any industry that experiences rapid growth, there are going to be some growing pains.
The ease of starting your own website has allowed thousands to become small business owners. On the whole, this is a wonderful thing for individuals and the economy at large. There are nevertheless some that will use this technology to take advantage of the unsuspecting. A rare few business cash advance providers have used the industry’s growing reputation as a facade for unethical business practices. Their websites may look the same as those of more responsible providers, and their policies may sound much the same, but something sinister is hidden in the small text.
As with any support industry, the business cash advance industry thrives on the success of its market, and thus does best by seeing their merchant clients grow and succeed within their own markets. It stands to reason then that the best strategy for BCA companies is one of compromise. Yes, they want to make a profit from their investment, but they also want to maintain customer satisfaction to ensure new and returning business. For this reason, most responsible cash advance companies endeavor to choose a repayment percentage (sometimes referred to as a retrieval percentage) that is bearable for your business’ cash flow while ensuring that they recoup their expenses and earn a return on their investment in a timely manner.
This is where the bad guys come in. Some BCA providers have started a practice that injures not only their customers but the health of their own industry. Through conditional subclauses in their policies, they open a loophole that allows them to change the customer’s predetermined retrieval percentage at will. They may justify this through claims that the original percentage was under calculated, but this practice threatens one of the primary advantages of a business cash advance—the ability to repay as able.
While bank loans have their place in the business world, it is the cash advance’s differences from traditional funding methods that make it such a popular choice. Business owners are relieved to find that there are no late payment penalties or unanticipated fees associated with a cash advance, but predatory providers are changing that too. In addition to their fluctuating repayment rates, they often implement fees that are more normally associated with loans. Cash advances are not loans, and therefore should not be subjected to lending penalties.
Responsible merchant cash advance providers are taking a stand against their unethical counterparts by enforcing the original standard of service and more uniform business practices across the industry. You can protect yourself as well by always researching your providers carefully. Most companies are happy to disclose their payment policies—read through their materials carefully. A company that mentions fees or penalties is not adhering to the industry standard and has only your money–not have your best interests–in mind.
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