Merchant Cash & Capital (MCC) made waves with the release of its ASAP (Automated Submission and Pre-approval) system last year. ASAP has helped significantly reduce the duration of the submission-to-funding process, making it easy for small businesses to obtain cash quickly. ASAP’s speed has only increased since it completed a funding time record of 70 minutes in February. We spoke with Stephen Sheinbaum, president and CEO of MCC, to get some background on ASAP.
NerdWallet: Could you please provide some background on your recent funding time record?
MCC: The record was really interesting. What we did was build a system called ASAP, which stands for Automated Submission and Pre-Approval Process. We built ASAP with the hope that our partners would be able to communicate with a merchant, have the merchant pass information to our team, so that we could populate certain fields. And right then and there, because of our algorithms and scoring models, as soon as the merchant presses submit a few things happen: It checks the information against some internal and third-party databases for “invalid merchants” so to speak, it pulls credit automatically (although we can do it on an integrated basis with reporting agencies), and it runs our full underwriting system, which generates a series of offers which can be presented to the merchant. Our team can then adjust the advance amount or the payback amount or the cost of the money, make sure that it complies with our underwriting guidelines, and the system can generate a contract right then and there, which we can email to the merchant, have it executed and sent back in to us. Once it comes back in, we are essentially validating that self-reported data that the merchant or partner populated.
And recently, we were able to fund a number of merchants from A to Z within an hour. And I’m not talking an underwriting process where it’s totally automated and we don’t speak to anyone – we actually speak to every merchant; we speak to landlords, references, etc. What we’ve done is built a hierarchy from an operating standpoint, such that if someone comes through the system with contracts attached to it, then that goes right to the top of the line and there are people waiting for it to come in and they go and conduct the references ASAP (no pun intended). That’s what the record is all about – it has had the desired goal of bringing speed to the process, by immediately getting a contract in a merchant’s hands and simplifying the process, enabling our partners or the merchant to upload all the documents. And it goes right in front of an underwriter on his screen, so he can work on it immediately. It has worked out really well. We have other capabilities to use the system to just generate quotes to bring back to the merchant – and even if the merchant doesn’t want to sign yet, they are still getting underwritten in an automated fashion. We’ve created a program where someone can use the process to find out what we would be willing to give the merchant based on that self-reported data, and the beauty is that the all parties involved can communicate more effectively. At the end of the day what used to take us days to figure out – will we be able to make a deal with this customer? – can now be figured out in a matter of minutes. It really leads to better efficiencies and productivity, and leads to greater economies of scale.
NW: Is speed important to the merchant?
MCC: Speed is very important to the merchant, but for a third-party sales office, it is critical. Because you often have scenarios where sales offices are buying leads from lead-generation companies, and those companies are selling leads to three to four companies at a time. But whatever buyer of the lead can get the contract to the merchant first can have a tremendous competitive advantage. What we’ve done and are doing is take this technology, built APIs and are starting to integrate with really large third-party processors – all sorts of companies who are now able to post on their site: “Do you need working capital, or a working finance option?” And a merchant can click on a radio button, and we fully integrate with their system so all the information is there. For example: A payroll company can now integrate directly with us. The payroll company already has the address, business owner’s name and generally what their gross revenues are. Now, that payroll company, as an additional revenue stream they can say to their customers: “We’ve established a portal for you – we’ve teamed up with one of the nation’s leading alternative finance companies – so you can just click here if you need working capital.” And if they click, all the info from the payroll company is integrated with our system to populate all the fields that used to require manual entry. And now, that merchant only needs to fill in a couple more fields, and boom, he’s got an offer. It’s really strong and being very well received. We’re integrating with companies that have hundreds of thousands of merchants now. Unlike others, we’re not just saying “you potentially qualify for up to so and so amount.” We’re giving a real firm number and honoring the number our system generates.
NW: How has usage grown since the implementation of ASAP?
MCC: The latest version was released in March, and 40% of the submissions we’re receiving are coming in through the ASAP system.
NW: How has ASAP changed over time?
MCC: The first version was similar, but it had many more pages and a lot more fields that were required. The customer experience was not as streamlined as it is now. We saw that speed was so important, and we spent a lot of time improving predictability in our underwriting. We were building algorithms and scoring models on the back end, and we wanted our sales people to be able to operate more efficiently on the front end, so we merged the two, which was the genesis for that first version. We’re about to roll out directly to merchants, not just our partners. Merchants will be able to come online and populate the fields and find out in minutes what they qualify for.
NW: What sparked the idea for ASAP?
MCC: It was really a function of listening to our customers and partners and asking, “What are they clamoring for?” They want speed and predictability. We’re still verifying the data, but we’re working hard to improve that process as well. We used to ask for tax returns, now we just have a form; we get them to sign an authorization. Then we pull the info through an API on an automated basis in a matter of seconds. We’ve gone from days (waiting for customers to get tax returns from their accountants) to seconds by putting the responsibility on our shoulders.
NW: Are any particular businesses more suited to ASAP than others?
MCC: No, not at all. We’ve built it to fit any business. We have a variety of products, whether it’s fixed everyday payments to variable payments to many others. We’ve worked all that optionality into our system. Our system can analyze any business we can fund. There are some businesses type that we are not comfortable financing and are excluded, but those are automated as well through a drop-down menu.
NW: What will ASAP look like in the future?
MCC: Well, one of the things we’re working on is that we’ve been establishing relationships with third parties who want to have us originate financing that’s normally outside our box; they’re willing to have us fund it, then they buy the account from us. So, eventually (and it’s very close) ASAP will be able to give quotes not just from MCC, but also from our funding partners. As an example, we don’t fund a ton of businesses that are entirely digital and are e- commerce businesses. We may not want to fund that, but we have relationships with other companies that have expressed interest in funding that business if we can generate and underwrite it for them. So, in those scenarios we’re integrating them with our system working up scoring models, generating demand for our funding partners.
NW: Anything in store for MCC in 2014?
MCC: Generally speaking, we are in a hyper-growth mode. We’re funding approximately $20 million a month and we expect that number to double or triple this calendar year. We’re set for growth and our systems are phenomenally well received. And we’re really excited for the business.