Release Notes: Merchant Cash Advance Edition (June 30th)


TurnKey Lender is happy to announce the release of the brand-new Merchant Cash Advance solution.

The Merchant Cash Advance (MCA) edition is a completely new branch of the TurnKey Lender solutions family built with the underlying MCA business model in mind. And while it has all the flexibility, intelligence, and scalability of the latest generation of TurnKey Lender software, the unique features of the MCA solution include and aren’t limited to:

  • Reimagined application flow

  • Ability to extend multiple offers

  • New industry-specific calculation options

  • Customer portal tailored to the MCA business model

  • Revenue generation through establishing a factor rate

  • A new calendar that allows flexibly charging contributions on business days

  • Dwolla Contributions integration and an expansion to the existing Plaid integration

  • MCA debit forecast and contributions’ collection

  • New terminology within the software and the documentation

Below you can learn about these new and upgraded features which make this edition the easiest to implement and use merchant cash advance software on the market.

Merchant cash advance application flow

Even though the MCA edition is built on the basis of TurnKey Lender ULM, the business processes within the TurnKey Lender System have been changed dramatically to reflect upon the business logic of merchant cash advance enterprises. And the first change visible to the user is the advance application logic.

The applicant describes their business, income structure, and any other relevant details required for making an informed decision on the business performance in the future. This information will be used to determine the advance amounts to be offered and the profits’ percentage MCA will charge to recoup the funding they provide.

In the default advance application flow, the customer has to provide their personal and business details, input and verify their bank account info, and agree to the terms of service.

Risk evaluation

The next step in the merchant cash advance application’s lifecycle has to do with bank statement scoring and application analysis. To do this, the System gathers and processes vast amounts of relevant data through the integrations with Plaid and Dwolla (described in more detail later on in these Release Notes).

In the MCA edition, the client provides their average revenue and bank account details, then the underwriter analyzes the structure of their income and establishes the amount they are willing to provide them in the advance, and the percentage they are going to charge to recover the advance.

For some MCA business cases, the client’s income may grow exponentially, by 30-50% a year, and in other cases, all the contributions are collected within a month and the income remains stable.

To ensure for accuracy of risk evaluation, bank statement scoring is heavily utilized in MCA edition and provides the underwriters with a 360 view of the customers’ financials allowing for a reliable prediction of their future income.

Extend multiple offers to clients

Another feature introduced by popular demand in the Merchant Cash Advance edition is the ability to extend multiple offers to a client.

Once an MCA’s staff member has thoroughly analyzed the application, they can come up with and swiftly form up to three offers with different amounts and terms they are willing to provide based on their evaluation and the scoring done in the System. The offers will then display in the Customer portal where they can easily choose the one that works best for them.

And here’s how it looks to the client in the Customer portal:

After the customer chooses one of the offers, they sign it through an e-sign integration available to them and the funds can be disbursed.

Advance debit forecast and contributions’ collection

Merchant cash advances in many cases are a lot more flexible than traditional loans in terms of repayment. The MCA edition’s business logic reflects that.

Once an offer is accepted, the initial debit forecast is built and added to all the advance documents. But when the actual contribution payments start, the schedule can be changed automatically or manually as many times as needed. This most commonly applies to cases where the customer can’t pay the scheduled contribution for some reason. Whether to impose fines, when to notify the staff, and how to rollover contributions — all of that can be set on the credit product level.

At the same time, as a business owner, you can always check what the initial forecasted schedule looked like to see if and how it changed over time.

Contribution’s collection models

The MCA edition allows for use of the standard credit products available in TurnKey Lender ULM (e.g. regular installments) as well as open-ended plans commonly used in the merchant cash advance industry. The Back-office user can choose not to form the full repayment schedule in advance, instead, the System will send out notifications about the upcoming contributions and how much the customer will be charged.

The calculation features exclusive to MCAs are:

  1. Installment-based durations which allow you to set the schedule duration not in days/months but in payments

  2. Merchant cash advance factor rate

  3. Financing based on forecasted revenue of a customer

  4. Stepping schedule – if a customer misses a contribution, the System will add a new one at the end of the schedule automatically.

Flexible auto-charges management

The MCA edition provides unlimited flexibility when it comes to forming the repayment schedule. For each advance, the forecasted repayment schedule is formed but in case any of the payments are delayed or rolled over, the schedule is recalculated and the remaining balance is redistributed on autopilot.

In case auto-charges are enabled but the attempts to receive the contribution return an NSF error two times in a row, auto-charges will be paused to avoid accumulating NSF fees, and a staff member will be notified.

Calendar centered around business days

To accommodate the needs of the gig-workers who are the most common target audience for MCAs, by default the calendar is set to take into account business days when calculating schedules and charging contributions. The calendar that comes with the solution allows you to tailor the automatic charges schedules to the days your clients are more likely to work, as well as other peculiarities of your audience.

Most common MCA business models

With the TurnKey Lender MCA edition, advance providers will be able to grant fast, transparent, and fully digital wealth access to gig-workers backed by our industry-leading AI.

The two most common use cases are:

  1. MCAs for gig-workers, like drivers or delivery people, for whom the advances will be smaller sums and the collection will be carried out on a daily or weekly basis,

  2. Large-scale businesses that will require large amounts in their advances and a higher level of long-term income prediction is required.

The structure of the system accommodates both models.

The percentage of the income and other terms of the merchant cash advances are fully configurable on the credit product level. The rate at which contributions are charged from the client’s bank account can be daily, weekly, monthly, or other, custom, regularity.

Pre-configured Plaid and Dwolla integrations

  • Plaid integration – the MCA edition includes a meaningful integration with Plaid which allows verifying the customer’s income and runs daily, recurrent reports to analyze the revenue structure and provide the staff with the current financials of each client. The income data is used to then form the offers for the customer with the factor rate specific to their case. Assets and Micro Deposits capabilities are also realized within this integration.

  • Dwolla Contributions integration – Dwolla is a cutting-edge powerful payment provider that can work natively with Plaid. Having integrated them both into TurnKey Lender, allows us to grant the next level of payment processing and analytics speed and income forecasting precision.

TurnKey Lender’s AI-driven Decision Engine conducts in-depth analytics of each application for the MCA’s staff. Based on the intel collected by the System through Plaid and Dwolla, MCA’s staff can instantly understand how big of an advance a client can get and what factor rate (percentage of their future income) is going to be charged in each contribution until repayment.

Offers are built on the basis of the forecasted revenue from Plaid. Tying the offers to the applicant’s real-time and historic income data allows MCAs to mitigate risks on an unmatched level. The System allows you to use income transactions and balances verification for analytics and in the schedule forecasts.

To learn about these and many more merchant cash advance and lending capabilities of our software, feel free to reach out to our team. We’ll be happy to discuss the particular needs of your business and show you in detail why we’ll the best automation software you can find.

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