eProdigy Integrates Square and Stripe Into Its 1Workforce Direct Funding Platform

NEW YORK, Sept. 17, 2015 — eProdigy, a FinTech holding company serving the alternative lending space, is pleased to announce that it has integrated Square and Stripe, two rapidly expanding processors, into its lending platform.
By April of 2015, eProdigy had completed the integration of Quickbooks, PayPal and Authorize.net. With the addition of Square and Stripe, eProdigy gains two valuable new data feeds that aggregate merchant account information into its system in order to rapidly assess whether to underwrite a merchant cash advance based on the applicant’s propensity to repay.

This targeted use of specific Big Data sets helps funders decide with unprecedented speed and accuracy whether a merchant advance is an appropriate financing tool for the applicant. A company’s transactions processed by either Square or Stripe, indicate the volume, frequency and dollar level of incoming payments. This in turn informs the funding decision algorithm. Given the massive migration of small merchants in all categories to Square and Stripe, eProdigy’s aggregation of their information broadens the number of data sets that can be used for underwriting decisioning.

About eProdigy

eProdigy is a FinTech holding company serving the alternative finance industry by providing products, services and a lending platform through its subsidiary companies: Capital Stack, ACHCapital, ACHBanking, eProdigy Loans, and 1Workforce. In addition to providing small businesses with cash advances and originating loans, the company makes its technology enabled financial and servicing platforms available to ISOs and other funders. Capital Stack is also the co-founder and 50% owner of DailyFunder, an online forum and publication that covers the alternative finance industry.

eProdigy CEO David Rubin notes, “Short term advances call for systems that are as dynamic as the businesses they are funding. These data sources rapidly provide a highly granular image of the applicant’s business cash flows, and they allow us to move quickly to a decision, whether “yes” or “no.” And as we broaden our ability to analyze different data sets, this in turn enables us to throw our net out to a wider range of businesses. Our ideal is a 5-minute paperless decision, and our technology’s role is to crunch more data points in an instant, than a daunting and protracted paper application ever could.”

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OUR MERCHANTS LOVE WORKING WITH US

When Teresa Hill needs fast funding for her business, she knows who to call. She has received several advances from us, and is one of our most satisfied and loyal merchants.

Ms. Hill is the owner of Island Station Surplus, a store in Kentucky that specializes in selling surplus, salvage and store returned items at deeply discounted prices. During the holiday season, her inventory expands to include designer items, and over the course of the year she carries health and beauty products. The nature of her business requires that she have cash on hand to make these large purchases, and she knows she can count on e-Prodigy to get her what she needs.

She primarily uses the funds to purchase inventory for her store-in her business, items often become available quickly and for a short period of time, making traditional bank funding an option she can’t rely on. The funding she receives from us, often in less than three days has allowed her to expand and grow. She has been able to secure funds for inventory while traveling, and our easy repayment terms let her know exactly where she stands on a daily basis.

We asked her if she would recommend our services to her friends who own businesses. Her enthusiastic response was exactly what we want all of our clients to say about us.

As she said, “My experience has been great and I would definitely recommend them to other business owners. I have always gotten what I need and the terms have been great for me.”

It’s clients like Teresa that make us proud of the work we do with small businesses. They are the lifeblood of our economy, and here at e-Prodigy we want to make sure they have the funds they need to continue to grow.

GETTING A MERCHANT CASH ADVANCE IS EASY BUT REPAYMENT CAN BE ONEROUS

A Merchant Cash Advance is a short-term advance of funds against a business’s receivables. To pay it back, a fixed debit, or in the case of some companies, a percentage, is taken directly off each sale daily or weekly. The Merchant Cash Advance business is a whole new industry that is booming, mainly because bank lending criteria have become so tight since the Great Recession that very few small businesses are able to qualify for bank loans.

Sometimes a cash advance is genuinely necessary, but it’s important to know when to pull the trigger, and when not to. Whether the cash advance comes from a credit card or a Merchant Cash Advance, this facility is best used as a stopgap when there’s an expected increase in revenue. For example, if you’re a contractor and, in order to win a bid on a $500K job, you need to have upfront money for materials and labor. Or you’re opening a retail location and need to buy inventory.

There are countless other examples that a small business owner needs capital to create growth: a new restaurant needs funds for inventory or salaries, a florist brought in last minute to create arrangements for a massive event, a dentist or doctor buying a piece of  equipment and is able to get a new income stream from the diagnostic tests.

These are all examples where an increase in income is anticipated. Business is basically good and growing, even amid a bumpy and unpredictable cash flow, but you can’t fund the capital outlay with your working capital. When the business needs the funds short-term to generate more revenue or cash flow it makes sense to take a short-term advance to secure that business growth.

You see these enticing offers: no paperwork, five-minute application, borrow up to $100K. Yes, $100K right now could solve a lot of problems. But the rule of thumb is that unless you’re using it to generate the new income stream that pays back the advance, it could create bigger problems than it solves. More succinctly stated: don’t use this instrument to fill a hole that creates an even bigger one.

To decide whether or not to take one, ask yourself these questions:

  • Will this help me win more business?
  • Will this help me grow my business?
  • Will this enable me to buy a new piece of equipment that generates cash?
  • Do I absolutely need the money right away?

 

And in terms of your ability to pay it back:

  • Can I generate the sales I need, so that I won’t feel it when a percentage (or fixed sum) is taken out of every credit card swipe?
  • Can I pay my other bills if I’m losing a percentage (or fixed sum) off the top of my sales?
  • How long can I go without missing this percentage or fixed sum being taken off each sale I make. Am I reasonably sure I can go the entire length of the expected payback period?
  • Do I put through a high volume of credit card transactions?

 

The price of a cash advance is significant. The cost of funds could be anything from 20 Percent to 40 percent on the advance, depending on your credit score and other risk factors. However, this is offset by the fact that the instrument provides some real, tangible advantages to small businesses – the application process is simple, funding decisions are made quickly, you’ll receive the funds in hours or days, not weeks.

Moreover, and you can still get funded at a range of credit scores, starting in the low 500s if other mitigating factors check out. In addition, payback is incremental, so the cost of funds is not so keenly felt. Payments are automatic, there are no checks to write, you don’t have to remember to remit a payment. And with some Merchant Cash Advance firms, there is transparency in the form of daily reporting, daily ledger and history. Also, there’s a huge difference between taking an advance and, say, using a factoring service, where the factor lays claim to all the receivables, and you receive “what’s yours” after the factoring company has been paid “what’s theirs.”

There are many providers of merchant cash advances, so you should perform your due diligence. Try to avoid hidden costs. If you use a broker, make sure they don’t charge you — your best bet is to go through a direct funder or a broker that is paid by a direct funder. You should also look for flexibility in the payback terms in terms of weekly vs. daily remittances, fixed daily debit; and some funders offer fixed gross percentage, so that payback can be more flexible and based on your cash flow levels.

Bottom line, if you’re generating enough cash, and with the right volume of increased sales, this financial tool can make good sense. But you have to be sharp and informed to use it successfully.