As we expected, the MCA industry remained as active as ever throughout Q3.
Big players made some fresh waves in the space, exciting new opportunities popped up in underserved global markets, and more disclosure regulations took hold across the U.S.
Below, we’ve highlighted the biggest developments from July through September 2024 that shaped the merchant cash advance landscape.
Want to get up to speed on past news? Check out our series of quarterly and year-end updates:
- Check out the biggest merchant cash advance trends and stories from earlier this year: Q1 and Q2.
- Take a look at our quarterly reviews from last year: Q1 2023, Q2 2023, Q3 2023, and Q4 2023.
- And, if you’re in the mood for a deeper dive, check out our annual roundups of the top MCA stories from 2023 and 2022.
Now, let’s jump into the top stories of Q3 2024!
eBay and Walmart Enter the Market
Once again, this quarter we saw big companies shaking up the SME funding landscape with new offerings:
- eBay has teamed up with Liberis to launch the Business Cash Advance (BCA), a revenue-based financing option for U.S. sellers. Sellers can apply online in just three minutes, receive personalized offers, and get funding within 24 hours.
- Walmart announced its own revenue-based programs for Marketplace sellers: Capital by Walmart and Capital for Walmart Fulfillment Services (WFS). The retail giant partnered with Parafin, just like Amazon.
As competition heats up, MCA providers will need to find ways to stand out, especially as small enterprises gain access to more financing options that offer faster approval times and fewer barriers.
For example, eBay’s and Walmart’s new programs could potentially drive down interest rates and fees for sellers—putting pressure on merchant cash advance providers to adjust their own terms to stay relevant.
The constant challenge for MCA providers, as always, is to stay agile. That means being able to adapt quickly to shifts in the market, while meeting the growing demand for fast, flexible capital. Those who can evolve with these changes will be best positioned for success.
MCAs in Developing Countries
With MCAs increasingly becoming a popular financing tool for SMEs worldwide, two key players are set to bring this innovation to underserved markets.
South Africa: Preference Capital
Preference Capital, in partnership with Absa Bank, just rolled out a new MCA product for SMEs in South Africa—with a potential reach of 3 million medium, small, and micro-entrepreneurs, who employ about 20% of its entire population.
Accessing traditional loans in South Africa has historically been a major roadblock to SME long-term growth and sustainability.
Several factors contribute to this issue, including few finance products tailored to SMEs, limited access to reliable credit data, and the perception that lending to SMEs is too risky. Plus, many SME owners in South Africa unfortunately don’t have the collateral needed.
These challenges make it harder for SMEs to access credit and often lead to higher borrowing costs. As such, Preference Capital’s new offering couldn’t have come at a better time.
In fact, the alternative funding market in South Africa is expected to see steady growth, predicted to rise from US$229.6 million in 2023 to US$619.6 million by 2028.
As alternative financing becomes more widely available, it’s likely to be a game-changer for South African enterprises that have long struggled with traditional lending barriers.
Indonesia: TymeBank
Meanwhile, TymeBank, a digital bank headquartered in South Africa, is making waves by expanding its MCA offering to Indonesia later this year. This move represents the company’s third Southeast Asian market, following similar launches in the Philippines and Vietnam.
Small enterprises are the backbone of Indonesia’s economy, with around 62 million micro, small, and medium-sized enterprises employing 97% of the workforce and contributing 61% of GDP. Despite their significant role, these enterprises have long faced barriers to financing, limiting their growth potential.
This is where SME funding products like merchant cash advances are stepping in. The alternative funding market in Indonesia is expected to grow from $5.78 billion in 2023 to $12.63 billion by 2028—signaling a growing demand for flexible funding options.
TymeBank’s expansion into Indonesia is particularly timely, as the government is simultaneously taking steps to support SMEs with a recently announced debt forgiveness program, offering certain SMEs a fresh start by writing off bad debts so they can access new funding they previously couldn’t obtain.
Combined, the government’s debt forgiveness initiative and the rise of digital funding options are providing a much-needed boost for Indonesia’s smaller enterprises—opening up new routes for growth and economic opportunity.
As we see a broader shift towards digital finance and alternative funding in emerging markets, and financial inclusion gains more focus in developing economies, companies like Preference Capital and TymeBank are poised to drive MCA expansion by tapping into new regions.
For MCA providers wanting to stay ahead of the competition and tap into new revenue streams, it’s worth considering similar entry into these high-growth markets. Plus, by supporting underserved SMEs, they can have a positive ripple effect, helping to boost local economies.
CFBP’s Small Business Lending Rule Extension
The Consumer Financial Protection Bureau (CFPB) recently announced it pushed back the deadlines for compliance with the Small Business Lending Rule, aka Section 1071 of the Dodd-Frank Act, aka the Final Rule.
Starting as early as mid-2025, small business lenders (including MCA providers) must collect and report specific data on loan applications, including:
- The race, sex, and ethnicity of the business owner.
- Whether the business is women-owned or minority-owned
- The loan amount, loan purpose, and whether the loan was approved or denied.
The new CFPB compliance dates for collecting data are now:
- July 18, 2025 for high-volume funders.
- January 16, 2026 for medium-volume funders.
- October 18, 2026 for low-volume funders.
At its core, Section 1071 is about supporting the Equal Credit Opportunity Act (ECOA). Passed in 1974, the ECOA helps ensure that funders don’t discriminate based on things like race, gender, age, or marital status when granting credit, including merchant cash advances.
Section 1071 also helps regulators keep an eye on funding practices and identify underserved communities across the U.S., where business growth is being held back.
The CFPB will allow funders to begin gathering data up to a year in advance if they want to test their systems. They’re also offering a bit of leeway: during the first year of reporting, funders won’t be penalized for mistakes, as long as they’re making a genuine effort to comply with the new rules.
That said—and even with the deadlines extended—it’s crucial for merchant cash advance providers to start now to prepare their systems. Tools like Onyx IQ make it easier to achieve compliance, while also providing key business insights into funding patterns.
Best States for SMEs (and MCA Funders)
In Q3, Lendio released a compelling report on the best states to start a small business. The study looked at several key factors including access to funding, taxes, and state-level incentives for business owners.
Here are some key takeaways:
- Hawaii, New Hampshire, and Nebraska ranked the lowest. These states struggle with high taxes, limited funding options, and a high cost of living, which can make things harder for SME owners.
- Florida, Texas, and North Carolina topped the list. These states offer lower taxes, plenty of business funding, and strong personal consumption—all of which make them great places for SMEs to thrive.
- Florida edged out Texas for the top spot this year. While the top 10 states remained pretty consistent with last year’s rankings, Florida’s rise signals that it’s becoming an even more favorable place for SMEs.
But here’s the catch: many SMEs, even those in the higher-ranking states, may still face challenges when it comes to obtaining traditional loans.
In fact, new small business lending dropped in Q2, with loans and approval rates down. Credit standards also tightened for the eleventh consecutive quarter, with businesses tapping into more of their credit lines due to changing revenue.
As traditional lenders pull back in states with thriving SME ecosystems, merchant cash advance providers have a golden opportunity to fill the gap. Targeting states with strong SME activity but limited financing options could be a smart move and key strategy for growth.
New State Disclosure Laws: Connecticut and Missouri
Missouri and Connecticut became the latest states to enact new disclosure laws aimed at improving transparency and accountability in SME financing:
- Missouri’s new law, effective February 28, 2025, will require funders to disclose key loan details upfront, including the total amount borrowed, payment schedule, and any fees or prepayment discounts. Brokers facilitating these transactions must also register with the Missouri Division of Finance.
- Connecticut’s new commercial financing disclosure legislation took effect on July 1, 2024. It targets sales-based financing transactions of up to $250,000 and will require funders to disclose similar details to Missouri. Funders and brokers must also register every year with the Connecticut Banking Commission.
As we’ve stated frequently in previous blog articles, these disclosure laws are ultimately a step forward for the merchant cash advance sector. After all, they help contribute to a stable and more sustainable market for both merchants and funders.
That said, as we see more states adopting similar regulations, ongoing compliance will prove fundamental—especially given the often-hefty penalties associated with non-compliance.
To ensure you stay on top of the latest changes in state legislation, be sure to bookmark our MCA Disclosures Law Map.
Onyx IQ Helps You Capitalize on Merchant Cash Advance Trends
The merchant cash advance landscape is evolving fast: new opportunities are popping up, and regulations are changing. To stay ahead, you need to be quick, agile, and ready to adapt.
That’s where Onyx IQ comes in.
Our platform makes it easy to tap into new markets, while helping you to navigate them smoothly.
With Onyx IQ, you can automate your workflows, improve decision-making, and stay on top of ever-changing legislation. Built by funders, for funders, it’s the perfect solution for tackling today’s challenges and preparing for the future.
As demand for fast, flexible funding rises, especially in emerging markets, Onyx IQ puts you in a prime position to capitalize on these opportunities. Whether you’re managing compliance, exploring new markets, or streamlining operations, we’ve got you covered.
Don’t wait for these shifts to catch you off guard!
Book an Onyx IQ demo today and see for yourself how our platform can help you stay competitive, adapt quickly, and set up your MCA operation for long-term success.
