eProdigy Blog

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.

Get Your Business Ready For Spring

As winter finally draws to a close, this is the perfect time of year to reflect on your business and get ready for the warmer weather. A few steps taken now can reap big benefits for your business for the rest of the year. Here are some tips to help you get your business moving as the seasons change:

Close Out Winter Inventory

Retailers in particular have had a rough winter. Severe storms in the northeast and mid west, coupled with extreme cold, kept many shoppers out of stores-leaving large amounts of inventory that still needs to be sold. Offering discounts on what remains can help you free up space and recoup some of your costs.

Update Your Contact Lists

This spring, make it a priority to organize and separate your customers and vendors into updated groups. For your customers – make sure you include information on how often they shop with you and what they’re buying. For your vendors – include response times and how often you need to work with them.

Once your contacts are organized, you can follow up with them and use the information you gather to determine who you will continue to work with, and what contacts to discard.

Update Your Website and Social Media Accounts

Spring is the perfect time to take stock of your online presence and make some positive changes across the board. If you don’t have the time to do it yourself, appoint a staff member to manage your social media accounts and create relevant posts. Remember that more and more customers are engaging with businesses on social media, so the more accessible you are, the better.

Update your website copy to reflect the current status of your business. Changes to pricing or policies, different hours, and new products are all things to keep regularly updated.

Spring Forward…Into The Cloud

Many small businesses are taking advantage of technology and going paperless – moving important files and documents into the cloud. Moving your files gives you the benefit of having everything you need in one place for future reference, and the generous sizes of cloud storage available ensure that you will have the space you need for all of your documents. This is particularly important as we move into tax season, and will streamline the process for you and your accountant.

As always, if you’re a small business owner that needs working capital to cover the expense of your spring updates, eProdigy can get you the funding you need to improve.

How will you clear the clutter this spring?

The EMV to MCA Bridge: A Unique Deadline Based Opportunity for ISOs to Cross-Sell – By David Rubin

As featured in this month’s issue of ISO & Agent – eProdigy’s CEO David Rubin gives his take on the unique opportunity ISOs have to cross sell alternative financing.

In the ever-dynamic world of financing and payments, there’s a great new opportunity for ISOs to cross-sell their merchant clients and significantly expand revenue streams as a result. All without having to find new clients.

With the looming fraud liability shift taking effect in October 2015, independent merchants will want to be EMV (chip card) enabled. Even as they’re engaging with their clients on EMV conversion, ISOs have a great opportunity to turn the conversation to merchant cash advances (MCAs).

For those ISOs not already familiar with these financing vehicles, MCAs have been around for 17 years. Simply explained, a merchant cash advance is a short-term advance of funds against a business’s receivables. 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 industry has mushroomed and is booming, mainly because bank lending criteria became so tight after the Great Recession that very few small businesses have been able to qualify for bank loans. If the virtual disappearance of bank lending to small businesses was the impetus that gave birth to this new category of lending, what made it possible to actualize and accelerate so fast, was the existing infrastructure that provided for a split between the various parties in the credit card money flow, between acquiring bank, merchant bank, credit card and processor.

Since the 2008 crash, and subsequent credit crunch, a lot more players have come into the alternative payments and lending space, and the industry has grown exponentially, from $500 million five years ago to an estimated $5 billion industry in 2014. ISOs, with their roots in the credit card processing industry, have been a big part of this explosive growth, acting as the alternative lending industry’s agency arm in selling merchant cash advances and making deals
that enable merchants and other small business people to get financed even as they service these clients with their POS and processing needs. And again, it all started with the split.

There’s a very compelling reason for ISOs not already involved with MCAs to get themselves up to speed on this business. In the case of processing-specialized ISOs, the average income stream from processing an account ranges from $50 to $70 a month of residual revenue.
MCAs can add a significant amount to an ISO’s bottom line, both in the form of lump sum payments and residuals. For example, by selling a $100,000 cash advance, the ISO could realize $8,000-10,000 in revenue up front. An additional income stream becomes possible when 50 to 60 percent of the MCA has been paid off and it becomes eligible for renewal: those
renewal fees will go to the ISO, as well. Selling MCAs opens up a whole new realm of income for the ISO, in denominations larger than income streams from processing.

Sound good? Well, if you’re an ISO who isn’t dealing with cash advances, you might want to consider familiarizing yourself with this part of the industry and learning how to sell these
products. And right now is the perfect time to start, because you’ll be proactively contacting merchants about their EMV upgrade needs anyway. While you’re helping them price and
install their new POS and software upgrades, you can ask them in the course of that conversation if they have an immediate need for ready cash. Then let them know how MCAs

When you’d most likely guide a client toward an MCA is when the client needs money, and needs it fast. As the ISO, you’re able to offer the client fast capital with limited documentation,
even against a potential background of poor credit. There are few if any other channels through which the merchant could access this kind of instant infusion. There are some peer-to-peer crowdfunding platforms, focused mainly on the A- and B-paper buckets of clientele. However, MCAs cover A- through D-paper markets, to get capital to a business very quickly – sometimes in just a day or two.

For you as the ISO, this is a perfect time to expand your knowledge of the industry while adding to your existing income streams. If you don’t already know the nuances of the business, you’ll want to become knowledgeable about the circumstances where an MCA is the most expedient financing vehicle, which companies only advance to A-credit businesses, which ones finance B through D, what the term times are, what the rates are, and so on. And because you’re already talking about EMV with your clients, the door is wide open
with this natural cross-selling opportunity.


Reprinted from ISO & Agent magazine.

More Than Just A Name

In 2010, when we launched Capital Stack, we did so to fill the growing void between merchants in need of working capital and the number of financial institutions that would work with them. As the years have gone by, we’ve seen traditional lenders become even more stringent with their guidelines for borrowers. This has created a unique opportunity to service small to mid sized businesses with not only the funding they need, but the technology and software necessary to service them.

Along the way we pioneered an algorithm that has cut the time a merchant can expect to wait for a funding decision from hours to minutes and the amount of time to actual funding from a week to less than a day in most cases. Technology is at the heart of everything we do, and we are excited about what we can use it to do to help our customers. We are proud to be able to service merchants as quickly as we do, and excited about the opportunities this creates for them to expand and grow their businesses.

It is innovation like this that keeps us excited about our industry and what we do to move our merchants and back end clients forward. To this end, we are excited to announce that we have formed eProdigy, a holding company that will control all of our existing companies and service every facet of  the alternative finance industry.

We will continue to provide our merchant partners with the cash advances they need to keep their businesses moving forward. We will also be offering longer term loan solutions. Our proprietary servicing software will continue to keep the back end of our services running smoothly, and of course Daily Funder will continue to bring you all of the latest industry news and trends.

All of these changes were made with one goal in mind. To continue provide all of our customers with top notch service.


Cold Weather Tips For Small Business Owners

For small business owners across the country, extreme cold and winter weather has been wreaking havoc – forcing closures, slowing delivery times, reducing foot traffic and in some cases, causing property damage. While a winter slowdown is to be expected, these extremes have left even the most robust businesses vulnerable.

Planning ahead can’t solve every problem, but it can help you survive the winter without driving yourself or your business into the ground.

Have you winterized your store? Keeping shovels and rock salt handy will help you keep your storefront clear and traffic flowing in the door. The last thing you need is a slip and fall, and this is one of the easiest ways to prevent a weather related injury to your customers.

Be sure to seal cracks and check to make sure that electrical and gas lines leading into and out of your business are safe. It’s also a great idea to keep emergency supplies on hand, in case you or one of your employees get stuck in a storm or power outage. Items like canned goods, blankets, wool clothing, flares and shovels are all useful to have on hand. If there are employees that live close by, plan for them to stop by and check on things.

Inclement weather can significantly slow shipping and delivery times. This can cost you money, and delay  your customers from receiving their items. Staying in close contact with your distributors, customers and vendors is a great way to manage expectations and be responsive on all fronts. Informed customers and vendors are happy ones, so doing your part to make sure everyone knows what they can expect from your business can only ensure that you continue to get high marks.

Be responsive to customer emails, and offer cold weather or snow specials if it’s safe enough to venture out. Keep your customers informed on changing opening and closing hours.

If your business is in an office setting, you may not have the same concerns as brick and mortar businesses do with potential property damage and loss of foot traffic, but you will have to plan for yourself and employees to be able to work safely in the event of a weather emergency. For critical employees at risk of losing power or internet access, or located in areas where roads and public transportation may be shut down,  investing in a mobile wifi hotspot is a great idea.

Remote access to shared drives allows your business to keep running in even the worst weather; and helps you to be sure your employees have the access they need to continue working on important projects and accounts.

As always, if your small business needs working capital to make a repair or get over a hump caused by a heavy winter storm, you can rely on us to get you the working capital you need.

Having a contingency plan in place is imperative for small business owners. It can mean the difference between devastating losses, and minor inconveniences.



Show Your Customers Some Love

As a small business owner, one of the most important relationships you will form is the one you make with your customers.

In the beginning, it makes sense to you to go the extra mile to gain their business. Added incentives, like discounted work or services will often lure new customers into the door, but what are you doing to keep them engaged? Oftentimes we take existing customers for granted, instead choosing to continue to court new customers.

Existing customers cost more money to keep, we tell ourselves. They can become high maintenance and may not spend as much as a new customer, we say. While this may be true of some, what you don’t want is for your existing customers to feel as if they have been dumped or neglected for “new blood.”

Your existing customers need to know that they are valued and that their business is appreciated. If you haven’t seen them in a while, a well placed email with an incentive can get you and your business back on the radar.  Above all else, what keeps people returning to a particular business is great customer service and a great product or service. You already have one, so use these steps to ensure your customers old and new, receive the type of service that will  make them repeat customers.

1. Never over promise – while we all want to see our customers happy, never offer them something you can’t deliver. Make sure to give your customers a realistic sense of what you can do for them, and keep the lines of communication open.

2. Honesty is the best policy – Always be honest with your customers. Misrepresenting yourself or your business, overcharging for services or products and otherwise being dishonest with customers is one of the fastest ways to find yourself, and your business on the rocks. People are more likely to work with a business they feel has treated them fairly, so make sure your policies and pricing reflect this.

3. Be available – Customers should be able to reach you quickly with questions and concerns. All businesses encounter a customer who is unhappy with a product or the service they received. Being unavailable to field questions and complaints can compound the problem and create a situation where the customer takes their displeasure public via social media. These days a bad review can haunt you for more than a few days and more than a few can ruin your business.

While great customer service has always been important to maintaining your business, this is a great time of year to reach out to your existing customers and let you know they are appreciated.



Get More Customers By Going Social

Social media presence is becoming one of the most important ways that businesses engage with their customers. As a small business owner, it’s important to keep your customer base informed and engaged.

Your social media efforts can be a great help-giving you a venue for immediate and meaningful interaction with your customers-but can be time and resource consuming. Luckily there are tools and tricks you can use to maximize your time, and our social media manager has some great ideas on how to manage your presence effectively.

Use Your Time Wisely

Devoting a full time staff member to your social media efforts may not work for your business, you can still develop a great social media presence. Tools like Hootsuite, Buffer and Sprout do the heavy lifting for you,  giving you the ability to manage, and schedule posts on your time-while creating content for your audience to take in on theirs.

It is still vitally important to engage, and you or another employee should be checking in several times day to answer customer inquiries.

Choose Platforms Your Customers Use

The key to engaging with your audience online is to meet them where they are, and deciding which platforms to focus on is extremely important. Are your customers millennials who use Twitter heavily? Stay at home Moms who use Pinterest? Knowing where they are online can can help you create effective campaigns and posts that they will readily share.

When you find your customers, make sure to interact with them in a meaningful way. Meaningful engagement doesn’t always mean selling. Interacting and responding thoughtfully can help to turn your customers into online brand ambassadors and advocates.

Incentivize Your Followers

Online and Social Media only deals are great ways to drive traffic back to your site.  You can also engage with the more vocal and positive followers personally, to build a strong online rapport.

Taking a few minutes to engage with your customers via social media daily can pay great dividends for your business. Thankfully there are some great tools available to take the guess work out of it and help you target your efforts.


Timely Tax Advice from our CFO

As we move into 2015, many small and mid sized business owners are coming off of a year end tax season that may have left them wanting to do more to be better prepared the next time around.

We asked our CFO, and resident tax guru Steve Brown, what small business owners can do in the New Year to ensure that they are filing properly and getting the deductions they deserve.

His advice to business owners is simple-don’t be afraid of being audited, and keep meticulous records. He offers these tips to ensure your next round of business tax preparation goes smoothly.

1. Keep a Diary

For seven years, you should keep a record of everyone you meet with, along with your business mileage.  While most business owners are aware of the deductions associated with business travel, most don’t keep the proper records to do so. Don’t lose out on potential deductions because of bad record keeping.

2. Seek Out a Tax Pro if You Work From Home

A home office can be a great way to reduce business expenses, but will fall under tighter scrutiny during tax season. There are deductions available, and seeking out a tax pro to guide you is probably your best bet to avoid filing mistakes.

3. Track Your Spending

If possible, all business expenses should be put on one credit card for easy tracking. Having all of your business expenses in one place makes pulling them out for your tax preparer a simple task. It also provides a back up for any receipts you may misplace. You should also be keeping a journal listing your expenditures. Your business receipts and journals should be kept for a minimum of five years.

4. Review Your Income Regularly

Significant changes will change your quarterly payments, and can change the way you need to file.

Even if you are short staffed, make sure you don’t shortcut documentation. From keeping a diary of everyone you meet with to tracking business mileage, to everyday expenditures, your records should be meticulous. The more documentation you have, the better you can insulate yourself when it is time to get ready for tax season.

5. Don’t Be Afraid of an Audit

Many business owners miss out on deductions they rightfully deserve because they are afraid of IRS scrutiny. If you are keeping records properly and working with a tax professional, there is nothing to be afraid of. The IRS will never come back and tell you about deductions you should have or could have taken, and if you properly documented everything and kept all of your receipts, there is really nothing to fear.

Always use the tax codes to your advantage, but remember – the bulls and the bears make money, and the pigs get slaughtered.


Improve Your Holiday Sales

At the height of the holiday shopping season, retailers are looking for ways to increase sales and bring in new customers-during what for many is the busiest time of year. Having a plan in place to make sure that you reach your sales goals and satisfy your existing customer base is not only smart-it may mean the difference between ending the season on a high or barely breaking even.

Upticks in employment, consumer spending and buyer morale are poised to make 2014 the biggest holiday shopping season ever. Retail industry estimates put this season’s expected consumer spending at $616.9 million, a 4.1% increase over 2013.

This means more potential business for you, and we’ve compiled some tips to help you make sure you’re ready for the holiday rush.

  1. Keep track of inventory – While this may seem like the most obvious of things to do to, the importance of having inventory
  2. Holiday decor – The time from Thanksgiving to New Year’s Day is full of holidays celebrated by most of your customer base. Your decor should match the festiveness of the season. Updating to include holiday themes in your brick and mortar shop and on your website will draw in holiday minded customers looking for gifts.
  3. Update your promotional schedule – scheduling email and in store promotions throughout the season can help you keep track of what customers are buying for what holidays-which can help you determine the best marketing efforts for your business.
  4. Prep for web traffic increase – Make sure your business can handle the increased traffic that comes with the season. Shoppers will be browsing (and buying) more, and you need to have your servers ready for the added bandwidth.
  5. Update your mobile site – more and more customers are relying on their mobile devices to research and complete purchases. According to ___ up to 30% of sales will be completed with the use of a mobile device, so make sure your website’s mobile presence has a customer friendly interface.
  6. Holiday Mailings – Your direct mail and email efforts should also reflect the holiday season in theme and tone. Offering special discounts and deals through customer codes is a great way to track who is shopping with you for the holidays.
  7. Free Shipping Day- Free shipping has been deemed the second most important factor when customers are making a decision to shop online. To this end, Free Shipping Day-December 18th this year-can provide the boost you need to draw customers to your site.

As always, when you’re in need of working capital to make sure you have enough inventory, staff or equipment on hand to keep your holiday retail season running smoothly, you can count on eProdigy to provide you with the funding you need to keep your business growing.


š National Retail FederationHoliday Sales Forecast