Notes on Specialty Finance

Merchants and brokers love to showcase healthy ending balances on bank statements. But I know that a single month-end number can hide dangerous intraday cash flow problems. Here is why the real metric that predicts my default risk is the low water mark.

A merchant cash advance is a purchase of future receivables, not a loan. Here is the order I underwrite in when I participate in a pool: duration, capacity, renewal history, deposit health.

Merchant cash advance underwriting is mostly exclusion, not pricing. Here's how I read capacity off the tape, and why I say no early to protect the capital I deploy.

Concentration is the risk that quietly does the damage. Here is how I think about portfolio concentration risk, and why I underwrite the shape of the book over any single deal.

Every week I see the same assumption repeated: the business used cash flow financing because the bank said no. I have been in this market long enough to know that framing is wrong more often than it is correct. The bank did not decline them. The bank does not offer this product. Those are two different statements and the distinction matters at the level of the operative legal document.

A look behind the curtain at how I evaluate deals. I explain why my merchant cash advance underwriting ignores FICO and focuses entirely on daily cash flow and renewal strength.

Most files on funding platforms look fine on paper. The ones that stop me are the renewals. After twenty years in specialty finance underwriting, here is the signal I trust above almost everything else.