IMGCAP(1)]
Granting merchants cash advances based on check transactions is not a widespread practice for cash-advance providers because of concerns about merchants bypassing the mechanisms used to track those transactions, observers say. Typically, cash-advance firms assess a merchant's past credit and debit sales to forecast their future sales. Then they purchase a portion of those future sales at a discount in exchange for providing cash to the merchant. For cash advances based on check transactions, "the only way I get paid back is if you put that check through the check reader," says David Goldin, president and CEO of AmeriMerchant LLC, a New York-based cash-advance company. "Do you know how easy it is to walk that check to the bank? We looked at that model and passed on it. There's just too high a degree of risk of the merchant being able to circumvent the payback mechanism." Not considering check transactions, however, reduces the amount of funds a merchant can receive from a cash-advance company. "To the extent that there's an opportunity to draw from a bigger pool, that's a positive," says Jeremy Brown, president and chief operating officer of Bethesda, Md.-based RapidAdvance LLC. "The check-advance programs are fairly new. They are not as stable, in my mind, as credit and debit card processing because you can easily deposit your checks at other banks."
