The shadowy world of merchant cash advances

Summary

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The Indicator from Planet Money

Episode Summary: "The Shadowy World of Merchant Cash Advances"

Date: March 11, 2026
Hosts: Waylon Wong & Alina Selyuk (NPR)

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Overview

This episode explores the murky and often predatory industry of Merchant Cash Advances (MCAs)—short-term, high-cost financing tools aggressively marketed to small businesses in distress. Through the story of entrepreneur Joshua Esnard, listeners are given an inside look at how MCAs can shift from a financial "lifeline" to a punishing "chokehold," and how regulatory gaps leave business owners vulnerable.

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Key Discussion Points & Insights

1. The Rise and Mechanics of Merchant Cash Advances

• Definition & Lure: MCAs are not traditional loans. Instead, lenders "purchase" a portion of a business's future sales, providing immediate cash (often within hours), but at extremely high fees and interest rates.
  • “It’s a pretty shadowy corner. It’s an industry that offers very fast cash for very high fees to businesses in distress.” — Alina Selyuk [00:27]
  • MCAs surged during the pandemic, targeting restaurants, music venues, and now small businesses struggling to pay tariffs.
• Aggressive Marketing: Business owners receive relentless calls and texts offering large sums quickly.
  • “I get five calls a day.” — Joshua Esnard [02:19]
• Unregulated Terrain:
  • MCAs are technically not loans, so they dodge most lending laws—no licensing requirements and no legal cap on fees.
  • "We've talked to debt lawyers and government investigators who have seen rates of like 30%, 90%, 300%." — Alina Selyuk [05:59]

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2. Joshua Esnard’s Story: Booming Business Meets Crisis

• Background:
  • Joshua Esnard, inventor and founder of The Cut Buddy (DIY hair-grooming tools, Shark Tank alum), sees his business hit $6 million/year revenue. [03:21]
• The Tariffs Trap:
  • New import tariffs (over 150%) hit suddenly, causing his import costs to skyrocket far beyond the value of the goods.
    • “The entered value of the goods was $3,000 bucks. And my tariff bill was $4,600.” — Joshua Esnard [04:24]
  • Facing contractual deadlines with major retailers (Walmart, Target), letting shipments sit at customs risked business relationships and massive storage fees.
    • “If you don’t deliver to these retailers, they drop your product. So you gotta pay it. So where do you get the money from? You get it from the mob. And that’s the MCA.” — Joshua Esnard [04:57]

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3. The MCA Debt Spiral

• Taking the Cash, Paying the Price:
  • Esnard took out three MCAs totaling $950,000; with fees, his debt ballooned to $1.2 million.
    • “So basically, there goes his profits for the year, right?” — Waylon Wong [07:14]
    • “Exactly. All profits went to tariffs and debt payments. Josh really cut costs. He started skipping his own paycheck.” — Alina Selyuk [07:17]
• Repayment Mechanism:
  • Lenders directly withdraw payments from business bank accounts—skimming a share of every sale.
    • “It’s like someone opening your wallet, seeing what you got there that week and taking a cut every week.” — Alina Selyuk [06:31]
• No Help from the SBA:
  • The Small Business Administration (SBA) now refuses to refinance MCAs, viewing them as high-risk.
  • Esnard likened the experience to a zombie film:
    • “These zombies are the MCAs calling you and harassing you... you’re running for help to the SBA, which is the shelter, and they just close the door on you because they think you may have gotten bit by these zombies.” — Joshua Esnard [07:43]

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4. Systemic Issues & Limited Recourse

• Oversight & Enforcement:
  • Federal and some state governments have taken steps to regulate MCAs or prosecute egregious cases, but many lenders (including Wall Street-backed funds and even those suggested by Amazon) still operate in a legal gray zone.
  • Trade associations call for compulsory licensing and action against “bad apples.” [08:26]
• Hard to Reach Lenders:
  • When reporters tried to contact MCA lenders, they received evasive responses.
    • “Our colleague... only got one text back that said, ‘How did you get my information?’” — Waylon Wong [08:38]

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5. Resolution and Future Hopes

• A Lifeline for Esnard:
  • A nonprofit lender (Business Consortium Fund) refinanced Esnard’s MCA debt into a standard business loan, giving him manageable payments over five years, though he still owes interest on $1.2 million. [08:47]
• Tariff Refund Prospects:
  • With some tariffs ruled illegal by the Supreme Court, Esnard holds out hope for a refund.
    • “Some of that refund money could really come in handy. Yeah, I bet.” — Alina Selyuk & Waylon Wong [09:15]

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Memorable Quotes

• “These zombies are the MCAs calling you and harassing you... and then you’re running for help to the SBA, which is the shelter, and they just close the door on you because they think you may have gotten bit by these zombies.” — Joshua Esnard [07:43]
• “It’s a financial lifeline that can turn into a financial chokehold.” — Alina Selyuk [01:08]
• “It’s like someone opening your wallet... and taking a cut every week.” — Alina Selyuk [06:31]

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Important Timestamps

• [02:19] — Joshua Esnard on relentless MCA marketing
• [03:21] — Esnard’s Cut Buddy origin story
• [04:24] — Tariffs make import costs unsustainable
• [05:23] — Comparing MCAs to borrowing from “the mob”
• [05:59] — Legal loopholes and uncapped fees
• [06:31] — Direct withdrawals from borrower accounts
• [07:43] — Zombie movie metaphor for MCAs and the SBA’s shift
• [08:47] — Esnard’s rescue by a nonprofit lender

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Tone & Style

The hosts maintain the show’s signature clarity and warmth, using accessible analogies and real-life anecdotes to demystify complex economic mechanisms. Joshua’s humor and candor lighten a somber topic, while the zombie metaphor vividly captures the relentless, menacing nature of MCA lenders.

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This summary provides a clear overview of the complexities of merchant cash advances, giving prospective listeners crucial context, standout moments, and real-world consequences—all distilled into a brisk, narrative-driven breakdown.

Transcript

[Alina Selyuk]

Npr.

[Waylon Wong]

This is the Indicator from Planet Money. I'm Waylon Wong and we have NPR business correspondent Alina Selyuk back with us today.

[Alina Selyuk]

Hello.

[Waylon Wong]

Hello. Always great to see you. And Alina, you've taken a field trip recently into a particular corner of the financial world.

[Alina Selyuk]

It's a pretty shadowy corner. It's an industry that offers very fast cash for very high fees to businesses in distress.

[Advertisement Voice]

Your file shows you're nearly approved for $159,000.

[Waylon Wong]

Okay, that does not sound real, but it sure does sound like a nice chunk of cash I could use.

[Alina Selyuk]

The thing is, these can be real, real money from real lenders who are largely unregulated. During the pandemic, these firms went after struggling restaurants and music venues. Now they found a new market of small businesses that desperately need cash to pay tariffs.

[Waylon Wong]

Today on the show, the story of a financial lifeline that can turn into

[Alina Selyuk]

a financial chokehold and how one business owner went from a year that was slated to be his best to a year of owing a fortune to lenders that took their money straight from his bank account.

[Joshua Esnard]

I'm a million dollars in debt with merchant cash advance loans right now.

[Waylon Wong]

That's coming up after the break.

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[Alina Selyuk]

Okay, so a few months ago, I met with a big group of small business owners and there was this moment when someone brought up these loan pitches, these never ending calls and texts that they're getting promising quick cash. And so we were like, is this like predatory loans? And the room almost vibrated. Yes, excellent.

[Joshua Esnard]

I can talk for hours about. I get five calls a day.

[Alina Selyuk]

That is the story that no one's talking about in our country right now,

[Waylon Wong]

but we will talk about it. So I heard someone say mca. So that stands for merchant cash advances. And this is the very shadowy financial world we are talking about.

[Alina Selyuk]

And the voice who said that is Joshua Esnard, who got deeply in debt to these companies. I visited him in North Carolina.

[Joshua Esnard]

Hey, how you doing? Good to see you.

[Alina Selyuk]

He has a warehouse office near the Raleigh Durham Airport. And just Josh has this fun business origin story, which is that he spent his childhood getting his hair cut at home by his dad who's like MacGyver. Very DIY dad. And then Josh finally rebelled as a 13 year old.

[Joshua Esnard]

I got my TJ Maxx clothes, the platinum Fubu. Yeah, the Fat Albert Fubu. I'm ready to go talk to the girls and stuff, but I got this buzz cut. So I'm like, I want a fade in, an edge up.

[Alina Selyuk]

And so teenage Josh invented a way to fix his hair himself. He carved a template out of a plastic folder with edges that you can press to your head and guide clippers for sharp lines. And eventually, Josh patented this tool and took it to Shark Tank. And now his company is 10 years old. It's called the Cut Buddy. It makes all kinds of hair grooming products now, including special shavers that are quiet and ergonomic. And the business turns seamless. $6 million in revenue a year. And last year was slated to be the best one yet by sales. But then. Tariffs, tariffs.

[Joshua Esnard]

All right, so let's look at this.

[Alina Selyuk]

And so we're looking at Josh's customs forms. You know, his warehouse is a maze of boxes stacked on pallets. Almost all of them are stamped China. And we'll look at one shipment from May. President Trump's new tariffs hiked Josh's import fees to 152%. So instead of like 230 bucks in tariffs, you paid over $4,000.

[Joshua Esnard]

Yeah, yeah. The entered value of the goods was 3,000 bucks. And my tariff bill was $4,600. Yeah. So I paid way more than they actually cost.

[Alina Selyuk]

Yeah.

[Waylon Wong]

So just to underline this, his tariffs cost more than his product, and that's

[Alina Selyuk]

a single small shipment. He tried to avoid tariffs by bid, but holding shipments in China means failing contracts with big stores. Leaving shipments at customs means huge warehousing fees.

[Joshua Esnard]

So when you're desperate and customs has your product at the dock and you gotta deliver to Walmart, Target or whatever, and you have to clear that out or else they're gonna send it to the same warehouse where Indiana Jones artifacts were stored. And then you're screwed because if you don't deliver to these retailers, they drop your product. So you gotta pay it. So where do you get the money from? You get it from the mob. And that's the mca.

[Waylon Wong]

Mca Merchant Cash advance, which apparently to Josh, feels like borrowing from a loan shark.

[Alina Selyuk]

And to be clear, the industry is pretty chaotic. So yes, a predatory lender might offer mcas, or it could be a fund on Wall street, it could be some guy, or it could be a lender suggested by Amazon. And here's the big Thing about merchant cash, they are technically not loans.

[Waylon Wong]

Right? When an MCA lender gives you a huge chunk of cash in a matter of hours, what they're doing is technically buying something from you. They are buying a stake in your future sales.

[Alina Selyuk]

So technically, it's like a purchase, not a loan. And that means most lending laws do not apply. The lenders don't have to be licensed, and the fees they can charge legally have no cap. We've talked to debt lawyers and government investigators who have seen rates of like 30%, 90%, 300%.

[Waylon Wong]

And the way the MCA lender gets repaid is often by directly dipping into the borrower's bank account. As that business makes sales, the lender simply withdraws its cut.

[Alina Selyuk]

It's like someone opening your wallet, seeing what you got there that week and taking a cut every week.

[Waylon Wong]

Now, this might seem like a wild ride to jump onto, but the big context to this is that business owners can feel like they have very few options in an urgent cash crunch. And big banks rarely give the time of day to small business lending because it's messy and risky. A merchant cash advance is fast and easy, but costly.

[Alina Selyuk]

So Josh's tariffs exceeded his budget five times, and he ended up taking out three merchant cash advances. Their total was $950,000. Including the fees. His actual debt reached $1.2 million.

[Waylon Wong]

So basically, there goes his profits for the year, right?

[Alina Selyuk]

Exactly. All profits went to tariffs and debt payments. Josh really cut costs. He started skipping his own paycheck. At one point, he appealed to the US Small Business Administration, the sba, which had given him a loan before. But here's a plot twist. The agency, as of last year, no longer refinances merchant cash advances. They're now red flags. In one of our meetings over Zoom, Josh put it in horror film terms.

[Joshua Esnard]

The way I look at it is like a zombie attack. These Zombies are the MCAs calling you and harassing you, trying to give you money in 24 hours with, like, a crazy fee. And then you're running for help to the sba, which is the shelter, and they just close the door on you because they think you may have gotten bit by these zombies.

[Waylon Wong]

And these are the fast moving zombies. Yeah. These are the 28 days later zombies. They're not Night of the Living Dead slow zombies.

[Alina Selyuk]

Yeah.

[Waylon Wong]

Over the years, the federal government has investigated some MCA lenders prosecuting some egregious cases. And several states have waded in with some regulation or pending legislation.

[Alina Selyuk]

And we did talk to one trade group that represents Wall street backed lenders, and the CEO there says regulators should weed out the bad apples pushing predatory loans, but they should require lenders to be licensed.

[Waylon Wong]

Our colleague Scott Horsley reached out to a few that were pitching Josh, but only got one text back that said, how did you get my information?

[Alina Selyuk]

And just to bring Josh's story full circle, he did get a rescue squad. His past lender, a nonprofit called the Business Consortium Fund, agreed to pay off his MCA debt and turn it into a traditional loan. So he now owes interest on top of his $1.2 million, but it's a manageable rate and he has five to pay.

[Waylon Wong]

Well, now that the Supreme Court has ruled some of the tariffs illegal, maybe Josh could get a refund. Maybe that'll help too.

[Alina Selyuk]

Some of that refund money could really come in handy. Yeah, I bet.

[Waylon Wong]

Alina, thanks so much for bringing the story to us. It was super interesting.

[Alina Selyuk]

Thanks for having me.

[Waylon Wong]

This episode was produced by Angel Carreras with engineering by Sina Lofredo. It was fact checked by Sierra Juarez. Ken Cannon edits the show and the indicator is a production of NPC pr.

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