•  Business Financing
  •  Main Street Business
  •  Real Estate

Supervest Review -- Invest in Merchant Cash Advances

Supervest is an automated alternative investment platform, currently focused on Merchant Cash Advances, where businesses pay a portion of their future income in exchange for an up-front cash advance. Supervest is expanding to other asset classes, including business loans and real estate “hard money” lending.

Supervest

  • Investment Types: Real Estate, Business Financing, and Main Street Business
  • Sectors: Real Estate and Business Financing
  • Minimum Investment: $25,000
  • Advertised Returns: 15-25%
  • Must be accredited
 Pros
  • Relatively quick payback times
  • Easy diversification across merchants and borrowers
  • Growing list of asset classes
 Cons
  • High minimum investment
  • Open only to accredited investors

Overview

This Supervest Review will help you learn more about Supervest's investment offerings, including how the alternative investments on Supervest are structured, and what your potential returns might be. You can read more about the criteria we use to review investment platforms here.

Supervest is an automated alternative investing platform offering a range of asset classes, including Merchant Cash Advances (MCA), hard money lending, and business loans. Supervest’s co-founders have experience in mortgage lending, merchant cash advances, and consumer and business payment technology. They previously ran their own MCA company, and as with many online alternative investment providers, have built a technology platform to bring a novel asset class to a broader pool of investors.

Supervest previously raised more than $500K in capital themselves through equity crowdfunding on SeedInvest.

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Types of investments Supervest offers

The largest current asset class available on Supervest is Merchant Cash Advances (MCA). In an MCA, a business receives a cash advance on future receivables, repaying a portion of their sales until the advance is repaid. MCAs are typically much faster to fund than a traditional loan, and because they technically aren’t loans, they aren’t subject to usury laws limiting interest rates.

The total market for Merchant Cash Advances is more than $20B, and established players such as American Express, PayPal, and Square have their own MCA offerings.

As an example of how an MCA is used, the owner of a pizza shop might need a new oven ahead of a big week of expected orders, and is willing to pay a premium for fast access to capital. If the amount needed is $10,000, the business owner would receive the full amount up front, and then pay back a multiple of that amount (for example, 1.4X) over a specified term, typically around 6 months.

Within the Supervest platform, investors can review open funding offerings, and allocate their portfolio to different merchants based on specific criteria and risk tolerance. Investors have a maximum exposure of 5% to any single MCA. The overall model of a platform for fractionalizing investment across a large volume of notes (though in this case they are not, technically, loans) is somewhat similar to P2P lending platforms such as Lending Club and Prosper.

Supervest also offers a “12% Note” product, with quarterly interest-only payments over a 2-year term, constructed from a portfolio of MCAs across the Supervest platform.

Supervest acquires the MCAs from participating (and vetted) MCA funding companies, who retain at least 20% of the MCAs to ensure “skin in the game.”

Supervest has also been adding new asset classes, such as hard-money lending and business loans, with additional asset classes planned for 2022.

What do you get when investing with Supervest?

The details vary by investment type. Prospective investors in merchant cash advances should be sure to understand their investments are not secured by any collateral, and are not traditional promissory notes. Rather, they are a claim on future earnings in exchange for an up-front lump sum payment (known as “participation interests”). According to Supervest, default rates for MCAs are 8.5-10.5%.

Investors in the 12% Note offering receive an unsecured promissory note from Supervest Investments LLC, a subsidiary of Supervest.

How does Supervest make money?

Supervest charges a platform management fee of 5-7%, deducted from incoming remittances paid by the merchants. A portion of that fee is passed through to the original funding provider. There are no fees charged on cash balances.

Potential returns and cashflow

Details vary by investment type. In the case of Merchant Cash Advances, investors receive daily payments as they are collected from the merchants, sometimes starting in as little as a week, and typically spread over 3-9 months. Investors can then choose to re-deploy those payments back into new MCAs.

MCA returns will of course very depending on an investor’s specific portfolio, but Supervest says annualized returns of 15-25% are common among its users.

Breadth of offerings on Supervest

Details vary by investment type, but in the case of Merchant Cash Advances, Supervest typically has thousands of MCA funding opportunities to choose from, and provides multiple options for searching, sorting, and filtering those opportunities.

Regulatory framework and due diligence expectations

Supervest does not offer merchant cash advances to business owners directly, instead sourcing the MCAs from a network of vetted funding providers. According to Supervest:

Supervest performs extensive initial and ongoing due diligence on any Funding company offering deal flow onto our platform. A course of company underwriting, process overview and portfolio analyses are undertaken to ensure prospective Funders meet the operating standards and performance thresholds maintained at Supervest. This due diligence includes: OFAC / CLEAR Report, Site Visit, Financials / Balance sheet review, Underwriting guidelines review, Collection guidelines review, Static Pool review, Third Party review, weekly portfolio performance review, weekly funder review, quarterly contract sampling.

Supervest currently offers investments only to accredited investors under SEC Reg D.

This review was first published on 05 December 2021.


Our Rating

Excellent

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