Merchants can turn to Yellowstone Capital for quick cash advances when other lenders refuse funding or when existing loans don't provide enough capital to cover expenses. High fees, short terms and questionable practices suggest this lender should be considered only as a last resort.
Founded in 2009, Yellowstone Capital claims to be one of the oldest providers of merchant cash advances (MCAs) in the industry. The company operates both as a direct lender and in partnership with a network of ISO agents to connect merchants with as many funding opportunities as possible. With such a structure in place, Yellowstone is able to find loan options for companies unable to obtain funding from banks, credit unions and even other cash advance providers. Services are largely targeted toward high-risk industries and companies without strong financial profiles or favorable credit scores.
Yellowstone's website promises the lender gets to know its customers "as individuals" instead of numbers and suggests no "credit challenges" are too daunting for its in-house funding team and "the country's biggest" network of ISOs to handle. According to various pages on the site, Yellowstone has extended funding to between 20,000 and 25,000 businesses, although it's difficult to know which statistic is correct because three different numbers are given, two of which appear on the same page of the website.
This is a major issue with Yellowstone's marketing and is reflected in the largely negative feedback customers have left on major review sites. Merchant Maverick cites the lack of information and presence of "fluff" in the marketing language used and states how difficult it is to get in touch with a live representative at Yellowstone to ask questions or clarify details. Since consistent communication between lenders and merchants is a key part of a successful loan agreement, such a poor commitment to connection sends up a red flag about this fast-cash lender from the start.
Despite these apparent shortcomings, Yellowstone's tone remains optimistic across all marketing channels. Staffed by "industry veterans" ready to "help [businesses] get approved" regardless of credit card score, the lender markets to companies in dire need of cash and those lacking the options available to companies in more favorable financial circumstances.
Yellowstone Capital is one of the few MCA lenders on the market not requiring applicants to maintain a minimum credit score. The advertising language on their website reflects this, suggesting the company will do just about anything to secure loans for merchants without the extensive documentation associated with traditional loan applications. However, Yellowstone does ask merchants to:
Because Yellowstone doesn't put any emphasis on credit scores, they're able to use ISO partnerships to make "outside-the-box" deals for merchants in just about every industry. This can be helpful to companies in dire need of funding but may also be problematic for those already deep in debt and seeking to stack additional loans. Fewer restrictions can mean less discernment and lead to poor funding decisions on the part of both lender and merchant.
With their loose guidelines and target audience of businesses with poor credit, Yellowstone already makes exceptions where other lenders draw the line. Even if a merchant has a questionable credit history, Yellowstone is likely to find a suitable funding deal.
Like most MCA providers, Yellowstone Capital caters to industries in which both cash flow and expenses vary widely based on circumstances beyond business owners' control. These industries include:
Holidays, weather conditions and economic fluctuations often impact the hospitality industry, and retail establishments tend to rely on a handful of big "shopping seasons" to bring in the majority of their income. When a slow time hits, some find it easier to go to lenders like Yellowstone instead of banks because of the faster turnaround time and minimal application requirements. In healthcare companies, emergency expenses may make a "fast-cash" loan necessary to avoid interruptions in patient care.
Despite catering to businesses in these situations, reviews suggest Yellowstone doesn't make good on its promise to work with its customers to understand and meet their needs. Many merchants report the company doesn't communicate well and isn't always ethical in the way it draws out funds for payment.
Law firms are among the many types of companies and organizations Yellowstone Capital doesn't hesitate to lend to when banks won't. Many fast cash lenders have lists of industries with which they prefer not to deal, but Yellowstone doesn't indicate it will reject any type of merchant. This apparent lack of restriction fits with the way the lender bills itself as an option for businesses unable to get funding from any other source.
Yellowstone Capital gives qualifying merchants 3 to 6 months to pay off loans in full. When compared with similar lenders, these terms are surprisingly short and offer little room for flexibility should an unexpected drop in cash flow occur.
Payments for MCA loans are generally taken as a percentage of each day's credit card sales, so higher sales volumes mean shorter terms. Merchants must be aware of the average amount Yellowstone expects them to pay each day so that they can budget accordingly.
For a $250,000 loan at Yellowstone's lowest buy rate and six-month terms, payments would average $2,800 per day, or a little over $14,000 every week. Payments would be double on a loan with three-month terms. Businesses must maintain reliable cash flows and strong sales volumes to prevent the need for additional funding just to meet daily loan obligations.
Applying for funding from Yellowstone Capital starts with a short online form requesting:
After submission, a representative from Yellowstone should get in contact with the applicant. However, reviews state it's hard to connect with the lender even though each business is promised a "personal liaison" as a guide through the loan process.
Yellowstone has five in-house funders available to negotiate deals. To facilitate the process, applicants must show proof of at least 75 percent ownership and are asked to provide the company's most recent three months' worth of bank statements along with a completed application.
The Yellowstone Capital website advertises same-day approval for the majority of merchants and funding in as little as 48 hours. Other areas of the site say funding may be available in 24 hours, but no details are given to indicate what circumstances may allow for this.
Fees for Yellowstone's MCA loans are higher than those of other lenders and much higher than the industry average. At 1.35 to 1.4, these rates add a significant amount to each loan the company funds. A merchant qualifying for a $250,000 loan would pay $87,500 in fees on the low end and $100,000 on the high end. Once the documentation fee is added, the final cost of the loan may be 35 to 40 percent more than the principal.
Because such high rates can negatively impact a company's budget, it's important for merchants to investigate all potential sources of funding before committing to an agreement. Even when time is of the essence, going with the lender promising the fastest turnaround time can result in a situation where payments become unsustainable.
Whereas the majority of other short-term lenders tend to be wary of or outright reject applicants with outstanding loans through other companies, Yellowstone is open to extending funds to merchants able to prove their ability to maintain a regular payment schedule.
This practice of stacking is a common but unpopular occurrence in the lending industry with potentially big consequences for merchants. Due to the high fees associated with MCAs, attempting to keep up with daily payments on more than one loan quickly becomes a struggle. Options for early renewal compound the problem by piling on more debt without any relief from the fees associated with the remainder of the original loan.
Businesses in need of multiple stacked loans just to stay in operation may wish to consider other financial help instead of going deeper into debt.
Documentation fees cover the cost of processing the paperwork associated with loans. Yellowstone Capital requires a one-time fee of around 4 percent of the loan amount. While this sounds like a low number, it can represent a sizeable chunk of the funding a business applies to receive.
For example, a $250,000 loan would require $10,000 in fees plus the buy rate on the loan as a whole. Companies counting on the full loan amount may find themselves falling short if these fees aren't properly calculated and considered in advance of accepting an offer.
Yellowstone requires no origination fee on top of its documentation charges. However, the documentation fee is much higher than the origination fee charged by similar lenders.
Merchants sometimes find an initial loan from a company like Yellowstone Capital isn't enough to cover expenses and need to renew before the terms are up. Yellowstone will consider renewal once an existing loan is 50 to 60 percent paid in. This policy can be useful for merchants with no other options for funding, but it can also lock in a cycle of borrowing with the potential to put a company out of business.
If a merchant takes out a $250,000 loan at Yellowstone's lowest buy rate of 1.35, they still carry about $170,000 worth of debt when half the loan is paid. The merchant is then responsible for paying off this amount on top of the additional debt incurred by the renewal.
As is the case with most cash advance lenders, Yellowstone doesn't offer forgiveness on any fees. The company also doesn't provide early payment discounts, meaning merchants are required to cover all fees regardless of when the loan is paid in full.
MCA loans are to be used for expenses associated with business operations or growth opportunities. Yellowstone Capital puts no other restrictions on loan funds, so merchants are free to:
However, short-term loans with high fees have many drawbacks for businesses already struggling to make ends meet. Unless a merchant is in a situation where cash flow is guaranteed to improve in the near future, using a Yellowstone Capital loan to handle essential expenses will likely prove to be untenable.
Yellowstone Capital has one of the most negative reputations in the fast-cash lending industry. With only 1.6 out of 5 stars on Google and 2.5 out of 5 on Yelp, the company has received mostly poor reviews and vehement complaints from its customers. Common criticism includes:
Based on the volume of complaints and the lack of responsiveness on the part of the company, the BBB has assigned Yellowstone a rating of F.
Although Yellowstone Capital reportedly claims BBB accreditation in its corporate email signature, the company has no such designation. The BBB has cited Yellowstone for this false claim and counts it against the lender in its rating. No other notable credentials or citations are documented.