Short Term Small Business Financing I: The Extended Hold
How a 16-month small business lending deal stretched to 45 months — and still delivered 13%+ returns
The Numbers
| Invested | $70,000 |
| Returned | $87,032.77 |
| Net Profit | $17,032.77 |
| MOIC | 1.24x |
| IRR | 13.12% |
| Target Term | 16 months |
| Actual Term | 45 months |
The Investment
In April 2018, YieldStreet launched Short Term Small Business Financing I — a $3 million portfolio of Merchant Cash Advances originated by Quicksilver Capital. The deal filled in minutes. I committed $70,000.
The structure:
- 13% target interest rate
- 16-month term (should have matured ~August 2019)
- $25,000 minimum investment
- Portfolio of MCAs cross-collateralized with other distinct portfolios and a common Reserve Account
Investment Timeline
Already Late Before COVID
The original 16-month term should have ended around August 2019. It didn’t. The underlying Merchant Cash Advances were taking longer to collect than projected. By early 2020, the investment was already in “Modified Outlook” status — YieldStreet’s polite way of saying things weren’t going as planned.
Then COVID hit.
In March 2020, lockdowns began. The portfolio was backed by small businesses — restaurants, retailers, service providers — exactly the businesses that got crushed. MCAs depend on daily credit card receipts. When foot traffic disappeared, so did the cash flow.
I mentally wrote this one off. A portfolio of small business loans, already struggling, entering the worst small business environment in a generation? I expected a total loss.
The Recovery No One Expected
Throughout 2020, collections continued at “reduced levels.” YieldStreet restructured the payment waterfall to prioritize principal over interest — a defensive move to preserve capital. By January 2021, they were in “active discussions with stakeholders regarding accelerating recovery.”
Then, in April 2021, the breakthrough:
“We are pleased to report that as a result of our efforts, we’ve reached agreements to achieve our goal of materially improving the performance of this investment.”
Substantial distributions resumed. By January 2022, YieldStreet upgraded the status to “Performing” and announced full repayment at approximately target returns.
The investment I’d written off came back from the dead.
The Numbers in Context
| Target interest rate | 13.00% |
| Actual IRR | 13.12% |
| Target term | 16 months |
| Actual term | 45 months |
| Time extended | 29 months |
The IRR slightly exceeded target (13.12% vs 13.00%), but capital was locked for nearly three times longer than expected. The opportunity cost of that frozen capital doesn’t show up in the IRR calculation.
What I Learned
Delays can compound. This investment was already late before COVID. Then the pandemic hit and made everything worse. When something’s behind schedule, external shocks don’t reset the clock — they push it further out.
Small business exposure is cyclical risk. MCAs depend on daily cash flow from small businesses. When a recession hits, small businesses get crushed first. COVID was an extreme example, but the lesson applies to any economic downturn.
Platform intervention can save a deal. YieldStreet restructured the waterfall, negotiated with stakeholders, and worked for two years to recover value. Without active management, this could have been a partial or total loss.
“Short term” is marketing. The name promised short-term financing. The reality was 45 months. Alternative investment timelines should be treated as optimistic estimates, not commitments.
Don’t give up on written-off investments. I mentally called this a loss in 2020. It returned 1.24x. Sometimes patience — and platform intervention — pays off.
Final Accounting
| Initial investment | $70,000 |
| Total returned | $87,032.77 |
| Interest earned | $17,032.77 |
| Holding period | 45 months |
| IRR | 13.12% |
This was my third YieldStreet investment. $70,000 committed in April 2018, targeting 13% over 16 months. Already late by early 2020, then COVID hit — and I expected total loss. Nearly four years later, full repayment arrived. The investment I’d written off delivered exactly what was promised, just 29 months late.
