Recently, when I sat down to watch the ABC reality show “Shark Tank” with my children, I was surprised to see a merchant cash advance lender, Total Merchant Resources, pitching the Sharks. Typically, the companies that present on the show offer a unique service or product. Instead, Total Merchant Resources is a “me too” player in the highly commoditized and competitive alternative-lending industry.

After some negotiation and discussion, Kevin O’Leary, a shark/investor known on the show as “Mr. Wonderful,” agreed to buy a 50 percent stake in the company for $200,000. As a loan broker, I know quite a bit about the cash-advance industry. While there are stories about how these loans have helped businesses grow despite the prices of the loans, I have also seen the negative impact they can have on small businesses. I was eager to understand what Mr. O’Leary was thinking, and I decided to contact him after the show aired. When I spoke with him, he told me that while the investment was not completed, everything was proceeding as planned.

Total Merchant Resources, like hundreds of other companies in the cash-advance business, is essentially running an unregulated bank for business owners. Based in Piscataway, N.J., it lends money to small businesses based on their credit card receivables. Sometimes, these loans are the only source of financing available to struggling small businesses, but they generally come with very high annual percentage rates — as much as 50 percent or more — and with very short amortization periods. As a result, these loans can put small-business owners on a high-interest treadmill that can be tough to get off. They can even ruin companies.

Mr. O’Leary explained his logic by saying that he was O.K. with participating in this endeavor because a market has been created for these loans since the recession. He said that his due diligence determined that there were about 20 comparable companies whose rates were all within 2 or 3 percentage points of each other.

I think that Mr. O’Leary’s due diligence might have been right, say, six months ago, but there has been some innovation and progress among alternative lenders over the last few months. We’re seeing companies such as DealstruckFundation and Funding Circle come into the market with products at much lower rates than those offered by the cash-advance lenders and with much longer amortization periods – some as long as four years. And the market is expected to heat up further with the widely anticipated entrance of Lending Club. When I raised these issues with Jason T. Reddish, chief executive of Total Merchant Resources, and Val Pinkhasov, the company’s president, they said they expected the new players to strengthen the market.

On “Shark Tank,” Mr. Reddish and Mr. Pinkhasov gave an example of a client that needed $18,000 for a new air-conditioning unit for its tanning salon. The lenders suggested that they came to the client’s rescue by offering quick money — albeit at an expensive rate and with the requirement that the money be paid back quickly. The tanning salon chose to take the cash advance. But I wonder whether the client knew about the new — less expensive — players in the market and whether it might have been able to save money and improve its cash flow position by choosing a different option.

In my loan brokerage, we often get calls from borrowers like the tanning salon who are in tight spots and need money quickly. And there certainly are times when we put clients who have no better option into cash advance merchant loans. But even within the cash-advance industry, our experience is that the market is not as tight as Mr. O’Leary seems to think. One player in particular, IOU Central, offers borrowers a one-year term loan at an all-in annual rate of about 21 percent. This is considerably cheaper than other players in the market.

And there is yet another new platform in the market, SmartBiz, that is offering loans through the Small Business Administration Express Loan Program. These loans are typically for less than $25,000 with a 10-year amortization. And it can take as little as five days to close the loan.

If you had the option to borrow $25,000 and pay it back at an annual percentage rate of 8 percent over a 10-year period or to take the same money and have nine months to pay it back at an annual rate of 50 percent or more, which option would you pick? Is Mr. O’Leary backing the right company? If you had the money — and Mr. O’Leary’s brand name — would you have made the same investment he did?