Two-time Emmy and three-time NAACP Image Award-winning, television Executive Producer Rushion McDonald, interviewed Craig Calafati. The Executive Vice President and Director of Lending for Arkansas Capital Corporation, Arkansas Capital Corporation. A community development finance company that was chosen by SBA to receive one of the three new SBLC licenses and now offers flexible capital solutions nationwide to small businesses and entrepreneurs in underserved minority communities.
Company Description *
Arkansas Capital Corporation (ACC) is a private, nonprofit lending corporation dedicated to empowering entrepreneurs in Arkansas and surrounding states. ACC offers flexible capital solutions to meet the unique needs of entrepreneurs, small businesses, and economic and community development projects, emphasizing serving low-income, minority, and rural communities. Since 1957, ACC has partnered with commercial banks, government agencies, and others at local, state, regional, and national levels to deploy over $2.34 billion in capital financing.
Talking Points/Questions *
Talking points:
If you don’t have a Business Plan you will not be successful.
What is the purpose of Arkansas Capital Corporation?
The SBA does not lend money. Instead, it provides guarantees so lenders are more inclined to lend money to small business owners.
Small business owners should establish a line of credit with immediate access - especially for small businesses with payroll employees.
Aspiring entrepreneurs are encouraged to spend time with entrepreneurs who are already operating a successful business in your area of interest to gain valuable insights.
Small business owners should always know how much money they need before speaking with a lender. #SHMS, #STRAW
Support the show: https://www.steveharveyfm.com/
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
Welcome to the show.
Speaker 2 (00:06):
I'm Rashan McDonald, the host of money Making Conversations Masterclass,
where we encourage people to stop reading other people's success
stories and start planning their own. Listen up as I
interview entrepreneurs from around the country, talk to celebrities and
ask them how they are running their companies.
Speaker 1 (00:23):
And speak with nod profits who are making a difference
in their local communities.
Speaker 2 (00:27):
Now, sit back and listen as we unlock the secrets
to their success on Money Making Conversations Masterclass. Hi, I'm
Rashan McDonald, our host this weekly money Making Conversation Masterclass show.
The interviews and information that this show provides off for everyone.
It's time to stop reading other people's success stories and
start living your own. My guess is the executive vice
(00:49):
President and Director of Lending for Arkaso Capital Corporation. Alkassol
Capital Corporation is a private, nonprofit lending corporation dedicated to
empowering entrepreneurs in Arkansos and surrounding states. Please work for
the Money Making Conversation Masterclass. Craig Kalafati, how you doing, sir?
Speaker 3 (01:07):
I'm doing well. How are you well?
Speaker 2 (01:08):
First of all, I got to find out about are
your football man? Because football season is starting. Uh in
Arches state of Arkansas. That's razorback Country who.
Speaker 3 (01:19):
Album.
Speaker 1 (01:22):
Well, they're joined you in sec so you know in
the territory.
Speaker 3 (01:26):
I'm very happy about that because now I get my
long horns on TV.
Speaker 1 (01:28):
There you got, my friend. I appreciate you.
Speaker 3 (01:30):
Now.
Speaker 2 (01:31):
When you say surrounding areas, I'm I'm from Houston, Texas,
so I'm very familiar with that whole area, especially that
Texallcana area.
Speaker 1 (01:39):
I've been through that many times. What do you mean
when you're surrounding states.
Speaker 3 (01:44):
Well, something happened that that kind of caused us to
expand in the surrounding states. About six months ago, SBA
made available an SBOC license, which is a small business
Lending Company license which allows a non bank to lend
nationwide for the ESBA program. We received one of those,
(02:06):
one of the three that were available first time in
forty years they've made them available. So we were limited
Darkansas up to that point. We're allowed to go nationwide,
but my thinking is I want to be sure we're
doing it right, so we're going to start with a
slow rollout. We're doing basically, be honest with you, it's
not just surrounding states, it's the SEC's the that's the
(02:29):
outbo which shows because everybody knows it right right right.
So initially that's what we're going to start with, just
the surrounding areas, this area of the South, and then
when we feel that we've got everything in place, everything
that's necessary to do the job right, then we'll take
it nationwide.
Speaker 2 (02:46):
Now that's rest really impressive because of the fact that
I had never heard of that. Why was that restriction
in place and you said it the first time in
forty years.
Speaker 3 (02:56):
Well, the non bank lenders are not regulated. So every
bank is regulated by the fdi C or the OCC
the Office of the Control of the Currency, and so
you have non bank lenders that are out there that
really aren't regulated. We're we have to be regulated by
the state, but some aren't regulated by anybody. So it's
(03:17):
incumbent on SBA. If they're going to let you lend
across the country, they have to regulate you. They have
to do the auditing and everything else, and frankly they
just didn't have the manpower and so they beef that
part up of SBA. So so now we are regulated
not only by the state of Arkansas, but by the SBA.
Speaker 2 (03:38):
Now speaking of Korean, he's the executive vice president director
of lending for Arkansas Capital Corporation. Now, I say, as
a private nonprofit. Now, this whole show is going to
be by educating me because my banking is you know,
Bank of America, fifth Third, Wills Fogo. Now I'm talking
to you, please educate me on a different.
Speaker 3 (04:00):
Okay, well, we're not a bank, so we don't take
deposits or anything else. A quick background in Arkansas Capital
we are a non bank lender. As I said, we're
a nonprofit. We are and we will let me back up.
We were formed in nineteen fifty seven by the governor
of Arkansas, Governor Rockefeller, and at the time, what he
(04:24):
did was he had a barbecue and he took together
he got together all the business leaders in Arkansas and said, look,
we're sitting in a very agrarian society. We need to
build up industry, we need to foster entrepreneurship. You're the
guys that are going to help me do it. And
he had them all kick in some money and start
a company to do just that. And that that was us.
(04:45):
So since nineteen fifty seven. Our mandate has been to
not only foster entrepreneurship small business, but to get into
underserved communities, rural communities, which we have plenty of here
in the South, and so that's really our focus. We
do a number of different things other than just small
business lending. We also have what's called an EB five Hub,
(05:09):
which is a program through a Department of Treasury and
Homeland Security that lends money to approved projects that create
American jobs via immigrants that come to this country. So
you were immigrating safe from China or India and you
had to spare nine hundred thousand dollars lying around, you
can invest it in this program and get your Green
(05:31):
card right away, but also create American jobs at the
same time. We do that. We do also do New
Market Tax Credits, which is another program through Department of
Treasury which fosters larger developments, typically over seventy nine million dollars,
and we do those across the South. And then our
(05:51):
educational arm we put on a contest called the Governor's Cup,
which is a contest for college students college team from
different universities, very much like Shark Tank, kind of an
elevator pitch contest where they win up to twenty thirty
thousand dollars to take their plans forward. Well, we've been
(06:13):
doing that for I think twenty one years, so the
small while lending is our primary focus. It's not the
only thing we do here, but yeah, it was. It
was a big boost for us to get that get
the SBLC license. It was a huge compliment.
Speaker 2 (06:30):
That allows me to talk to you because you know,
my show is nationwide.
Speaker 1 (06:34):
Yeah, and that's one of.
Speaker 2 (06:35):
The reasons I was excited about it because of the
fact that when you start talking about underserved communities, that's
my audience. I'm not saying my audience is that feeled
with entrepreneurs. Sixty percent African American, twenty white. Fifty five
thousand dollars is the media income from our audience as
seventy percent mail. You know, so when I when I
(06:57):
look at the breakdowns, four percent mail and the great things.
At the start of the conversation, we was talking about
the Arkansas Capital Corporation. He was talking about it was
established for entrepreneurs and rural communities and underserved communities. Listening
to my audience, a lot of them in big cities.
So I think that this qualifies rural communities.
Speaker 3 (07:20):
But not the underserved necessarily rights.
Speaker 1 (07:23):
That's why I'm going, what is what qualifies as the underserved?
Speaker 3 (07:28):
The communities of color obviously, and you know Rurle fits
into that. I would say, when we're talking about underserved communities,
we're talking about community of color, awesome, primarily Hispanic and
Black communities.
Speaker 2 (07:41):
Awesome, awesome, And so again, you know, when I do
the interviews, Craig as always, can you tell everybody the
website that they can go to who wants to see
the applications if they want to fill out the application
and the process again one more time.
Speaker 3 (07:58):
Yeah, it's arcapital dot com. Pretty easy to remember. And
you'll go on there and you'll see.
Speaker 1 (08:04):
That's pretty easy.
Speaker 2 (08:05):
Aarcapital dot com, A capital dot com.
Speaker 1 (08:08):
I love it is a R C A P I
T O L T A L.
Speaker 2 (08:14):
T A l dot com dot com. And then do
you is it a registration button that says loans or what?
Speaker 1 (08:21):
Do you go?
Speaker 3 (08:21):
It? Just it says apply here, apply here, apply here. Great,
and then you do that and then uh, there's also
contact information if you need to call us your questions.
Remember we're also watching you. Uh, you know, as the
application is being done, and if all of a sudden
you disappear, we're probably gonna call you and say, do
you need help or do you need I love that,
(08:43):
I love that.
Speaker 4 (08:44):
Please don't go anywhere. We'll be right back with more
money Making Conversations Masterclass. Welcome back to the Money Making
Conversations Masterclass, host by Rashaan McDonald. Money Making Conversations Masterclass
continues online at Moneymakingconversations dot com and follow money Making
(09:08):
Conversations Masterclass on Facebook, Twitter, and Instagram.
Speaker 2 (09:12):
The mentorship that you was talking about, you're not there
just to take applications.
Speaker 1 (09:16):
You're trying to assist them.
Speaker 2 (09:18):
And like you said, this is honest conversation, Greig, I
commend you on it because so many people in this
business can be frustrated and need to hear the truth.
Speaker 1 (09:26):
It's not time right now.
Speaker 2 (09:28):
You know, get that business plan together, see it out
a lot better, make sure you understand your profit more
and your costs on this particular product, all these things,
because I'm telling you, I get a lot of businesses
that start, you know, they're doing all right, but they're struggling.
Speaker 1 (09:43):
But they're struggling to the.
Speaker 2 (09:44):
Point that they cannot qualify for a business loan a
line of credit, and then so they stuck.
Speaker 1 (09:50):
They kind of like stuck, and so.
Speaker 2 (09:52):
Trying to provide opportunities for them.
Speaker 1 (09:57):
Then they peoplework on look good, will not look good.
Speaker 3 (10:00):
Right, And also through through that application process is also
where you find out exactly how much money do you
really need? Because one of the worst things we could
do is underfund somebody. That's why you see most of
these businesses go out of Everybody wonders this business was
around for six months and their doors closed. What happened.
It's because they thought they were going to be full
(10:22):
on day one. Yes, and that doesn't happen. And you've
got to have some cushion in there, and you've got
to build that in up front or you're not going
to make it. And and under capitalization is far and
away the biggest reason for failure.
Speaker 2 (10:35):
I want to be if somebody was listening to my
show Creed and they contacted you, what is the procedure
of doing a lending relationship with Arkansas Capital Corporation.
Speaker 3 (10:48):
Well, it's kind of interesting. One thing that we brought
online in the last year is an online application, and
it's it's not what a lot of people are used
to seeing when they go on a bank site or
some other lender site, is kind of an inquiry form. Hey,
this is what I'm looking for. Give me a call
that's not ours. Ours is a full blown application. It's
(11:09):
it's the complete application. They can fill it out at home.
I mean, let's face it, the people that we're talking
to and talking about here are people that are working
all day for the most part, they got jobs, they
got businesses, so they you know, they can come in
this thing two in the morning. They can fill out
their application. Once they submit that, it takes them to
another page which shows them all the documents that they
(11:31):
need to upload. So it's a pretty seamless, pretty easy
process to get into. We are notified the moment they
open the application. We get emails it says, hey, so
and so open the application so we can watch it
in case they have problems. But once they submit it,
we get another notification and we know to contact them
at that point. So it's a pretty slick, pretty slick
(11:56):
and easy to navigate process like that.
Speaker 2 (12:00):
Because I get I don't like those little forms. You
feel out and then you go back. Because I'm a
member of the National Minorities Supply Development Council, which is
the feeling of charge of Minority Supplyed Development Council. And
I would tell you it's like filling out a bank
loan to apply for that, you know, because they ask
you for your tax All that they did don't ask
you for is your bank statements and so, which you
(12:21):
have to have at least four months of consecutive months
of recent bank statement.
Speaker 1 (12:25):
So just just here.
Speaker 2 (12:27):
I know it's online, but if you can give us
a kind of like an overview, like like I just
mentioned tax returns, doue have to be signed bank statements,
What are you looking for as far as that that
that credit score? Just an overview of what if one
goes to online prior to going if they have an
insight of an insight of what it's to be expected
(12:48):
of them.
Speaker 3 (12:49):
Well, yeah, obviously it's going to ask them about their
you know, the project and what they're looking for, right,
And you'd be amazed how many people aren't really even
sure about that part when they when they get into it.
But yeah, so we'll ask them what their project is,
what their background is. Then when you get into the
document uploads, we want three years of well we want
(13:11):
a business plan first and foremost. If it's a new
and I'm talking about a new business here, I want
a business plan, and we want a detail business plan
that shows that you actually know the business and you
know what you're going into. I mean, that's that's the key.
You know, a lot of it I can glean just
from looking at numbers. I can tell roughly what you
want to do, but I'm going to get into your
(13:32):
business plan and see how you plan to manage day
to day operations, how you see it going, what what
you see as your challenges, how you're going to overcome them,
that kind of thing. That that's what we really put
a lot of weight into that and the work that's
put into that. So you'll have that, you'll have any
cost documents, any any invoices that you're going to need
(13:53):
to pay, We'll have you upload all that stuff. It's
really the information that we're going to need to make
a credit decision. Your resume is going to be involved, obviously. Yeah,
the most important thing when you're laying all this out
is that you know exactly what it is you're asking
for and why you need that. I mentioned earlier, it's
(14:14):
surprising how many people show up to the process and
really you ask them, okay, first and foremost, what would
what are you looking for? And they really they look
at you and say, well how much can I get? Yes,
that's not the answer that we want to.
Speaker 1 (14:27):
Hear, right, and I think anybody wants to say.
Speaker 2 (14:29):
The thing about it is, this is really cool having
you on the show because of the fact that you know,
so many people are funding companies out of their pockets
or funding their companies through family relationships, you know. And
some people go online try to do go FuMB these
to try to get revenue for that.
Speaker 1 (14:45):
But that business plan, and for.
Speaker 2 (14:48):
The life of me, I never heard it associated with
a loan expectation.
Speaker 1 (14:54):
But it has to be.
Speaker 2 (14:56):
That has to be one on one and let's talk
to that business plan because so many people just start
a business based on a dream, are based on faith.
You're a lot of faith conversation when people go out
and become entrepreneurs. So talk about that business plan and
why people make a mistake and put that at the
back end before they open their business.
Speaker 3 (15:18):
Yeah, it really surprised me because the business plan is
really your your bible. It's showing how you're going to
open the doors, how you're going to keep them open,
and and how you're going to pass that on to
the next person. So what you know, we're looking for
every aspect of the business. And the other thing that
that people find when they start doing their business plan
(15:41):
is that they didn't realize how much they didn't know
about this particular business when when they start we're having
to work through different ideas within the plan and they say, oh,
I didn't think of that, and I didn't think of that,
And that's where really a mentor can come in, you know,
maybe find somebody who's already in that business talking through
these things with those people. There are also what are
(16:04):
called SBDCs all over the country. In every major university
in the country has what's called SPDC. It is a
small business I can't remember what the acronym stand for,
but basically what it is, it's a free service that's
paid for by the SBA and you can go in.
They will help you with your business plan, They'll they'll
(16:24):
show you how to do your books. They do a
number of different things for free and they can really
help you flesh out what is important in a business plan.
But but like I said that that's really the proof
is in the putting in that thing that we look
through that and say, if you have a restaurant, we
want to know you know, and this will be not
(16:46):
just us, this is any lender. You know, how many table?
How many times is that one particular table gonna gonna
be sat turned? We call it, how many times is
that table going to be turned? What's the average ticket price?
What you know, what are the prices your menu, what's
your food costs going to run? There's a lot of
different aspects to that, and that's really what we're looking
(17:06):
for because so much of what we call underwriting and lending,
at least here, is not based as much on the
business as it is on the person. Who is this person?
Do they have the background that they need, Do they
have the skills that they need to do this? Have
they really put in the effort everything to get this
(17:27):
business off the ground, Because this is gonna be the
hardest job you've ever had. If you start your own business,
and you know this, you start your own business, that's
the hardest you're ever going to work in your entire life.
And a lot of people realize business plans setting you back.
You're gonna have real problems once you open the door.
Speaker 2 (17:41):
And I really wanted to bring that out because of
the fact that a lot of people will get frustrated
in cerch situations. People might say, Hey, you know, I'm
being rejected because of the color of my skin. In
some cases it does happen, but there is a process,
and the process can frustrate you because it's so detailed,
ask a lot of you and sometimes the frustration of
(18:04):
because you're not ready at that moment. You might be
ready six monthsly, or you shouldn't open a business at
all because you are ready.
Speaker 3 (18:13):
Right, No, that's exactly right, And you know that is
a big part of my job, our job as a lender.
Sometimes it's just to say no. It's because you're these
people are going into a contract. They're gonna borrow a
lot of money. They're gonna put a lot of their
life on the line here in terms of you know,
(18:35):
their their their business, everything that they do. If that
business fails, they're not even gonna lose all that money.
They're gonna owe all the money that they borrowed from
the lender that's going to follow him around. I mean,
this is a huge decision. So sometimes it's up to
us to say, you know what, you're not ready yet.
You need to do this, this and this and then
(18:56):
we can talk. But it's a huge decision and it's
a huge responsibility on our part too, because you have
the capability of ruining somebody's life if you don't make
the right decision.
Speaker 1 (19:08):
Kreik.
Speaker 2 (19:08):
He has some really interesting questions that I wanted to
bring into the show because I think it provides variable
insight to people. Because when we're talking to Currier Califari,
you know he's the executive vice president director of Lending
for Arkansas Capital Corporation. Arkansas Capital, if you don't know,
it's a private, nonprofit lending corporation dedicated to empowering entrepreneurs
(19:29):
in Arkansas and the surrounding state. That's how he's starting
out right now. He wants to work because he just
got approved to do this hadn't been done in forty
years to go national, but he only works with the
surrounding states. Initially, I'm not saying if you listen to
this show, you can't go to the website and fill
out the form.
Speaker 1 (19:45):
It's an online form, very detail.
Speaker 2 (19:48):
You're basically filling out an application you're filling out an application.
If you click the registration button, it's not one of them.
We're gonna contact you later and it's going to ask
you for all the new necessary documents that will.
Speaker 1 (20:02):
Require you to qualify for what.
Speaker 2 (20:04):
You're trying to attempt here, and what I'm not trying
to do on the show is encourage you not to
do anything.
Speaker 1 (20:09):
I'm encourage you to prepare to do with different things.
Speaker 2 (20:13):
And one of the things you said in your questions
is that small business ownership establish a line of credit
with immediate access, especially for small businesses with payroll employees.
Speaker 3 (20:23):
Talk to me, well, yeah, a line of credit is
important because every business has unexpected expenses that pop up.
Let's assume it's not a business that needs an lining
credit in normal course of business. You just wanted a security.
It doesn't necessarily have to be a large line of credit.
You're not going to pay on the money that you're
(20:45):
not using. But it's a good idea for a lot
of different businesses to have that just as a backup, because,
like I said, things always pop up. You don't want
a big a rock going through a picture window shut
down your business because you didn't have enough money to
fix the window, right, you know, stilly little things like that.
So a lot of times a line of credit is
(21:07):
very important. Some businesses just can't function with that line
of credit. If you get into construction or something where
you're laying out a lot of money up front before
you're going to get paid, then those lines of credit
become absolutely necessary.
Speaker 1 (21:20):
Well, you know, but when I'm.
Speaker 3 (21:21):
Small businesses should look at just having a little cushion
in the bagree.
Speaker 2 (21:26):
You know, I will tell you, Correig, I've broken all
the rules, the wrong rules, you know, opening up you know,
on the on faith. This is what I want to do,
getting in business with partners with no contract. The whole
idea was just to make money.
Speaker 1 (21:43):
That was my goal.
Speaker 2 (21:44):
And I think that's the average entrepreneur. They just want
to make money. They see the possibilities, but they don't
see the ramifications of not setting it up correctly. And
I'm talking to you, not trying to get you to
do a book one on one some advice like three
pointers about starting your own business.
Speaker 3 (22:05):
Great, know what you want meaning exactly, Let's let's talk
about what what you need to do when you come
to a lender like me. Know what you want and
know why, not only why you need it, but how
much it's going to cost. M h that I mean,
that's I keep going back to that. That is the key.
(22:27):
You really want to know you and this is going
to happen in your business plan. It's going to flesh
out a lot of this you're you're going to see.
You know, you might have said, oh, well, I'm going
to open this this plumbing company and we're going to
have this big, really cool, you know, antique truck that's
going to drive around town.
Speaker 1 (22:43):
Right.
Speaker 3 (22:44):
Oh you know it's going to cost one hundred thousand dollars,
but it'll give me great advertising. Well, you start going
through the numbers of everything. How important is that really?
It's that's maybe something you do down the road. So
you get down to the nuts and bolts. What you
need to open, what you need to operate, You need
to keep the doors open. That's it, and you but
you got to know it. And it's that that first
(23:08):
and port that's the most important thing is know.
Speaker 2 (23:10):
What you're talking about in that business plan that you
that they tend to forget.
Speaker 1 (23:15):
Because I'm gonna keep coming back to that greatause.
Speaker 2 (23:18):
My big takeaway is that business plan, because I kid
you not. I opened my comedy club in nineteen ninety two.
I did not have a business plan. I counted people
who came through that door. I knew how to you know,
have my budget, you know, fly comedian in charge, ten
dollars advertisement for the radio stations.
Speaker 1 (23:37):
But who I was going to have working that weekend.
Speaker 2 (23:40):
But that's not a business plan because I was just
doing weekend the weekend. I wasn't projecting ninety days. I
wasn't projecting a year or let alone five years. I
was just going day to day basically, And that's not
a business plan.
Speaker 1 (23:55):
And that's what you're talking about, correct.
Speaker 3 (23:57):
That's exactly right. Yeah, I'm a former business owner. I've
right out of college, I opened restaurants, and yeah, we
didn't do it with a business plan, and I really
wish I had because I spent probably a year undoing
things that I had done, you know, that I wouldn't
have done had I really thought it out ahead of time.
Speaker 2 (24:16):
Yeah, I want to ask you about the SBA, you know, yeah,
a small business administration, And my reading is said the
SBA does not lend money. Instead, it provides guarantees, so
lenders are more inclined to lend money to small business owners.
Speaker 1 (24:32):
Please explain that to me.
Speaker 3 (24:34):
Yeah, that's what a lot of people don't realize that.
The SBA does not lend out money. What the SBA
does is they provide guarantees to lenders. So if I
were to do a small business loan, let's pick a
round number, like, you know, one hundred thousand dollars, right,
they would give me, as a lender, a guarantee of
(24:55):
let's say it's a higher amount, like five hundred thousand.
On one hundred thousand, they would give me a guarantee
of eighty five percent. On a half million or a million,
they would give you a guarantee of seventy five percent.
So what that does for me is a lender, I
know that I've got the SBA behind me for seventy
five percent of the money I'm going to lend out.
I'm only on the hook now for twenty five That
(25:17):
lowers my risk to the point where I might take
a chance on somebody who's starting a business who's you know,
maybe doesn't you know. SBA loans are usually lacking one
component that a bank likes to see, and it can
be a number of different things. Maybe there's a collateral
(25:38):
short pall. Maybe they're new, you know in town. Maybe
it's most banks don't even want to talk about startup
businesses and so that that's a big one. So it's
the SBA will allow us. It gives us just that
comfort level to be able to take that leap.
Speaker 2 (25:58):
Okay, let me just great, you know, okay, SB Because
I always hear them talking about loans, especially when COVID happened,
they was talking about these different types of loans and
these these integrate different tied to the loans. Is that
different than what we're talking about now.
Speaker 3 (26:10):
Yeah, completely different that those those the PPP load programs
are over. Okay, all that money has been allotted and
everything else. And as a matter of fact, that's one
thing that's really changed things quite a bit is we
get a lot of people that come on our website
think it is free money, and they did. They come
on there and then we'll give a call say you know,
(26:31):
this is a loan. They're like, oh, I have to
pay a pack.
Speaker 2 (26:34):
Yeah did you hear that, my listeners, you have to
pay this back?
Speaker 1 (26:39):
Why would they have that? Why would they think that?
Speaker 3 (26:41):
Why would they because the PPP loans we were forgiven
most of them. You can you could apply to have
those forgiven, and so people just thought, oh, yeah, that's
still going on. It's not. You know that the programs
we're talking about primarily are the seven A program and
the five H four program. Those are specifically for small businesses,
(27:02):
owner occupied businesses. So if you're looking to build a
residential neighborhood, this is not for you. If you're going
to buy a building for your plumbing company or whatever,
this is where you want to.
Speaker 1 (27:15):
Go, right right right.
Speaker 2 (27:17):
You know the thing about it is that now we're
not talking about PPPR SBA.
Speaker 1 (27:24):
You're saying that they do not lend money.
Speaker 3 (27:28):
In this sense. PvP they did, and for disasters they
lend out some money. These two programs they do not
lend money.
Speaker 1 (27:35):
So what does SBA do.
Speaker 3 (27:37):
You're saying that they are They provide a guarantee.
Speaker 1 (27:39):
Okay, that's what I'm confused.
Speaker 2 (27:41):
Okay, So you go to SBA, and what's that conversation
that you're going to have with them so they can
go to you and get the money.
Speaker 3 (27:50):
Okay, the borrower will never talk to SBA, They'll come
to us. Okay, the borrower doesn't ever interact with SBA.
The SBA deals strictly with the banks, and if you
contact the SBA, although do is give you a list
of banks that do SBA loans because you have to
be an approved lender with SBA. Okay, so you come
(28:12):
to you come to us. We deal with the SBA,
and Arkansas Capital is called what's called a preferred lender,
So we don't even go through SBA underwriting. Now a
lot of banks have to go through SBA underwriting and
that adds time and a lot of other things to
the process, but we don't even have to do that.
SBA trust us, they know we've been around, so we
(28:33):
do our own underwriting and when we close the loan,
there's certain documentation that we send SBA and they provide
us with a guarantee. So if you didn't pay your
loan back and you still owed me, after we liquidate
everything and everything's all done and there's still say one
(28:53):
hundred thousand dollars that's still owed, the SBA would would
pay us seventy five thousand. That would we would be
out twenty five and then the SBA would go and
collect on that that hundred It would be up to
them from that point right on and they would give
it to treasury. And that's what I was talking about earlier,
(29:14):
and Treasury will follow you around for the rest of
your life, right, so it's really important that you you
want this loan.
Speaker 2 (29:22):
You dropped a nugget on it with the business plan,
even though I know that's important that he had come
out of your mouth and this is what you do
financial lending. Because I had a conversation with a client
of mind the day talking about getting the line of credit,
and I talked about a business plan, but I didn't
say the words business plan, you know, And I think
(29:42):
that that has to become a normal point of my
vernacular so they can understand the role that when you
start playing.
Speaker 1 (29:49):
Because I always tell people the advice.
Speaker 2 (29:51):
You know, I always live at least six months of
income on your bank just in case something go wrong.
Certain terms, but certain terms you say. But until you
say the right term, the right buzzwords, it doesn't win,
and more importantly winning with what you're.
Speaker 1 (30:05):
Trying to do.
Speaker 2 (30:05):
Again, thank you Greg for coming to my show, Money
Making Conversation master Class. Great interview, made, really really great interview,
and we'll be talking again if we can like, you know,
twice a year just talk to you.
Speaker 1 (30:15):
I love that. I think that it's important.
Speaker 2 (30:18):
Things happen seasonal, you know, and what we're talking about
now is different from what we were talking about in
the spring because tax season and employment types of leads
and all those things. So again, thank you for coming
on Money Making Conversation Club CREG.
Speaker 3 (30:30):
Thank you.
Speaker 2 (30:31):
This has been another edition of Money Making Conversation Masterclass
posted by me Rashaun McDonald. Thank you to our guests
on the show today, and thank you listening to audience now.
If you want to listen to any episode I want
to be a guest on the show, visit Moneymaking Conversations
dot com. Our social media handle is money Making Conversation.
Join us next week and remember to always.
Speaker 1 (30:52):
Leave with your gifts. Keep winning the
Welcome to the show.
Speaker 2 (00:06):
I'm Rashan McDonald, the host of money Making Conversations Masterclass,
where we encourage people to stop reading other people's success
stories and start planning their own. Listen up as I
interview entrepreneurs from around the country, talk to celebrities and
ask them how they are running their companies.
Speaker 1 (00:23):
And speak with nod profits who are making a difference
in their local communities.
Speaker 2 (00:27):
Now, sit back and listen as we unlock the secrets
to their success on Money Making Conversations Masterclass. Hi, I'm
Rashan McDonald, our host this weekly money Making Conversation Masterclass show.
The interviews and information that this show provides off for everyone.
It's time to stop reading other people's success stories and
start living your own. My guess is the executive vice
(00:49):
President and Director of Lending for Arkaso Capital Corporation. Alkassol
Capital Corporation is a private, nonprofit lending corporation dedicated to
empowering entrepreneurs in Arkansos and surrounding states. Please work for
the Money Making Conversation Masterclass. Craig Kalafati, how you doing, sir?
Speaker 3 (01:07):
I'm doing well. How are you well?
Speaker 2 (01:08):
First of all, I got to find out about are
your football man? Because football season is starting. Uh in
Arches state of Arkansas. That's razorback Country who.
Speaker 3 (01:19):
Album.
Speaker 1 (01:22):
Well, they're joined you in sec so you know in
the territory.
Speaker 3 (01:26):
I'm very happy about that because now I get my
long horns on TV.
Speaker 1 (01:28):
There you got, my friend. I appreciate you.
Speaker 3 (01:30):
Now.
Speaker 2 (01:31):
When you say surrounding areas, I'm I'm from Houston, Texas,
so I'm very familiar with that whole area, especially that
Texallcana area.
Speaker 1 (01:39):
I've been through that many times. What do you mean
when you're surrounding states.
Speaker 3 (01:44):
Well, something happened that that kind of caused us to
expand in the surrounding states. About six months ago, SBA
made available an SBOC license, which is a small business
Lending Company license which allows a non bank to lend
nationwide for the ESBA program. We received one of those,
(02:06):
one of the three that were available first time in
forty years they've made them available. So we were limited
Darkansas up to that point. We're allowed to go nationwide,
but my thinking is I want to be sure we're
doing it right, so we're going to start with a
slow rollout. We're doing basically, be honest with you, it's
not just surrounding states, it's the SEC's the that's the
(02:29):
outbo which shows because everybody knows it right right right.
So initially that's what we're going to start with, just
the surrounding areas, this area of the South, and then
when we feel that we've got everything in place, everything
that's necessary to do the job right, then we'll take
it nationwide.
Speaker 2 (02:46):
Now that's rest really impressive because of the fact that
I had never heard of that. Why was that restriction
in place and you said it the first time in
forty years.
Speaker 3 (02:56):
Well, the non bank lenders are not regulated. So every
bank is regulated by the fdi C or the OCC
the Office of the Control of the Currency, and so
you have non bank lenders that are out there that
really aren't regulated. We're we have to be regulated by
the state, but some aren't regulated by anybody. So it's
(03:17):
incumbent on SBA. If they're going to let you lend
across the country, they have to regulate you. They have
to do the auditing and everything else, and frankly they
just didn't have the manpower and so they beef that
part up of SBA. So so now we are regulated
not only by the state of Arkansas, but by the SBA.
Speaker 2 (03:38):
Now speaking of Korean, he's the executive vice president director
of lending for Arkansas Capital Corporation. Now, I say, as
a private nonprofit. Now, this whole show is going to
be by educating me because my banking is you know,
Bank of America, fifth Third, Wills Fogo. Now I'm talking
to you, please educate me on a different.
Speaker 3 (04:00):
Okay, well, we're not a bank, so we don't take
deposits or anything else. A quick background in Arkansas Capital
we are a non bank lender. As I said, we're
a nonprofit. We are and we will let me back up.
We were formed in nineteen fifty seven by the governor
of Arkansas, Governor Rockefeller, and at the time, what he
(04:24):
did was he had a barbecue and he took together
he got together all the business leaders in Arkansas and said, look,
we're sitting in a very agrarian society. We need to
build up industry, we need to foster entrepreneurship. You're the
guys that are going to help me do it. And
he had them all kick in some money and start
a company to do just that. And that that was us.
(04:45):
So since nineteen fifty seven. Our mandate has been to
not only foster entrepreneurship small business, but to get into
underserved communities, rural communities, which we have plenty of here
in the South, and so that's really our focus. We
do a number of different things other than just small
business lending. We also have what's called an EB five Hub,
(05:09):
which is a program through a Department of Treasury and
Homeland Security that lends money to approved projects that create
American jobs via immigrants that come to this country. So
you were immigrating safe from China or India and you
had to spare nine hundred thousand dollars lying around, you
can invest it in this program and get your Green
(05:31):
card right away, but also create American jobs at the
same time. We do that. We do also do New
Market Tax Credits, which is another program through Department of
Treasury which fosters larger developments, typically over seventy nine million dollars,
and we do those across the South. And then our
(05:51):
educational arm we put on a contest called the Governor's Cup,
which is a contest for college students college team from
different universities, very much like Shark Tank, kind of an
elevator pitch contest where they win up to twenty thirty
thousand dollars to take their plans forward. Well, we've been
(06:13):
doing that for I think twenty one years, so the
small while lending is our primary focus. It's not the
only thing we do here, but yeah, it was. It
was a big boost for us to get that get
the SBLC license. It was a huge compliment.
Speaker 2 (06:30):
That allows me to talk to you because you know,
my show is nationwide.
Speaker 1 (06:34):
Yeah, and that's one of.
Speaker 2 (06:35):
The reasons I was excited about it because of the
fact that when you start talking about underserved communities, that's
my audience. I'm not saying my audience is that feeled
with entrepreneurs. Sixty percent African American, twenty white. Fifty five
thousand dollars is the media income from our audience as
seventy percent mail. You know, so when I when I
(06:57):
look at the breakdowns, four percent mail and the great things.
At the start of the conversation, we was talking about
the Arkansas Capital Corporation. He was talking about it was
established for entrepreneurs and rural communities and underserved communities. Listening
to my audience, a lot of them in big cities.
So I think that this qualifies rural communities.
Speaker 3 (07:20):
But not the underserved necessarily rights.
Speaker 1 (07:23):
That's why I'm going, what is what qualifies as the underserved?
Speaker 3 (07:28):
The communities of color obviously, and you know Rurle fits
into that. I would say, when we're talking about underserved communities,
we're talking about community of color, awesome, primarily Hispanic and
Black communities.
Speaker 2 (07:41):
Awesome, awesome, And so again, you know, when I do
the interviews, Craig as always, can you tell everybody the
website that they can go to who wants to see
the applications if they want to fill out the application
and the process again one more time.
Speaker 3 (07:58):
Yeah, it's arcapital dot com. Pretty easy to remember. And
you'll go on there and you'll see.
Speaker 1 (08:04):
That's pretty easy.
Speaker 2 (08:05):
Aarcapital dot com, A capital dot com.
Speaker 1 (08:08):
I love it is a R C A P I
T O L T A L.
Speaker 2 (08:14):
T A l dot com dot com. And then do
you is it a registration button that says loans or what?
Speaker 1 (08:21):
Do you go?
Speaker 3 (08:21):
It? Just it says apply here, apply here, apply here. Great,
and then you do that and then uh, there's also
contact information if you need to call us your questions.
Remember we're also watching you. Uh, you know, as the
application is being done, and if all of a sudden
you disappear, we're probably gonna call you and say, do
you need help or do you need I love that,
(08:43):
I love that.
Speaker 4 (08:44):
Please don't go anywhere. We'll be right back with more
money Making Conversations Masterclass. Welcome back to the Money Making
Conversations Masterclass, host by Rashaan McDonald. Money Making Conversations Masterclass
continues online at Moneymakingconversations dot com and follow money Making
(09:08):
Conversations Masterclass on Facebook, Twitter, and Instagram.
Speaker 2 (09:12):
The mentorship that you was talking about, you're not there
just to take applications.
Speaker 1 (09:16):
You're trying to assist them.
Speaker 2 (09:18):
And like you said, this is honest conversation, Greig, I
commend you on it because so many people in this
business can be frustrated and need to hear the truth.
Speaker 1 (09:26):
It's not time right now.
Speaker 2 (09:28):
You know, get that business plan together, see it out
a lot better, make sure you understand your profit more
and your costs on this particular product, all these things,
because I'm telling you, I get a lot of businesses
that start, you know, they're doing all right, but they're struggling.
Speaker 1 (09:43):
But they're struggling to the.
Speaker 2 (09:44):
Point that they cannot qualify for a business loan a
line of credit, and then so they stuck.
Speaker 1 (09:50):
They kind of like stuck, and so.
Speaker 2 (09:52):
Trying to provide opportunities for them.
Speaker 1 (09:57):
Then they peoplework on look good, will not look good.
Speaker 3 (10:00):
Right, And also through through that application process is also
where you find out exactly how much money do you
really need? Because one of the worst things we could
do is underfund somebody. That's why you see most of
these businesses go out of Everybody wonders this business was
around for six months and their doors closed. What happened.
It's because they thought they were going to be full
(10:22):
on day one. Yes, and that doesn't happen. And you've
got to have some cushion in there, and you've got
to build that in up front or you're not going
to make it. And and under capitalization is far and
away the biggest reason for failure.
Speaker 2 (10:35):
I want to be if somebody was listening to my
show Creed and they contacted you, what is the procedure
of doing a lending relationship with Arkansas Capital Corporation.
Speaker 3 (10:48):
Well, it's kind of interesting. One thing that we brought
online in the last year is an online application, and
it's it's not what a lot of people are used
to seeing when they go on a bank site or
some other lender site, is kind of an inquiry form. Hey,
this is what I'm looking for. Give me a call
that's not ours. Ours is a full blown application. It's
(11:09):
it's the complete application. They can fill it out at home.
I mean, let's face it, the people that we're talking
to and talking about here are people that are working
all day for the most part, they got jobs, they
got businesses, so they you know, they can come in
this thing two in the morning. They can fill out
their application. Once they submit that, it takes them to
another page which shows them all the documents that they
(11:31):
need to upload. So it's a pretty seamless, pretty easy
process to get into. We are notified the moment they
open the application. We get emails it says, hey, so
and so open the application so we can watch it
in case they have problems. But once they submit it,
we get another notification and we know to contact them
at that point. So it's a pretty slick, pretty slick
(11:56):
and easy to navigate process like that.
Speaker 2 (12:00):
Because I get I don't like those little forms. You
feel out and then you go back. Because I'm a
member of the National Minorities Supply Development Council, which is
the feeling of charge of Minority Supplyed Development Council. And
I would tell you it's like filling out a bank
loan to apply for that, you know, because they ask
you for your tax All that they did don't ask
you for is your bank statements and so, which you
(12:21):
have to have at least four months of consecutive months
of recent bank statement.
Speaker 1 (12:25):
So just just here.
Speaker 2 (12:27):
I know it's online, but if you can give us
a kind of like an overview, like like I just
mentioned tax returns, doue have to be signed bank statements,
What are you looking for as far as that that
that credit score? Just an overview of what if one
goes to online prior to going if they have an
insight of an insight of what it's to be expected
(12:48):
of them.
Speaker 3 (12:49):
Well, yeah, obviously it's going to ask them about their
you know, the project and what they're looking for, right,
And you'd be amazed how many people aren't really even
sure about that part when they when they get into it.
But yeah, so we'll ask them what their project is,
what their background is. Then when you get into the
document uploads, we want three years of well we want
(13:11):
a business plan first and foremost. If it's a new
and I'm talking about a new business here, I want
a business plan, and we want a detail business plan
that shows that you actually know the business and you
know what you're going into. I mean, that's that's the key.
You know, a lot of it I can glean just
from looking at numbers. I can tell roughly what you
want to do, but I'm going to get into your
(13:32):
business plan and see how you plan to manage day
to day operations, how you see it going, what what
you see as your challenges, how you're going to overcome them,
that kind of thing. That that's what we really put
a lot of weight into that and the work that's
put into that. So you'll have that, you'll have any
cost documents, any any invoices that you're going to need
(13:53):
to pay, We'll have you upload all that stuff. It's
really the information that we're going to need to make
a credit decision. Your resume is going to be involved, obviously. Yeah,
the most important thing when you're laying all this out
is that you know exactly what it is you're asking
for and why you need that. I mentioned earlier, it's
(14:14):
surprising how many people show up to the process and
really you ask them, okay, first and foremost, what would
what are you looking for? And they really they look
at you and say, well how much can I get? Yes,
that's not the answer that we want to.
Speaker 1 (14:27):
Hear, right, and I think anybody wants to say.
Speaker 2 (14:29):
The thing about it is, this is really cool having
you on the show because of the fact that you know,
so many people are funding companies out of their pockets
or funding their companies through family relationships, you know. And
some people go online try to do go FuMB these
to try to get revenue for that.
Speaker 1 (14:45):
But that business plan, and for.
Speaker 2 (14:48):
The life of me, I never heard it associated with
a loan expectation.
Speaker 1 (14:54):
But it has to be.
Speaker 2 (14:56):
That has to be one on one and let's talk
to that business plan because so many people just start
a business based on a dream, are based on faith.
You're a lot of faith conversation when people go out
and become entrepreneurs. So talk about that business plan and
why people make a mistake and put that at the
back end before they open their business.
Speaker 3 (15:18):
Yeah, it really surprised me because the business plan is
really your your bible. It's showing how you're going to
open the doors, how you're going to keep them open,
and and how you're going to pass that on to
the next person. So what you know, we're looking for
every aspect of the business. And the other thing that
that people find when they start doing their business plan
(15:41):
is that they didn't realize how much they didn't know
about this particular business when when they start we're having
to work through different ideas within the plan and they say, oh,
I didn't think of that, and I didn't think of that,
And that's where really a mentor can come in, you know,
maybe find somebody who's already in that business talking through
these things with those people. There are also what are
(16:04):
called SBDCs all over the country. In every major university
in the country has what's called SPDC. It is a
small business I can't remember what the acronym stand for,
but basically what it is, it's a free service that's
paid for by the SBA and you can go in.
They will help you with your business plan, They'll they'll
(16:24):
show you how to do your books. They do a
number of different things for free and they can really
help you flesh out what is important in a business plan.
But but like I said that that's really the proof
is in the putting in that thing that we look
through that and say, if you have a restaurant, we
want to know you know, and this will be not
(16:46):
just us, this is any lender. You know, how many table?
How many times is that one particular table gonna gonna
be sat turned? We call it, how many times is
that table going to be turned? What's the average ticket price?
What you know, what are the prices your menu, what's
your food costs going to run? There's a lot of
different aspects to that, and that's really what we're looking
(17:06):
for because so much of what we call underwriting and lending,
at least here, is not based as much on the
business as it is on the person. Who is this person?
Do they have the background that they need, Do they
have the skills that they need to do this? Have
they really put in the effort everything to get this
(17:27):
business off the ground, Because this is gonna be the
hardest job you've ever had. If you start your own business,
and you know this, you start your own business, that's
the hardest you're ever going to work in your entire life.
And a lot of people realize business plans setting you back.
You're gonna have real problems once you open the door.
Speaker 2 (17:41):
And I really wanted to bring that out because of
the fact that a lot of people will get frustrated
in cerch situations. People might say, Hey, you know, I'm
being rejected because of the color of my skin. In
some cases it does happen, but there is a process,
and the process can frustrate you because it's so detailed,
ask a lot of you and sometimes the frustration of
(18:04):
because you're not ready at that moment. You might be
ready six monthsly, or you shouldn't open a business at
all because you are ready.
Speaker 3 (18:13):
Right, No, that's exactly right, And you know that is
a big part of my job, our job as a lender.
Sometimes it's just to say no. It's because you're these
people are going into a contract. They're gonna borrow a
lot of money. They're gonna put a lot of their
life on the line here in terms of you know,
(18:35):
their their their business, everything that they do. If that
business fails, they're not even gonna lose all that money.
They're gonna owe all the money that they borrowed from
the lender that's going to follow him around. I mean,
this is a huge decision. So sometimes it's up to
us to say, you know what, you're not ready yet.
You need to do this, this and this and then
(18:56):
we can talk. But it's a huge decision and it's
a huge responsibility on our part too, because you have
the capability of ruining somebody's life if you don't make
the right decision.
Speaker 1 (19:08):
Kreik.
Speaker 2 (19:08):
He has some really interesting questions that I wanted to
bring into the show because I think it provides variable
insight to people. Because when we're talking to Currier Califari,
you know he's the executive vice president director of Lending
for Arkansas Capital Corporation. Arkansas Capital, if you don't know,
it's a private, nonprofit lending corporation dedicated to empowering entrepreneurs
(19:29):
in Arkansas and the surrounding state. That's how he's starting
out right now. He wants to work because he just
got approved to do this hadn't been done in forty
years to go national, but he only works with the
surrounding states. Initially, I'm not saying if you listen to
this show, you can't go to the website and fill
out the form.
Speaker 1 (19:45):
It's an online form, very detail.
Speaker 2 (19:48):
You're basically filling out an application you're filling out an application.
If you click the registration button, it's not one of them.
We're gonna contact you later and it's going to ask
you for all the new necessary documents that will.
Speaker 1 (20:02):
Require you to qualify for what.
Speaker 2 (20:04):
You're trying to attempt here, and what I'm not trying
to do on the show is encourage you not to
do anything.
Speaker 1 (20:09):
I'm encourage you to prepare to do with different things.
Speaker 2 (20:13):
And one of the things you said in your questions
is that small business ownership establish a line of credit
with immediate access, especially for small businesses with payroll employees.
Speaker 3 (20:23):
Talk to me, well, yeah, a line of credit is
important because every business has unexpected expenses that pop up.
Let's assume it's not a business that needs an lining
credit in normal course of business. You just wanted a security.
It doesn't necessarily have to be a large line of credit.
You're not going to pay on the money that you're
(20:45):
not using. But it's a good idea for a lot
of different businesses to have that just as a backup, because,
like I said, things always pop up. You don't want
a big a rock going through a picture window shut
down your business because you didn't have enough money to
fix the window, right, you know, stilly little things like that.
So a lot of times a line of credit is
(21:07):
very important. Some businesses just can't function with that line
of credit. If you get into construction or something where
you're laying out a lot of money up front before
you're going to get paid, then those lines of credit
become absolutely necessary.
Speaker 1 (21:20):
Well, you know, but when I'm.
Speaker 3 (21:21):
Small businesses should look at just having a little cushion
in the bagree.
Speaker 2 (21:26):
You know, I will tell you, Correig, I've broken all
the rules, the wrong rules, you know, opening up you know,
on the on faith. This is what I want to do,
getting in business with partners with no contract. The whole
idea was just to make money.
Speaker 1 (21:43):
That was my goal.
Speaker 2 (21:44):
And I think that's the average entrepreneur. They just want
to make money. They see the possibilities, but they don't
see the ramifications of not setting it up correctly. And
I'm talking to you, not trying to get you to
do a book one on one some advice like three
pointers about starting your own business.
Speaker 3 (22:05):
Great, know what you want meaning exactly, Let's let's talk
about what what you need to do when you come
to a lender like me. Know what you want and
know why, not only why you need it, but how
much it's going to cost. M h that I mean,
that's I keep going back to that. That is the key.
(22:27):
You really want to know you and this is going
to happen in your business plan. It's going to flesh
out a lot of this you're you're going to see.
You know, you might have said, oh, well, I'm going
to open this this plumbing company and we're going to
have this big, really cool, you know, antique truck that's
going to drive around town.
Speaker 1 (22:43):
Right.
Speaker 3 (22:44):
Oh you know it's going to cost one hundred thousand dollars,
but it'll give me great advertising. Well, you start going
through the numbers of everything. How important is that really?
It's that's maybe something you do down the road. So
you get down to the nuts and bolts. What you
need to open, what you need to operate, You need
to keep the doors open. That's it, and you but
you got to know it. And it's that that first
(23:08):
and port that's the most important thing is know.
Speaker 2 (23:10):
What you're talking about in that business plan that you
that they tend to forget.
Speaker 1 (23:15):
Because I'm gonna keep coming back to that greatause.
Speaker 2 (23:18):
My big takeaway is that business plan, because I kid
you not. I opened my comedy club in nineteen ninety two.
I did not have a business plan. I counted people
who came through that door. I knew how to you know,
have my budget, you know, fly comedian in charge, ten
dollars advertisement for the radio stations.
Speaker 1 (23:37):
But who I was going to have working that weekend.
Speaker 2 (23:40):
But that's not a business plan because I was just
doing weekend the weekend. I wasn't projecting ninety days. I
wasn't projecting a year or let alone five years. I
was just going day to day basically, And that's not
a business plan.
Speaker 1 (23:55):
And that's what you're talking about, correct.
Speaker 3 (23:57):
That's exactly right. Yeah, I'm a former business owner. I've
right out of college, I opened restaurants, and yeah, we
didn't do it with a business plan, and I really
wish I had because I spent probably a year undoing
things that I had done, you know, that I wouldn't
have done had I really thought it out ahead of time.
Speaker 2 (24:16):
Yeah, I want to ask you about the SBA, you know, yeah,
a small business administration, And my reading is said the
SBA does not lend money. Instead, it provides guarantees, so
lenders are more inclined to lend money to small business owners.
Speaker 1 (24:32):
Please explain that to me.
Speaker 3 (24:34):
Yeah, that's what a lot of people don't realize that.
The SBA does not lend out money. What the SBA
does is they provide guarantees to lenders. So if I
were to do a small business loan, let's pick a
round number, like, you know, one hundred thousand dollars, right,
they would give me, as a lender, a guarantee of
(24:55):
let's say it's a higher amount, like five hundred thousand.
On one hundred thousand, they would give me a guarantee
of eighty five percent. On a half million or a million,
they would give you a guarantee of seventy five percent.
So what that does for me is a lender, I
know that I've got the SBA behind me for seventy
five percent of the money I'm going to lend out.
I'm only on the hook now for twenty five That
(25:17):
lowers my risk to the point where I might take
a chance on somebody who's starting a business who's you know,
maybe doesn't you know. SBA loans are usually lacking one
component that a bank likes to see, and it can
be a number of different things. Maybe there's a collateral
(25:38):
short pall. Maybe they're new, you know in town. Maybe
it's most banks don't even want to talk about startup
businesses and so that that's a big one. So it's
the SBA will allow us. It gives us just that
comfort level to be able to take that leap.
Speaker 2 (25:58):
Okay, let me just great, you know, okay, SB Because
I always hear them talking about loans, especially when COVID happened,
they was talking about these different types of loans and
these these integrate different tied to the loans. Is that
different than what we're talking about now.
Speaker 3 (26:10):
Yeah, completely different that those those the PPP load programs
are over. Okay, all that money has been allotted and
everything else. And as a matter of fact, that's one
thing that's really changed things quite a bit is we
get a lot of people that come on our website
think it is free money, and they did. They come
on there and then we'll give a call say you know,
(26:31):
this is a loan. They're like, oh, I have to
pay a pack.
Speaker 2 (26:34):
Yeah did you hear that, my listeners, you have to
pay this back?
Speaker 1 (26:39):
Why would they have that? Why would they think that?
Speaker 3 (26:41):
Why would they because the PPP loans we were forgiven
most of them. You can you could apply to have
those forgiven, and so people just thought, oh, yeah, that's
still going on. It's not. You know that the programs
we're talking about primarily are the seven A program and
the five H four program. Those are specifically for small businesses,
(27:02):
owner occupied businesses. So if you're looking to build a
residential neighborhood, this is not for you. If you're going
to buy a building for your plumbing company or whatever,
this is where you want to.
Speaker 1 (27:15):
Go, right right right.
Speaker 2 (27:17):
You know the thing about it is that now we're
not talking about PPPR SBA.
Speaker 1 (27:24):
You're saying that they do not lend money.
Speaker 3 (27:28):
In this sense. PvP they did, and for disasters they
lend out some money. These two programs they do not
lend money.
Speaker 1 (27:35):
So what does SBA do.
Speaker 3 (27:37):
You're saying that they are They provide a guarantee.
Speaker 1 (27:39):
Okay, that's what I'm confused.
Speaker 2 (27:41):
Okay, So you go to SBA, and what's that conversation
that you're going to have with them so they can
go to you and get the money.
Speaker 3 (27:50):
Okay, the borrower will never talk to SBA, They'll come
to us. Okay, the borrower doesn't ever interact with SBA.
The SBA deals strictly with the banks, and if you
contact the SBA, although do is give you a list
of banks that do SBA loans because you have to
be an approved lender with SBA. Okay, so you come
(28:12):
to you come to us. We deal with the SBA,
and Arkansas Capital is called what's called a preferred lender,
So we don't even go through SBA underwriting. Now a
lot of banks have to go through SBA underwriting and
that adds time and a lot of other things to
the process, but we don't even have to do that.
SBA trust us, they know we've been around, so we
(28:33):
do our own underwriting and when we close the loan,
there's certain documentation that we send SBA and they provide
us with a guarantee. So if you didn't pay your
loan back and you still owed me, after we liquidate
everything and everything's all done and there's still say one
(28:53):
hundred thousand dollars that's still owed, the SBA would would
pay us seventy five thousand. That would we would be
out twenty five and then the SBA would go and
collect on that that hundred It would be up to
them from that point right on and they would give
it to treasury. And that's what I was talking about earlier,
(29:14):
and Treasury will follow you around for the rest of
your life, right, so it's really important that you you
want this loan.
Speaker 2 (29:22):
You dropped a nugget on it with the business plan,
even though I know that's important that he had come
out of your mouth and this is what you do
financial lending. Because I had a conversation with a client
of mind the day talking about getting the line of credit,
and I talked about a business plan, but I didn't
say the words business plan, you know, And I think
(29:42):
that that has to become a normal point of my
vernacular so they can understand the role that when you
start playing.
Speaker 1 (29:49):
Because I always tell people the advice.
Speaker 2 (29:51):
You know, I always live at least six months of
income on your bank just in case something go wrong.
Certain terms, but certain terms you say. But until you
say the right term, the right buzzwords, it doesn't win,
and more importantly winning with what you're.
Speaker 1 (30:05):
Trying to do.
Speaker 2 (30:05):
Again, thank you Greg for coming to my show, Money
Making Conversation master Class. Great interview, made, really really great interview,
and we'll be talking again if we can like, you know,
twice a year just talk to you.
Speaker 1 (30:15):
I love that. I think that it's important.
Speaker 2 (30:18):
Things happen seasonal, you know, and what we're talking about
now is different from what we were talking about in
the spring because tax season and employment types of leads
and all those things. So again, thank you for coming
on Money Making Conversation Club CREG.
Speaker 3 (30:30):
Thank you.
Speaker 2 (30:31):
This has been another edition of Money Making Conversation Masterclass
posted by me Rashaun McDonald. Thank you to our guests
on the show today, and thank you listening to audience now.
If you want to listen to any episode I want
to be a guest on the show, visit Moneymaking Conversations
dot com. Our social media handle is money Making Conversation.
Join us next week and remember to always.
Speaker 1 (30:52):
Leave with your gifts. Keep winning the
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