June 28, 2024 • 27 mins
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Unlock the power of SBA financing to scale your business to new heights! In this eye-opening episode, Vinney Chopra and Beau Eckstein reveal 5 game-changing secrets about SBA loans that could transform your entrepreneurial journey. #SBAFinancing #BusinessGrowth
Discover how to leverage SBA 7(a) and 504 loans to finance multi-million dollar projects, including residential assisted living facilities and other businesses.
Learn about the hidden potential of USDA loans for rural markets and how to combine various financing options to maximize your capital stack. #RealEstateInvesting #CommercialRealEstate
Our experts break down complex financing strategies, including:
- How to qualify for up to 90% financing on total project costs
- Strategies for scaling beyond the $5 million SBA cap
- Utilizing seller financing to minimize your out-of-pocket expenses
- Leveraging green energy incentives for larger loan amounts
But that's not all! We also dive into the future of business with cutting-edge AI technologies that are revolutionizing industries like assisted living.
Learn how early adopters are creating multi-million dollar companies with minimal manpower. #AIinBusiness #TechInnovation
Whether you're a seasoned investor or just starting out, this episode is packed with valuable insights to help you navigate the world of business financing and growth.
Don't miss out on these expert tips that could be the key to unlocking your business's full potential. #Entrepreneurship #BusinessLoans
Remember to like, subscribe, and share this video to help fellow entrepreneurs on their journey to success.
Join us every Friday at 9 AM Pacific / 12 PM Eastern for more game-changing business strategies! #SmallBusiness #FinancingStrategies
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Vinney (00:00):
the other big game changer Is really utilizing artificial intelligence
to really supercharge your business.
So now I'm even more gung ho on howI am going to supercharge my business
utilizing AI, because I'm only likenot even scratching the surface.
So it is very exciting.
you have to adapt if you're notadapting right now, because of
(00:20):
artificial intelligence, there'sgoing to be single person companies.
that are worth hundreds of millions ofdollars because they're able to utilize
technology like this, like it's goingto transform, you're going to have
probably like a 25 year old kid thatuses AI one person show and creates a
200 million business, like two years.
Speaker 2 (00:42):
Hi friends, this is Vinny Chopra from here in Danville,
California, and you might be saying,Hey, Vinny, what are these over here?
You know, I wrote this book a fewyears back, Apartment Syndication
Made Easy, it became top seller.
I came from India with 7 in my pocket.
It says 500 million.
It's going to be 1 billionvery soon, very soon.
(01:05):
I'm right at about 850, 900 million.
It's And then I'm readyfor the next billion.
Actually, you will see thathappening two billion in this book.
Also, the other book I wrote,which has been a very big
positivity has been my life.
Always, always.
I've been married 43years with two children.
And the beauty is to be positive.
(01:26):
The mindset that can take youto all the places in the world.
And that's the book that also.
Became big, big seller.
My third book, SeniorAssisted Living is coming.
So do yourself a favor, go aheadand click the link below to get free
copies, audio copies of these books,even printed copies of these books.
If you, I'm a print in meansdigital, if you can't afford it,
(01:49):
but I would highly recommend foryou to get these or go to amazon.
com.
Just go to Amazon.
I got it in soft cover and hard cover.
In Kindle, in audio, alsothe Spanish version of this.
Oh, this book also.
So let's crush it, guys.
I know you can be successful.
I know you can do the kind of thingsthat you want to do in life and have
(02:12):
the streams of income and know how toreally, you know, educate yourself so
that you could become a strong, strongforce in this world in real estate.
I know you can.
So take that step.
Don't just be on the sideline.
Take charge of your life.
Take charge of your education.
(02:33):
This is Vinney Chopra,Vinney Smile Chopra.
Thank you for following me on socialchannels, listening to my podcast,
YouTube channel, all the differentchannels, and also liking the podcast.
Please give us a five star review,subscribe to it, share the content.
My blogs are there.
Please like.
Watch them too and read them.
(02:53):
Also YouTube channel,all the different ones.
My Vinney and Beau show on Friday at 9 a.
m.
Pacific every week, and alsoAbundance Mindset with Vinney and
Walter Amarello on Thursday live.
Please enjoy this show.
Thanks again for everything.
God bless you.
Vinney (03:13):
Hello there, this is Vinney Chopra and Beau Eckstein
for the Vinney and Beau show.
We come live to you.
We are really excited today to talkabout RAL, Residential Assisted
Living Financing through SBA, SmallBusiness Administration, 7A Loan.
And who is better than howto really make it happen?
(03:35):
That's Beau Eckstein, my brotherright here, because he's been a
specialist in not only franchising,not only loan brokering, but actually
SBA financing is his specialty.
Hi Beau, how are you, bro?
I am doing well.
Yes.
I'm excited to havethis conversation today.
It's another beautiful Friday.
a lot of people don't realizethe power of, these government
(03:58):
guaranteed loan programs, such as.
SBA, there's also another programcalled USDA BNI, which is for areas that
have a population less than 50, 000.
we do a lot in USDA for senior housingin the underserved rural markets.
the advantage of the USDA.
If it's in one of these marketsis you can do, up to 25 million
(04:19):
deals with this product.
you can also put in CPACEin the capital stack.
They also have another programfor community facilities.
If you're building a large facilitywhere you can do deals up to a
hundred million dollars with theUSDA community facility program.
So today I think is a greattopic to talk about why.
Everyone should look for SBA financing.
if they're buying businesses, they're,doing residential assisted living
(04:43):
or assisted living, skilled nursing,motels, hotels, anything that's owner,
construed as a business, even selfstorage is construed as a business.
You could possibly utilize the SBA 7A,the SBA 504, or potentially if it's a
rural market, the USDA B& I, B& I loan.
So here's the thing thatmost people don't know.
(05:05):
Most people think you're stuckwith a total of 5 million, which is
true to some part, but we're goingto talk today about how you can
actually really scale a business.
Utilizing, SBA financing.
And you can do this yourselfwithout bringing in or doing a
syndication if you didn't want to.
Because the equity injection requirements,for a startup, are typically you want,
(05:27):
they want to see at least 10 percent ofthe total cost in some banks will want
20 percent of the total cost in somewill want 25 on a startup business.
When there's real estateinvolved in the ownership, it
makes the deal stronger, right?
Cause it's fully collateralized.
But let's just say we'll useVinney's deal as an example.
So here's the caveat when you'redoing these Facilities you need
(05:50):
to be shovel ready permit ready.
So you have to have your permit andlicensing in hand prior to the sba So
what a lot of people do on an acquisition?
Such as Vinney's doing he'sgoing to either get bridge loan
short term financing Or he'sgoing to do some seller carry.
Seller carry.
Yeah.
In my case, it's the seller carry.
(06:10):
We closed it in 10 days, brother.
I love it.
Yeah.
So the seller carry, then you get yourlicensing in place and you get all
your paperwork to the SBA, to the bank.
Remember SBA doesn't make the loans.
It guarantees a portion of the loan.
So all said and done, you can financewhat's really the beautiful part of
this, which people don't really get isthat you can finance the purchase price.
(06:33):
You can finance the FF& E.
You can finance the, any otherimprovements, assuming that you
had a qualified contractor, thatbecomes your total project costs.
You can finance up to 90 percentof total project costs and you
can build in working capital.
so it's a phenomenal program when you'redoing it the way Vinney's doing it right
(06:53):
now, which is you're acquiring with sellerfinancing or bridge debt, you just got
to make sure that debt is eligible for.
refinance basically, right?
And so it's no prepayment penalty.
I can give it back any day.
But for SBA, they have certainrules, so it has to be eligible.
Like it has to be, I have a balloonpayment or ask that be short term debt.
(07:14):
If you had a conventional loan on it andit was a 30 year term, it wouldn't be
eligible for, an SBA project, most likely.
Now there are some rules and somekind of areas you could work around.
Just know when you're structuringyour capital, how this all works.
Now, most of these banks, I'mgoing to want to see, some relative
experience in the industry.
(07:34):
maybe there's an RN, you're a nurse,or maybe you have some other core,
correlating, experience maybe it's evena lot of business entrepreneurship,
in other businesses, we just need sellthe fact that you do have experience
and you have the right business plan.
They're going to want a business plan.
They're going to want projections.
and some banks often want afeasibility study, not all the time,
(07:57):
just depends on the total cost.
So all said and done, what will happenis if you have a lot of business
entities, it's very, Paperwork heavybecause a lot of real estate people
like Vinney, they have multiple LLCs.
They sometimes depreciate everything.
And so that's where there's a little bitof pain getting through the underwriting
(08:18):
when there's all these variables.
But if you're just a simple person, yougot some W2 income, you own a few rental
properties or whatever, that makes itactually almost easier to get these loans.
Yeah, okay, like you almosthave to keep it simple.
So anyways, so the loan let's just say theloan goes in place typically it's going
to be a 25 year term Yeah, it's gonna helpwith when in real estate is involved now
(08:41):
If any was just buying a business with noreal estate, it would be a 10 year term
anytime the term is greater than 15 yearsit's gonna have a three year declining
prepayment penalty five percent threepercent and one percent the third year.
So I always say end of the second yearIf the rates really come down and we can
get you a fixed rate option at that timeWe'd refi pay the one percent penalty.
(09:01):
That's not a big deal Typicallyon a smaller deal size.
so SBA is really good.
So you can have multipleSBA loans now here.
So now Vinney, then let's justsay he didn't have any other
assisted living experience.
this was his first one.
Then let's just say a year anda half later, he files his first
year of tax returns and he'sprofitable on the next future deal.
(09:25):
You can actually get up to a hundredpercent of costs because it's
considered a business expansion.
You're capped at 5 million aggregate.
there's a classification systemcalled the North American, NAS code.
you can have up to 5 millionin any given NAS code.
So like we could do several of these, Ifwe're doing about a million dollar per
project, but what happens when you runout of your aggregate of SBA financing?
(09:48):
It's simple.
you move into what'scalled an SBA 504 loan.
then, you do the project as an SBA504 green, and then the seven, a SBA
loan doesn't count in the aggregate.
when you do a green loan, you canactually have up to 16 and a half
million of SBA aggregate financing.
So for an SBA green loan, we sendan engineer out and we have to
(10:11):
do something that reduces energyconsumption by a certain percentage.
And then it's eligible.
and a 504 is a first and second.
So you can actually do a 504 loan forup to 18, 19 million, because you're
going to have a 10 or 12 million.
Eight to 12 million senior loan.
And then up to a five anda half million second.
So as you can see, you can own 40, 50million of real estate type of these
(10:34):
business models, potentially withSBA financing, it's pretty awesome.
And the difference you don't necessarilyneed to bring in money partners because
you can come up with the down paymentor what we call the equity injection.
So you can scale this business, nothaving to raise a bunch of capital.
Now just say Vinney.
(10:55):
Was moving to his next project, whichwas going to be a 3 million dollar
acquisition of an existing facility,and he needed to come up with 10%.
He can actually bring a partnerin that owns less than 20%.
And that partner comes in with theequity injection or you could a
combination Of sell or carry you ifyou were to buy an existing facility
You can have the seller carry back upto seven and a half percent of the ten
(11:18):
percent you need to come in with Soon a three million dollar facility,
you could close literally for seventyfive thousand dollars out of pocket.
Wow so guys, this is and this toolis not just for assisted living.
You can use this for most businesses.
I got a guy buying a business right nowfor 2.4 million and we got the seller
to carry back 5%, so he is gonna close.
(11:39):
So basically you can go from corporateto owning a business with very
little out of pocket, and then getall the value of owning a business,
get the cash flow immediatelyon an existing business, right?
because it's already cash flowing.
And that's what's happening rightnow with so many baby boomers that
are retiring that own businesses.
They don't have a succession plan.
(12:00):
They need to do something with thebusiness, either shut it down or sell it.
And obviously, they'd rathersell it and make a few bucks.
I was just wondering, does it happenyou just get stuck with one or two and
SPS says no more loans, but what you'resharing is you could really go up to 5
million, which could be maybe 4 RALs.
(12:20):
Possibly, million, million, million.
But then after that, it could go to 504,B or C or something, 504 up to 19 million.
And with the green, that's the beauty.
And also why don't we go greenbecause we want to reduce the
utilities cost and everything.
(12:41):
So it's much better to go green.
You mentioned about PACE also.
You want to say that again?
How would that come into place?
Is that PACE?
The green is PACE.
No, it's not PACE, but on largerassisted living facilities, you
can put PACE in the capital stack.
So when you're building these 100 bed,the real, the best way to do it when
(13:01):
you're not in a time crunch, the problemwas, when you were doing your deals,
you were trying to go fast, right?
Is not the most fast vehicle, but youessentially can get, construction money
and then see pace in the capital stack.
It's not in every state, but basicallythat's extra equity in the deal.
It's almost like pref equity,but it's really a debt piece.
(13:22):
So understanding these, toolswith USDA, you can put a C PACE
in the capital stack for projects.
the 504 doesn't allow C PACE, the 7A does.
So there's just, it's differentrules, different navigation.
There's also a lot of taxcredits like a taxation.
If I remember, I know in Florida,I was working with a consultant
(13:43):
and they had given I don't know, 4billion or something in CPS money.
But they were saying that I willnot have to pay the payment.
It's only like by yearly thatyou have to pay the payment.
With your taxes and it'snot for about two years.
It's usually capitalized.
And then it's in most municipalities,most jurisdictions, you make
(14:06):
the payment basically with likehow you make a tax payment.
It's not a lien, like a mortgage lien.
It's actually like anassessment, like a tax.
And that's why a lot of banks don't likeit because in theory it takes it's a super
lane what's called what's called a superlane But understanding the capital stack
and navigating these type of financingis, I watch people every day go from,
(14:31):
I'm making six figures, I'm in my techjob, they're doing well, but they're
like, Hey, there's gotta be a better way.
They're, yeah, you got a littlecapital, go out and buy a business,
buy a franchise, utilize leverage.
so you don't necessarily need to goout and raise millions of dollars.
Now, obviously.
If there's a project that warrantsit, you're going to go do that
and, do a syndication, bututilizing SBA, you don't need to.
(14:53):
And so that's the beauty of it.
And then you could just get alook, you can get a partner, right?
Like how we partnered on the Marina.
There's these, you can do allthis kind of stuff and more.
knowing how to maneuverthe systems, is critical.
And sometimes, if you can find aseller that's willing to carry, you're
going to take that down and then.
And then ultimately too, once yourfacilities got two years of history,
(15:14):
we might take it out of that SBA loan.
So that's going to openup more bandwidth, right?
If you had 3 million of loan and wetook it out with the, we refinanced
it with the conventional bank.
Now you still have the 5 million again.
Yeah, you can use the 7a to build too.
So you can do ground up residentialcare facilities as well.
So you can do all of it with SBA financenow, you mentioned about registered
(15:37):
Contractors, so how do we know that, likefor example in my property in scottsdale,
arizona, right phoenix as we are doingthe work on it In the front and the back
and every it's turned key already and thenall the materials we're going to furnish
and all Keep proper bills right invoicesYou But how about the contractors?
(16:00):
So yeah, so anytime you're dealing witha bank, they don't want a contractor
that doesn't have a decent financialstatement Usually they're going to vet
the contractor if you're doing severalhundred thousand or million dollars
in construction They have certainstandards of what they want, right?
And so the key there one is this yourproperty was already remodeled But
let's just say you bought a propertywith bridge financing like a short
(16:24):
term loan because it was in disrepairBut it was a perfect location And we
got this short term debt, and, andthen we got the licensing and then you
hadn't started the construction yet.
Then we get the SBA loanto get the construction to
renovate and do all that stuff.
And it was 300, 000 in renovations and.
to, equip the property for the seniors.
(16:44):
so the SBA loan comes in, they'regoing to want to know that the
contractor is reputable, basically.
And they have, they fill out a oneor two page form and sometimes they
have to attach a financial statement.
So you have to use a, if you're doinga loan and a bank's making the loan and
you're doing the construction with thebank, they're going to want to make sure
(17:05):
the contractor is reputable, basically.
Because even if the contractor is good,we've run into this problem before,
but the contractor built stuff for you.
But his financials were weakand so unfortunately banks
don't take your word for it.
they want to make sure just as they'remaking sure you're a good borrower, that
the person that they're going to give500, 000 to build something is actually
(17:28):
going to be able to build it and buildit at the price they have estimated.
So just be aware of that, that youhave to have all these pieces in place.
If you're doing construction, you have toget the right contractors and so forth.
It's not Hey, I'm a handyman.
I'm doing myself.
If you're a contractor, you cando it yourself, but the SBA is
going to say, you need to go getquotes from two other parties.
(17:50):
Outside to make sure that what you'resaying is possible without construction.
So just knowing how to navigate thesystems, the banks, and then just,
they also look at global cashflow.
Okay.
So an SBA loan, they want to see thatyour outside income can cover your debts.
They just want to make sure that you haveoutside income that covers your living
(18:12):
expenses covers your outside debt So ifyou're writing off everything and you
lose money every year It's a little bitmore challenging than if you show a little
bit of money in That income can qualify.
We call that global cashflow.
Yes.
So that's the problem with big realestate people is that what will make
it a little bit more challenging isbecause they Sometimes show huge losses
(18:35):
and they you got to be able to justify.
Oh that's just cost segregations anddepreciation You're so right property
might be making profit but then inthe taxation When the CPA puts in
depreciation, big negative amount, thepositives go into negative at the bottom.
That's what, is that.
I know when I got qualified for thishome over here, my banker, Franco
(19:00):
Lentrini, he really worked so hard.
Four months actually to put it allback together, but he was able to
get me that loan So you're right.
It's a lot more work, but it's okay.
Hey, guess what, to be able to getinterest rates So whatever it is
prime plus one or prime plus 1.
Of course the prime is higher now, when itgoes lower In two three years, it's going
(19:25):
to make a lot more, you know appealing butat the same time assisted living because
we Collect so much rent from the seniors.
It just makes sense It still bringspositive cash flow at the bottom
line even at the high interest rates.
So that's why I love this blue ocean Icall it blue ocean, not the red ocean
(19:47):
where there's a lot of competition, Ihave a franchise consulting business.
We're we help people buy businesses.
I was on a call with afranchisor and they do home care.
they're partnering with thisnew AI enabled technology.
if I was starting a residentialassisted living business and I was
going to scale it, I would look atthe software because it monitors.
(20:08):
The residents, with AI inside the house.
So it's an added bonus where, you'regoing to be talking to the daughter of
the resident or the potential resident.
And so they want to know that theirparent is being well taken care of.
So I see this and I'll show it toyou after we get off, but this is
something I would look into doingbecause it's going to give an
(20:30):
added, advantage to the marketplace.
The family will feel secure that,their parents, or grandparents are
well taken care of in the facility.
I see.
Yeah, they're monitored 24 7, even thoughthere's one or two people on staff,
there's also additional monitoring.
Yes, you can.
You can use this as the owner of thisresidential assisted living to then
(20:54):
say, look we also have this technology.
So we have best in class caregivers,but we also have this added bonus.
I was on a call the other day andthe guy was talking, he's a guy I've
been following for probably 13, 14years now, he did a presentation for
a go abundance, and it was all on AI,and I'll share the presentation with
(21:15):
you, Vinney, it'll blow your mind.
Like I've been using AI, but theway he uses AI will blow your mind.
So the other big game changer Isreally utilizing artificial intelligence
to really supercharge your business.
So now I'm even more gung ho on howI am going to supercharge my business
utilizing AI, because I'm only likenot even scratching the surface.
(21:38):
So it is very exciting.
you have to adapt if you're notadapting right now, because of
artificial intelligence, there'sgoing to be single person companies.
that are worth hundreds of millions ofdollars because they're able to utilize
technology like this, like it's goingto transform, you're going to have
probably like a 25 year old kid thatuses AI one person show and creates a
(22:02):
200 million business, like two years.
Stuff like that's going tostart happening more and more.
And so I really want to adapt andunderstand AI and a higher level and
then utilize it because I was playingaround with some tools yesterday.
I'll show you offline, Vinney.
Yeah, it's truly amazing.
I have this new, software orapp and you give it a script.
(22:26):
So I could do a script on SBA financing,so I just, I use AI to create a script.
I upload that script to thesoftware and it creates a video.
Oh my.
It's what I did it yesterday.
It'll blow your mind.
Words outta my mouth.
I interviewed Unsual, my partnerfrom Cloud Defense yesterday,
(22:47):
one hour and five minutes.
And he wrote a book on AI andcyber security, which is on Amazon.
He just launched it and hehas three articles, I think,
on AI and cyber security.
He designed the same programalso, algorithms, where I give him
the scripts and then me talking.
(23:08):
Those words.
And he said, Vinney, you could send tothousands of emails at the same time.
So maybe this I'm very curious to reallyfind out with this software that you
have, but a lot of people are doing it.
I know he was putting it together.
He shared with me some videos, but,I'm sure a lot of people are doing it.
Yeah.
(23:29):
I was reading an article andthey think about 85 million
jobs will be lost because of AI.
85 million jobs.
I think that's what I read.
I want to see where they citeit, but here's the caveat though,
there'll be almost close to ahundred million jobs created.
Look at that.
So there's a net gain of 12 or 14 million.
So right now is a time to beadapting these things and be an
(23:52):
early adopter to this technology.
If you have not really got in andplayed around and chat GPT, AI,
you are really missing the boat.
I would suggest everybody reallyunderstand these programs and
then how can you implement theseprograms into your business?
So what I was just telling Vinney, Ican now do a couple of videos a day
(24:13):
that are faceless, those go on YouTube.
My VA can do those for me.
Okay, I can use, I use cast magic, youcan do show notes, it can write a blog
about this, episode we're doing right now.
It can send email, itcan write the emails.
So get these automations in place,and then you can be in more spots.
(24:34):
All can be in like 30 differentspots where I, before I could do one.
So now that's how you leverage andeverybody knows that leverage is the key.
Buying real estate leverage is the key.
Growing your business leverage is thekey because there's only one of you.
So you have to learn how toleverage your intellectual property.
So you can expand fasterand in a bigger way, right?
(24:55):
That's what you want to do.
Not everybody needs to expand.
So true what you're saying, andall these softwares, I know Opus
Clips Pro that you shared with me,we are having so much fun with it.
This is a software I letgo two of my video editors.
But the thing is I have other one now.
She's my manager and she's able to do theOpus clips and add more and, personalize
(25:18):
and do the things and then post, post.
So you're right.
And you're using it.
Opus pro you said task magic.
CAST MAGIC.
There's another app, okay, whereI could do a presentation on
SBA financing a video on, right?
And then I could put it throughthis app, and it'll have me
talking in Spanish, Espanol.
(25:39):
And it looks like I'm actually talking.
I can do any language, Chinese, whatever.
Here's the thing we know roughlyabout 30 ish percent of people in the
United States right now speak Spanish.
Don't quote me on that.
I'm just pulling that numbersomewhere around there.
I believe so that numberis continuing to grow.
So if I want to get the people thataren't English as their second language,
(26:00):
or maybe they don't speak English,they live here, they're, paying taxes.
They're looking for loans.
SBA loans.
Now I can be a resource to them where Icouldn't before so I can start a Spanish
channel Yeah, and it's really me justtalking in english and this app is then
making me look like i'm talking espanol.
Excellent again guys.
I hope you really this episode.
(26:22):
Give us five star reviews andShare this episode because we
come to you every friday 9 a.
m.
Pacific 12 eastern Thank you both.
This was a great show.
I hope you really got a lot out of it,but spa financing And great hacks that
we talked about Thanks for sharing that.
And we'll see you next week.
(26:43):
See you guys.
Bye bye.
Beau and I are together to really bringthe best to get your business to the next
level Do me a favor subscribe and shareI really appreciate it and I look forward
to interacting with you in the future
the other big game changer Is really utilizing artificial intelligence
to really supercharge your business.
So now I'm even more gung ho on howI am going to supercharge my business
utilizing AI, because I'm only likenot even scratching the surface.
So it is very exciting.
you have to adapt if you're notadapting right now, because of
(00:20):
artificial intelligence, there'sgoing to be single person companies.
that are worth hundreds of millions ofdollars because they're able to utilize
technology like this, like it's goingto transform, you're going to have
probably like a 25 year old kid thatuses AI one person show and creates a
200 million business, like two years.
Speaker 2 (00:42):
Hi friends, this is Vinny Chopra from here in Danville,
California, and you might be saying,Hey, Vinny, what are these over here?
You know, I wrote this book a fewyears back, Apartment Syndication
Made Easy, it became top seller.
I came from India with 7 in my pocket.
It says 500 million.
It's going to be 1 billionvery soon, very soon.
(01:05):
I'm right at about 850, 900 million.
It's And then I'm readyfor the next billion.
Actually, you will see thathappening two billion in this book.
Also, the other book I wrote,which has been a very big
positivity has been my life.
Always, always.
I've been married 43years with two children.
And the beauty is to be positive.
(01:26):
The mindset that can take youto all the places in the world.
And that's the book that also.
Became big, big seller.
My third book, SeniorAssisted Living is coming.
So do yourself a favor, go aheadand click the link below to get free
copies, audio copies of these books,even printed copies of these books.
If you, I'm a print in meansdigital, if you can't afford it,
(01:49):
but I would highly recommend foryou to get these or go to amazon.
com.
Just go to Amazon.
I got it in soft cover and hard cover.
In Kindle, in audio, alsothe Spanish version of this.
Oh, this book also.
So let's crush it, guys.
I know you can be successful.
I know you can do the kind of thingsthat you want to do in life and have
(02:12):
the streams of income and know how toreally, you know, educate yourself so
that you could become a strong, strongforce in this world in real estate.
I know you can.
So take that step.
Don't just be on the sideline.
Take charge of your life.
Take charge of your education.
(02:33):
This is Vinney Chopra,Vinney Smile Chopra.
Thank you for following me on socialchannels, listening to my podcast,
YouTube channel, all the differentchannels, and also liking the podcast.
Please give us a five star review,subscribe to it, share the content.
My blogs are there.
Please like.
Watch them too and read them.
(02:53):
Also YouTube channel,all the different ones.
My Vinney and Beau show on Friday at 9 a.
m.
Pacific every week, and alsoAbundance Mindset with Vinney and
Walter Amarello on Thursday live.
Please enjoy this show.
Thanks again for everything.
God bless you.
Vinney (03:13):
Hello there, this is Vinney Chopra and Beau Eckstein
for the Vinney and Beau show.
We come live to you.
We are really excited today to talkabout RAL, Residential Assisted
Living Financing through SBA, SmallBusiness Administration, 7A Loan.
And who is better than howto really make it happen?
(03:35):
That's Beau Eckstein, my brotherright here, because he's been a
specialist in not only franchising,not only loan brokering, but actually
SBA financing is his specialty.
Hi Beau, how are you, bro?
I am doing well.
Yes.
I'm excited to havethis conversation today.
It's another beautiful Friday.
a lot of people don't realizethe power of, these government
(03:58):
guaranteed loan programs, such as.
SBA, there's also another programcalled USDA BNI, which is for areas that
have a population less than 50, 000.
we do a lot in USDA for senior housingin the underserved rural markets.
the advantage of the USDA.
If it's in one of these marketsis you can do, up to 25 million
(04:19):
deals with this product.
you can also put in CPACEin the capital stack.
They also have another programfor community facilities.
If you're building a large facilitywhere you can do deals up to a
hundred million dollars with theUSDA community facility program.
So today I think is a greattopic to talk about why.
Everyone should look for SBA financing.
if they're buying businesses, they're,doing residential assisted living
(04:43):
or assisted living, skilled nursing,motels, hotels, anything that's owner,
construed as a business, even selfstorage is construed as a business.
You could possibly utilize the SBA 7A,the SBA 504, or potentially if it's a
rural market, the USDA B& I, B& I loan.
So here's the thing thatmost people don't know.
(05:05):
Most people think you're stuckwith a total of 5 million, which is
true to some part, but we're goingto talk today about how you can
actually really scale a business.
Utilizing, SBA financing.
And you can do this yourselfwithout bringing in or doing a
syndication if you didn't want to.
Because the equity injection requirements,for a startup, are typically you want,
(05:27):
they want to see at least 10 percent ofthe total cost in some banks will want
20 percent of the total cost in somewill want 25 on a startup business.
When there's real estateinvolved in the ownership, it
makes the deal stronger, right?
Cause it's fully collateralized.
But let's just say we'll useVinney's deal as an example.
So here's the caveat when you'redoing these Facilities you need
(05:50):
to be shovel ready permit ready.
So you have to have your permit andlicensing in hand prior to the sba So
what a lot of people do on an acquisition?
Such as Vinney's doing he'sgoing to either get bridge loan
short term financing Or he'sgoing to do some seller carry.
Seller carry.
Yeah.
In my case, it's the seller carry.
(06:10):
We closed it in 10 days, brother.
I love it.
Yeah.
So the seller carry, then you get yourlicensing in place and you get all
your paperwork to the SBA, to the bank.
Remember SBA doesn't make the loans.
It guarantees a portion of the loan.
So all said and done, you can financewhat's really the beautiful part of
this, which people don't really get isthat you can finance the purchase price.
(06:33):
You can finance the FF& E.
You can finance the, any otherimprovements, assuming that you
had a qualified contractor, thatbecomes your total project costs.
You can finance up to 90 percentof total project costs and you
can build in working capital.
so it's a phenomenal program when you'redoing it the way Vinney's doing it right
(06:53):
now, which is you're acquiring with sellerfinancing or bridge debt, you just got
to make sure that debt is eligible for.
refinance basically, right?
And so it's no prepayment penalty.
I can give it back any day.
But for SBA, they have certainrules, so it has to be eligible.
Like it has to be, I have a balloonpayment or ask that be short term debt.
(07:14):
If you had a conventional loan on it andit was a 30 year term, it wouldn't be
eligible for, an SBA project, most likely.
Now there are some rules and somekind of areas you could work around.
Just know when you're structuringyour capital, how this all works.
Now, most of these banks, I'mgoing to want to see, some relative
experience in the industry.
(07:34):
maybe there's an RN, you're a nurse,or maybe you have some other core,
correlating, experience maybe it's evena lot of business entrepreneurship,
in other businesses, we just need sellthe fact that you do have experience
and you have the right business plan.
They're going to want a business plan.
They're going to want projections.
and some banks often want afeasibility study, not all the time,
(07:57):
just depends on the total cost.
So all said and done, what will happenis if you have a lot of business
entities, it's very, Paperwork heavybecause a lot of real estate people
like Vinney, they have multiple LLCs.
They sometimes depreciate everything.
And so that's where there's a little bitof pain getting through the underwriting
(08:18):
when there's all these variables.
But if you're just a simple person, yougot some W2 income, you own a few rental
properties or whatever, that makes itactually almost easier to get these loans.
Yeah, okay, like you almosthave to keep it simple.
So anyways, so the loan let's just say theloan goes in place typically it's going
to be a 25 year term Yeah, it's gonna helpwith when in real estate is involved now
(08:41):
If any was just buying a business with noreal estate, it would be a 10 year term
anytime the term is greater than 15 yearsit's gonna have a three year declining
prepayment penalty five percent threepercent and one percent the third year.
So I always say end of the second yearIf the rates really come down and we can
get you a fixed rate option at that timeWe'd refi pay the one percent penalty.
(09:01):
That's not a big deal Typicallyon a smaller deal size.
so SBA is really good.
So you can have multipleSBA loans now here.
So now Vinney, then let's justsay he didn't have any other
assisted living experience.
this was his first one.
Then let's just say a year anda half later, he files his first
year of tax returns and he'sprofitable on the next future deal.
(09:25):
You can actually get up to a hundredpercent of costs because it's
considered a business expansion.
You're capped at 5 million aggregate.
there's a classification systemcalled the North American, NAS code.
you can have up to 5 millionin any given NAS code.
So like we could do several of these, Ifwe're doing about a million dollar per
project, but what happens when you runout of your aggregate of SBA financing?
(09:48):
It's simple.
you move into what'scalled an SBA 504 loan.
then, you do the project as an SBA504 green, and then the seven, a SBA
loan doesn't count in the aggregate.
when you do a green loan, you canactually have up to 16 and a half
million of SBA aggregate financing.
So for an SBA green loan, we sendan engineer out and we have to
(10:11):
do something that reduces energyconsumption by a certain percentage.
And then it's eligible.
and a 504 is a first and second.
So you can actually do a 504 loan forup to 18, 19 million, because you're
going to have a 10 or 12 million.
Eight to 12 million senior loan.
And then up to a five anda half million second.
So as you can see, you can own 40, 50million of real estate type of these
(10:34):
business models, potentially withSBA financing, it's pretty awesome.
And the difference you don't necessarilyneed to bring in money partners because
you can come up with the down paymentor what we call the equity injection.
So you can scale this business, nothaving to raise a bunch of capital.
Now just say Vinney.
(10:55):
Was moving to his next project, whichwas going to be a 3 million dollar
acquisition of an existing facility,and he needed to come up with 10%.
He can actually bring a partnerin that owns less than 20%.
And that partner comes in with theequity injection or you could a
combination Of sell or carry you ifyou were to buy an existing facility
You can have the seller carry back upto seven and a half percent of the ten
(11:18):
percent you need to come in with Soon a three million dollar facility,
you could close literally for seventyfive thousand dollars out of pocket.
Wow so guys, this is and this toolis not just for assisted living.
You can use this for most businesses.
I got a guy buying a business right nowfor 2.4 million and we got the seller
to carry back 5%, so he is gonna close.
(11:39):
So basically you can go from corporateto owning a business with very
little out of pocket, and then getall the value of owning a business,
get the cash flow immediatelyon an existing business, right?
because it's already cash flowing.
And that's what's happening rightnow with so many baby boomers that
are retiring that own businesses.
They don't have a succession plan.
(12:00):
They need to do something with thebusiness, either shut it down or sell it.
And obviously, they'd rathersell it and make a few bucks.
I was just wondering, does it happenyou just get stuck with one or two and
SPS says no more loans, but what you'resharing is you could really go up to 5
million, which could be maybe 4 RALs.
(12:20):
Possibly, million, million, million.
But then after that, it could go to 504,B or C or something, 504 up to 19 million.
And with the green, that's the beauty.
And also why don't we go greenbecause we want to reduce the
utilities cost and everything.
(12:41):
So it's much better to go green.
You mentioned about PACE also.
You want to say that again?
How would that come into place?
Is that PACE?
The green is PACE.
No, it's not PACE, but on largerassisted living facilities, you
can put PACE in the capital stack.
So when you're building these 100 bed,the real, the best way to do it when
(13:01):
you're not in a time crunch, the problemwas, when you were doing your deals,
you were trying to go fast, right?
Is not the most fast vehicle, but youessentially can get, construction money
and then see pace in the capital stack.
It's not in every state, but basicallythat's extra equity in the deal.
It's almost like pref equity,but it's really a debt piece.
(13:22):
So understanding these, toolswith USDA, you can put a C PACE
in the capital stack for projects.
the 504 doesn't allow C PACE, the 7A does.
So there's just, it's differentrules, different navigation.
There's also a lot of taxcredits like a taxation.
If I remember, I know in Florida,I was working with a consultant
(13:43):
and they had given I don't know, 4billion or something in CPS money.
But they were saying that I willnot have to pay the payment.
It's only like by yearly thatyou have to pay the payment.
With your taxes and it'snot for about two years.
It's usually capitalized.
And then it's in most municipalities,most jurisdictions, you make
(14:06):
the payment basically with likehow you make a tax payment.
It's not a lien, like a mortgage lien.
It's actually like anassessment, like a tax.
And that's why a lot of banks don't likeit because in theory it takes it's a super
lane what's called what's called a superlane But understanding the capital stack
and navigating these type of financingis, I watch people every day go from,
(14:31):
I'm making six figures, I'm in my techjob, they're doing well, but they're
like, Hey, there's gotta be a better way.
They're, yeah, you got a littlecapital, go out and buy a business,
buy a franchise, utilize leverage.
so you don't necessarily need to goout and raise millions of dollars.
Now, obviously.
If there's a project that warrantsit, you're going to go do that
and, do a syndication, bututilizing SBA, you don't need to.
(14:53):
And so that's the beauty of it.
And then you could just get alook, you can get a partner, right?
Like how we partnered on the Marina.
There's these, you can do allthis kind of stuff and more.
knowing how to maneuverthe systems, is critical.
And sometimes, if you can find aseller that's willing to carry, you're
going to take that down and then.
And then ultimately too, once yourfacilities got two years of history,
(15:14):
we might take it out of that SBA loan.
So that's going to openup more bandwidth, right?
If you had 3 million of loan and wetook it out with the, we refinanced
it with the conventional bank.
Now you still have the 5 million again.
Yeah, you can use the 7a to build too.
So you can do ground up residentialcare facilities as well.
So you can do all of it with SBA financenow, you mentioned about registered
(15:37):
Contractors, so how do we know that, likefor example in my property in scottsdale,
arizona, right phoenix as we are doingthe work on it In the front and the back
and every it's turned key already and thenall the materials we're going to furnish
and all Keep proper bills right invoicesYou But how about the contractors?
(16:00):
So yeah, so anytime you're dealing witha bank, they don't want a contractor
that doesn't have a decent financialstatement Usually they're going to vet
the contractor if you're doing severalhundred thousand or million dollars
in construction They have certainstandards of what they want, right?
And so the key there one is this yourproperty was already remodeled But
let's just say you bought a propertywith bridge financing like a short
(16:24):
term loan because it was in disrepairBut it was a perfect location And we
got this short term debt, and, andthen we got the licensing and then you
hadn't started the construction yet.
Then we get the SBA loanto get the construction to
renovate and do all that stuff.
And it was 300, 000 in renovations and.
to, equip the property for the seniors.
(16:44):
so the SBA loan comes in, they'regoing to want to know that the
contractor is reputable, basically.
And they have, they fill out a oneor two page form and sometimes they
have to attach a financial statement.
So you have to use a, if you're doinga loan and a bank's making the loan and
you're doing the construction with thebank, they're going to want to make sure
(17:05):
the contractor is reputable, basically.
Because even if the contractor is good,we've run into this problem before,
but the contractor built stuff for you.
But his financials were weakand so unfortunately banks
don't take your word for it.
they want to make sure just as they'remaking sure you're a good borrower, that
the person that they're going to give500, 000 to build something is actually
(17:28):
going to be able to build it and buildit at the price they have estimated.
So just be aware of that, that youhave to have all these pieces in place.
If you're doing construction, you have toget the right contractors and so forth.
It's not Hey, I'm a handyman.
I'm doing myself.
If you're a contractor, you cando it yourself, but the SBA is
going to say, you need to go getquotes from two other parties.
(17:50):
Outside to make sure that what you'resaying is possible without construction.
So just knowing how to navigate thesystems, the banks, and then just,
they also look at global cashflow.
Okay.
So an SBA loan, they want to see thatyour outside income can cover your debts.
They just want to make sure that you haveoutside income that covers your living
(18:12):
expenses covers your outside debt So ifyou're writing off everything and you
lose money every year It's a little bitmore challenging than if you show a little
bit of money in That income can qualify.
We call that global cashflow.
Yes.
So that's the problem with big realestate people is that what will make
it a little bit more challenging isbecause they Sometimes show huge losses
(18:35):
and they you got to be able to justify.
Oh that's just cost segregations anddepreciation You're so right property
might be making profit but then inthe taxation When the CPA puts in
depreciation, big negative amount, thepositives go into negative at the bottom.
That's what, is that.
I know when I got qualified for thishome over here, my banker, Franco
(19:00):
Lentrini, he really worked so hard.
Four months actually to put it allback together, but he was able to
get me that loan So you're right.
It's a lot more work, but it's okay.
Hey, guess what, to be able to getinterest rates So whatever it is
prime plus one or prime plus 1.
Of course the prime is higher now, when itgoes lower In two three years, it's going
(19:25):
to make a lot more, you know appealing butat the same time assisted living because
we Collect so much rent from the seniors.
It just makes sense It still bringspositive cash flow at the bottom
line even at the high interest rates.
So that's why I love this blue ocean Icall it blue ocean, not the red ocean
(19:47):
where there's a lot of competition, Ihave a franchise consulting business.
We're we help people buy businesses.
I was on a call with afranchisor and they do home care.
they're partnering with thisnew AI enabled technology.
if I was starting a residentialassisted living business and I was
going to scale it, I would look atthe software because it monitors.
(20:08):
The residents, with AI inside the house.
So it's an added bonus where, you'regoing to be talking to the daughter of
the resident or the potential resident.
And so they want to know that theirparent is being well taken care of.
So I see this and I'll show it toyou after we get off, but this is
something I would look into doingbecause it's going to give an
(20:30):
added, advantage to the marketplace.
The family will feel secure that,their parents, or grandparents are
well taken care of in the facility.
I see.
Yeah, they're monitored 24 7, even thoughthere's one or two people on staff,
there's also additional monitoring.
Yes, you can.
You can use this as the owner of thisresidential assisted living to then
(20:54):
say, look we also have this technology.
So we have best in class caregivers,but we also have this added bonus.
I was on a call the other day andthe guy was talking, he's a guy I've
been following for probably 13, 14years now, he did a presentation for
a go abundance, and it was all on AI,and I'll share the presentation with
(21:15):
you, Vinney, it'll blow your mind.
Like I've been using AI, but theway he uses AI will blow your mind.
So the other big game changer Isreally utilizing artificial intelligence
to really supercharge your business.
So now I'm even more gung ho on howI am going to supercharge my business
utilizing AI, because I'm only likenot even scratching the surface.
(21:38):
So it is very exciting.
you have to adapt if you're notadapting right now, because of
artificial intelligence, there'sgoing to be single person companies.
that are worth hundreds of millions ofdollars because they're able to utilize
technology like this, like it's goingto transform, you're going to have
probably like a 25 year old kid thatuses AI one person show and creates a
(22:02):
200 million business, like two years.
Stuff like that's going tostart happening more and more.
And so I really want to adapt andunderstand AI and a higher level and
then utilize it because I was playingaround with some tools yesterday.
I'll show you offline, Vinney.
Yeah, it's truly amazing.
I have this new, software orapp and you give it a script.
(22:26):
So I could do a script on SBA financing,so I just, I use AI to create a script.
I upload that script to thesoftware and it creates a video.
Oh my.
It's what I did it yesterday.
It'll blow your mind.
Words outta my mouth.
I interviewed Unsual, my partnerfrom Cloud Defense yesterday,
(22:47):
one hour and five minutes.
And he wrote a book on AI andcyber security, which is on Amazon.
He just launched it and hehas three articles, I think,
on AI and cyber security.
He designed the same programalso, algorithms, where I give him
the scripts and then me talking.
(23:08):
Those words.
And he said, Vinney, you could send tothousands of emails at the same time.
So maybe this I'm very curious to reallyfind out with this software that you
have, but a lot of people are doing it.
I know he was putting it together.
He shared with me some videos, but,I'm sure a lot of people are doing it.
Yeah.
(23:29):
I was reading an article andthey think about 85 million
jobs will be lost because of AI.
85 million jobs.
I think that's what I read.
I want to see where they citeit, but here's the caveat though,
there'll be almost close to ahundred million jobs created.
Look at that.
So there's a net gain of 12 or 14 million.
So right now is a time to beadapting these things and be an
(23:52):
early adopter to this technology.
If you have not really got in andplayed around and chat GPT, AI,
you are really missing the boat.
I would suggest everybody reallyunderstand these programs and
then how can you implement theseprograms into your business?
So what I was just telling Vinney, Ican now do a couple of videos a day
(24:13):
that are faceless, those go on YouTube.
My VA can do those for me.
Okay, I can use, I use cast magic, youcan do show notes, it can write a blog
about this, episode we're doing right now.
It can send email, itcan write the emails.
So get these automations in place,and then you can be in more spots.
(24:34):
All can be in like 30 differentspots where I, before I could do one.
So now that's how you leverage andeverybody knows that leverage is the key.
Buying real estate leverage is the key.
Growing your business leverage is thekey because there's only one of you.
So you have to learn how toleverage your intellectual property.
So you can expand fasterand in a bigger way, right?
(24:55):
That's what you want to do.
Not everybody needs to expand.
So true what you're saying, andall these softwares, I know Opus
Clips Pro that you shared with me,we are having so much fun with it.
This is a software I letgo two of my video editors.
But the thing is I have other one now.
She's my manager and she's able to do theOpus clips and add more and, personalize
(25:18):
and do the things and then post, post.
So you're right.
And you're using it.
Opus pro you said task magic.
CAST MAGIC.
There's another app, okay, whereI could do a presentation on
SBA financing a video on, right?
And then I could put it throughthis app, and it'll have me
talking in Spanish, Espanol.
(25:39):
And it looks like I'm actually talking.
I can do any language, Chinese, whatever.
Here's the thing we know roughlyabout 30 ish percent of people in the
United States right now speak Spanish.
Don't quote me on that.
I'm just pulling that numbersomewhere around there.
I believe so that numberis continuing to grow.
So if I want to get the people thataren't English as their second language,
(26:00):
or maybe they don't speak English,they live here, they're, paying taxes.
They're looking for loans.
SBA loans.
Now I can be a resource to them where Icouldn't before so I can start a Spanish
channel Yeah, and it's really me justtalking in english and this app is then
making me look like i'm talking espanol.
Excellent again guys.
I hope you really this episode.
(26:22):
Give us five star reviews andShare this episode because we
come to you every friday 9 a.
m.
Pacific 12 eastern Thank you both.
This was a great show.
I hope you really got a lot out of it,but spa financing And great hacks that
we talked about Thanks for sharing that.
And we'll see you next week.
(26:43):
See you guys.
Bye bye.
Beau and I are together to really bringthe best to get your business to the next
level Do me a favor subscribe and shareI really appreciate it and I look forward
to interacting with you in the future
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