12 Days of Giving Day 8: From $1.5M in Predatory Debt to Breathing Room in 4 Days

Episode Transcript
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Stoy Hall (00:10):
Happy holidays, everyone.
Sarah's back.
Woo.
She has not been busy at all.
Uh, just really Netflix andchilling.
Um, so I'm happy to her on withher not tight schedule, but she
is back for another 12 days ofgiving.
And this one, uh, we literallytalked about last week and this
one was kind of crazy to me onmultiple levels, so I'm glad

(00:32):
she's gonna be talking aboutthat one specifically.
So, tune in, sit back, relax alittle bit.
I think this one's gonna touchyou or someone that you know.
Uh, relatively deeply.
So, Sarah, without further ado,tell us the story, what was
going on and how you helped.

Sara Weldon (00:45):
Thank you and thank you for having me.
Story.
I am very excited to be here andhopefully this will get me into
the holiday spirit because rightnow I have no idea that we're
getting close to Christmas.
So thank you.
Um, this was a cool story.
So I run Tru and with, withRick, uh, the two of us run it
and.
You know, the past several yearswe've stepped into kind of a

(01:05):
different role of, I'm not onthe phones every day as much.
I'm not so client facing.
I'm, you know, managing fromabove and doing the marketing
and the videos and all thatstuff, which is fun.
Um, but I've really missed theday to day interaction and I.
Gosh, a few weeks ago I had aclose friend reach out and
asked, Hey, Sarah, I've got,I've got someone that needs,
needs your help.

(01:25):
Would you be willing to takethem on?
And I was like, absolutely.
Of course.
So in my very free schedule, I,uh, I fit them in and, um, it
was really evident right away.
Like, this is someone that needsour help.
Um, it was a, I'm gonna call himGeorge.
His name was George and he had,um.
An amazing business.

(01:45):
That's the thing here.
He had an amazing business, buthe was in financial trouble.
See, a lot of people assume, youknow, people that are in
financial trouble are, you know,not good with their money or
they don't, they don't know howto manage things, not the
reality at all.
This guy makes$14 million a yearbetween his two businesses.
An astounding number.
But the problem was the world oflending.

(02:06):
There's some very not so, uh.
Amazing people in it.
And so 10 years ago, 10 yearsago, he had a friend convince
him that he needed to get somemerchant cash advances.
And for those of you that don'tknow what those are, uh, I won't
use the actual term.
I'll keep my language clean.
But basically it's a, um, wecall'em a poop sandwich, really

(02:27):
is what we call them, um,because it's, it's a, it's a
dangerous loan.
It's extremely high interestdaily or weekly payments.
Um, and it's, it's.
Almost financial suicide formost businesses that get into
'em, I'll be quite honest,because they get into'em and
they just cannot breathe to getout.
And those same lenders will pileloan upon loan upon loan and

(02:50):
they keep thinking, okay, I'lljust take this one and it'll get
me out.
Well, unfortunately George, um,over the years had taken on more
and more and more, and he waseven 10 years later, he was a
million and a half in debt onthese loans and just felt like.
He's working so hard, but allhis money every month was going
towards paying these loans andthis interest, and he's like,

(03:12):
Sarah, I don't even know what todo.
Um, and I will be honest, itwas, it was such an emotional
conversation because a, I, Ireally praised him because
here's this man that is workinghis tail off.
But yet he had been takenadvantage of, was drowning in
debt, but he still had such agood attitude about it.
Like a lot of people could bevery negative and hateful and

(03:32):
spiteful.
Like poor me, he was not thevictim.
He's like, look, is thereanything you can do to help?
And, and I got to.
I got to put on my superherocape and I got to help him.
And really, you know, I dove in.
I figured out a situation.
He's got a great credit score, aseven 40 credit score, great
bank statements.
So that alone astounded me thathe was put into these loans and,

(03:56):
um.
We got to find relief together.
So I was able to help himrestructure that debt.
Um, because with, with all thoseloans, there is a little escape
hatch that lawyers know how tofind.
Um, us, us regular people don'tknow it's, it exists, so we
think we're stuck.
But the lawyers can do theirlegal mumbo jumbo and

(04:16):
essentially restructure thewhole debt.
So we did.
Um, so I talked to him and Ibelieve it was.
Within four days, he hadbreathing room again.
We restructured a million and ahalf in debt.
We are saving him$45,000 amonth.
$45,000 a month.
I mean, that's a huge amount.

(04:38):
And with that money, he's goingto be able to get things under
control again.
You know, he's not going to feellike.
Okay, I'm, I've got this greatbusiness, but it's all going to,
paying off this loan.
Um, his whole financialsituation drastically turned the
other way with just doing that.
And he was so grateful and itfelt, it felt really good.

(05:01):
Like I was able to do what'sright.
And, and that's what's rare inthe lending world because most
people look at it as, I don'tcare what's right, what's gonna
put the most money in my pocket,you know, because those, those
loans.
Uh, there's no lie, I am nothiding it.
Those loans, they pay tremendouscommission.
So people love pushing thembecause they make oodles of

(05:21):
money much more than a standardgood loan.
They make like three, four timesthe commission.
Um, and it just felt great and,and just hearing that relief in
his voice, knowing like, okay, Isee an end to this because we,
we were able to cut down thetotal principle owed, cut down
his payments.
To where he knows they'll, thiswill end.

(05:44):
And, and then on top of it, itwas, it, we started working
together because I, I'm notsomeone that just goes, okay,
let's fix this and goodbye.
We had a long conversation aboutbusiness credit.
I explained what it was and whythat type of funding was so much
more sustainable for him, and myultimate goal was to get him to
start building.
Capital, doing capital stackingbecause he has multiple

(06:05):
businesses and he's alwaysneeding working capital.
He's the perfect candidate forthat.
Um, so we've come up with astructured plan.
I kind of, and it was greatbecause he's gotta pay down a
couple things to be able to docapital stacking and now he can
because he's got that extramoney.
Um, so it was kind of like this,this total approach, total redo

(06:26):
and damn it felt good.
It really did.
Um, just.
You know, I've been, I've beenout of the loop for a little
while, so to come in on likesuch a power case like that felt
really good.
So

Stoy Hall (06:37):
you mean there's your holiday spirit right there.
I know, yep.
Um, talk us through, so forthose, what we're talking about
is, is, is the merchant onesorcas.
For short, which is, you hear alot, we hear, uh, mca, we hear
lines of credit, we heard termloans and we hear capital
stacking.
Can you briefly run through eachone of those?

(06:59):
Yep.
And I don't need a pro con listof each one of'em, but why you
don't prefer MM Cs.
We don't either, by the way.
Um, and you guide everyonearound to the others.

Sure.
So, uh, an MCA, let's start withthat merchant cash advance.
Reason why these are soappealing and why so many
businesses get into'em isthey're quick.
You essentially could have moneywithin 24 hours.
Um, it requires very minimaldocumentation.
No.
Financials in terms of you don'tneed tax, state, uh, taxes,
nothing like that.
They're just simply looking atyour bank statements.

(07:31):
That's it.
Um, it is, they do look at yourcredit score, and yes, for some
people that's all you canqualify for.
If you have a low credit score,if you have bank statements that
look like Swiss cheese becauseof all the holes in there, you
know, all the negative days,then yes, that is your only
option.
But the problem with thoseobviously, is it's a daily or a
weekly payment that getsautomatically taken out of your

(07:53):
bank account.
The interest is astronomical,like sickening.
It's way more than the loanitself, and so you never can get
out of it and out ofdesperation.
So many business owners take itbecause.
A lot of times they're convincedthis is the quickest, fastest
solution.
This is all I can qualify for.
I gotta do it.

(08:13):
Sure.
I'll figure it out.
And they never figure it out.
I, I've, I've personallywitnessed so many business
owners going outta businessbecause of those.
Um, so those are merchant cashadvances.
Um, do we have clients goinginto them?
Yes.
It is a last resort and only ifI.
Really strongly recommend to aclient.
Do you have a clear path to getout?

(08:36):
You know, is this somethingwhere you're a builder and
you're gonna suddenly have thatinflux of capital once that
project sells that you can turnaround and pay this off?
Fine.
That makes sense.
This is not a long-termsustainable solution for you to
make payroll.
Everyday expenses.
It's, it's a very dangeroussolution.
Um, that's a merchant cashadvance.
As you can tell.
I don't love them, and I, I'm soopen about it.

(08:57):
I just, I hate them.
Um, whereas a true line ofcredit is a revolving line of
credit.
So those can also be donequickly.
Those can also be done on bankstatement only.
Um, for that, basically it'srevolving.
So let's say you get a line ofcredit for 50,000, you only pay
on what you're spending.
So.
You spend 20,000, you only payon that.

(09:19):
Once that's paid off, it'savailable again.
So I do like lines of credit.
I've, I feel like a lot ofbusiness owners get them.
And if you've got decent credit,good bank statements, good,
positive cash flow.
Great.
That makes a lot of sense foryou.
Um, term loan on the other hand,is going to be a chunk of money.
So for example, a term loanwould be like, I'm getting a

(09:41):
$200,000 term loan.
I get that 200,000.
It's for a set term.
So let's say maybe it's fiveyear term loan, so they split up
the payments.
You do have interest on that.
You, once that's paid off, it'sdone.
It's not revolving.
You don't get to reuse thatmoney.
That's the money.
That's it.
You know, for some people thatdoes make sense.

(10:02):
You know, I've had clients takethose to restructure and pay off
credit cards.
Um, so those.
Those typically take a littlebit longer to get, and there is
a little bit more financialsrequired.
Not a, not heavy, not like anSBA, but, but definitely a
little bit more than just yourstraight line of credit.
Other types.
Let's see.

(10:22):
Capital stacking.
I could talk about this oneforever.
This is definitely my favoritetype of funding.
Um, with this, it's stackingbusiness credit.
Business credit doesn't show upon your personal credit with
capital stacking, uh.
We're stacking business creditcards, so everything comes in
the name of your business.
It comes at 0% for up to 18months.
Beautiful part about that youonly pay on what you use.

(10:45):
Once it's paid off, it'savailable again, very similar to
a line of credit, exactly likerevolving line of credit, except
it comes in the form of abusiness.
Credit card, same thing.
No financials needed.
No bank statements, no taxreturns.
No nothing.
Um.
So for me, I always like thatit's a great choice, especially
for startups when you've madenothing and you still are able

(11:07):
to access that capital.
So in a nutshell, I think thoseare all of, all of the kind of
types of, of loans that we talkabout on a continuous basis.
Um, I think you, you couldfigure out which one I like the
best, but.

Stoy Hall (11:21):
Yeah, you could definitely layer like what's
your top, what's your least?
And

I know I kind of did it that way, didn't I?

Stoy Hall (11:27):
Well, I, it's important for everyone to know
no matter what.
I don't wanna say no matterwhat,'cause there's some
situations you can't do anythingabout.
Right?
There's just literallysituations that you're so deep
in that, um, more of a, youknow, a foreclosure or
bankruptcy is the route to go.

Yep.

Stoy Hall (11:42):
Besides them, right?
Being able to do any of theseand have that flexibility and
have that conversation.
With a team to understand whereyou're at, to get you either out
of your situation or to prepareyourself for a better one.
Mm-hmm.
Is so paramount because Yeah.
Yep.
No, we're not going the MCAroute, however, yeah, you could
capital stack, you could alsoline of credit if you're
available too and a term, andhaving those three.

(12:06):
Could provide differentflexibility for different
purposes tied to differentthings.
Obviously, capital stack has a0% for 18 months, but then its
credit card rates after thatline of credit's always gonna be
a little higher.
12 thirteens, depending on themarket.
However, you're not gonna havethe 26 20 nines like the credit
card would, and then your termloans are gonna be.
Well, right now they're probablywhat, in the sevens, eights,
depending on stuff.

(12:26):
Yep.
Right.
So you're gonna have differentinterest rates, different
repayment schedules fordifferent purposes.
And the most important piece isthat they're talking to a team
like you, like us, ourcollective, to get a game plan
around, no matter what theychoose to do.
So they don't get stuck thinkinglast resorts mca.
And then they have to doubledown on that.
Because I think you had said.

(12:46):
Not only was it like 1.5 millionin, but like didn't you have
like 10 of'em or somethingstacked on top of each other?
Yep.
And everyone think about that.
If you had 10 loans stacked ontop of each other with daily
payments, with interest ratesthat are just unheard of, it
does a couple things.
One, interest rates are throughthe roof, so you're already
gonna lose on interest.
In general, if you're payingsomething daily, it's hurting

(13:08):
your cash flow, which means thenyour bills that go up and down.
Won't get paid or you get behindon, and now it's a trickle
effect for the entire business,and that's what was happening.
So everybody listening there isa way out of your situation or
there's a better way to prepareyour situation.
Ultimately, you need to talk toa team and think about all of
the avenues and not just whatyour local bank says.

(13:29):
Not with the person who'sselling you this hot fa fast
cash is selling, but look at atit as a bigger picture.
Otherwise, you are gonna runinto bigger issues that maybe we
can't help with.

Mm-hmm.
Absolutely.
You said that so much betterthan me.
That's why we work welltogether.
You just say it so much better.
But no, I, I very much agreeand, and I think you hit it the
nail on the head.
You have to have a team to talkto.
And that's where so many peoplemiss the boat is they're
operating.
On their own because they thinkthat's the only thing to do, and

(13:59):
they're operating out of fearand out of panic, and they're,
it's reactive.
It's not being proactive.
And, and the problem with beingin that place is all those
unscrupulous lenders prey onthat.
They know so many people are inthat situation.
You know, if you were to tellthem, wait a second, I gotta
take a step back.
I need to talk to my financialadvisor, they'll panic because

(14:21):
they'll know you're gonna, youknow.
They'll be talked out of itbecause it's not a logical
decision.
And that's why I love what youand I both do, because we come
from a place of logic and whatmakes sense, not how are we
gonna make a buck that doesn'tplay in either of our
strategies.
And you know, my.
My team, I, I, I praise them alot.
I joke that they're me just in amale form, but they really do.

(14:45):
They talk it through with theclient and they'll talk someone
out of funding because it makesno sense.
And that's what I love.
And that's, I mean, that's awhole other podcast.
I wish we could restructure theworld of lending because that's
truly what it should be, becauseotherwise we're just, we're.
Putting people in such dangeroussituations.
It, it, it's, it's horrible.
And I don't know how they sleepat night, to be quite honest.

(15:07):
But

Stoy Hall (15:08):
yeah, I mean, that's a whole thing, such as it

is

Stoy Hall (15:10):
of getting commissions and everything.
And don't get us wrong people,we, you, you pay us.
Sure.
Right.
Our mind's not on commission.
Sarah's and true FinCo is, butlike, they're gonna be
transparent with what that is.
Right.
A lot of these won't, or it'llbe so intertwined with the
product that you couldn't figureit out if you tried to, unless
you were or someone looking atthat.
So just be careful out there itis.

(15:31):
The holiday season.
There are a lot of emotionsgoing on your business, whether
it's going into 2026 and you'relaunching one, or it's going
into the new year and you'refreaking out trying to figure
things out, talk to somebody,right?
Mm-hmm.
Just talk to us, come to us,come to our collective, allow us
to help you as much as possible.
And then you can go from there.
But if you don't talk to someoneand you just make a rash

(15:52):
decision, more times than not,it's going to hurt you and bury
you deeper.
Yep.
Sarah, I appreciate your time,um, and bringing that story to
us.
'cause it's one that we reallyhaven't talked about, um, much
and I'm glad we were able to.
So without that, have a veryhappy holidays.
Thank you.
And all those listening, by theway, there is a Sarah.
Episode two coming out, andwe're gonna talk about
nonprofits, so stay tuned.

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12 Days of Giving Day 8: From $1.5M in Predatory Debt to Breathing Room in 4 Days

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