October 18, 2024 • 35 mins
Ready to fund your business the smart way? Join Ricky Brazee, owner of Business Funds Marketplace, as he shares how and when to seek additional capital—without relying on traditional banks. From revenue-based financing to the importance of cash flow and credit, Ricky gives you the inside track on what lenders really want in a loan application. You'll learn why equipment financing demands higher credit scores, how to build business credit, and how to avoid common loan pitfalls. Whether you're expanding or just need new equipment, this episode is packed with insights to help you make savvy financial decisions and unlock growth for your business.
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Episode Transcript
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Speaker 1 (00:00):
I just really want to stress that taking money is
very common.
It's not like you know.
You're doing something thatnobody's ever done before.
I'd say like 90% of businesseshave taken money from somebody
or started it that way.
Do not let the business creditgame pass you by because you are
not educated on it or you thinkthat that's too expensive to
borrow money.
Speaker 2 (00:21):
Hi, welcome to another episode of Pay2Create.
I am your host, Sarah Jenkins,and alongside me today is my
baby daddy and business owner.
Speaker 1 (00:30):
Ricky Brazy of Business Funds Marketplace.
Speaker 2 (00:32):
Well done.
What is Business FundsMarketplace?
Speaker 1 (00:36):
Thanks, for having me .
It's an online lendingmarketplace for businesses
seeking funding.
Speaker 2 (00:42):
Now, if you're a business owner, how long would
you be in business before youdecide to seek funding?
Not for your lemonade stand.
Speaker 1 (00:48):
We're probably not looking for the first year in
business.
You're probably just gettingeverything sorted out.
You're probably getting abusiness bank account, ein,
figuring out how to set upmarketing, hire people, start to
delegate tasks that you'reprobably doing as a business
owner, as we all do.
And I'd say probably after thefirst year you start looking at
funding, start to seek any kindof opportunity to build your
(01:12):
business credit at that time.
Speaker 2 (01:14):
If you're going back to hiring SOPs, who's answering
phones or whatever, at whatpoint?
If you're starting a business,would you say, maybe I need a
little extra capital to grow orcontinue.
Speaker 1 (01:26):
When you have an opportunity to use the money.
So we lend something calledworking capital.
That's the product that we lend, it's just money for the
business.
But it's called working capitalbecause you're supposed to put
the capital to work right away.
So you come and take money whenyou can inject it into your
company and you can use it rightaway for an opportunity that
you see fit.
And take money when you caninject it into your company and
you can use it right away for anopportunity that you see fit.
Speaker 2 (01:46):
If you are the lender or the broker for lending, what
opportunities would you not seefit?
Speaker 1 (01:54):
So lending is based upon risk.
So we are going to do anassessment, a small assessment.
So they look at three months ofbank statements, typically six
months of bank statements.
They'll take a look at yourcashflow.
Make sure you can handle a loan, so they look at three months
of bank statements, typicallysix months of bank statements.
So take a look at your cashflow.
Make sure you can handle a loan, so they'll look at your
average, your balances.
Also, look at your business too.
So they'll look at Secretary ofState and look at your time in
business, look you up on DunBradstreet, look at your
(02:16):
business credit and just makesure that you can handle the
loan in a manageable, low-impactway.
Speaker 2 (02:21):
So when you say somebody should put their
working capital to work for them, their loan to work right away
in their company, what might bea good example of that?
Speaker 1 (02:31):
Say you're a contractor any kind of
contractor, plumbing contractor,say you're a plumbing
contractor, okay, and Not aeuphemism.
You want to bid on someplumbing jobs Not a euphemism.
You want to bid on someplumbing jobs.
So there's going to be somecompetition, and sometimes when
you're bidding, it's not justhow much you're going to cost,
(02:53):
it's the terms of yourarrangement too.
So you might want to say, hey,you don't need to pay me 50% up
front in order to complete thisjob.
I don't need you to fund me soI can pay my materials and pay
my guys.
I can handle that as a businesson my own.
You might win that contract andwin that job because you didn't
(03:17):
have to borrow money to get thejob started.
You just started because youhad capital.
So you can gain morerelationships through being more
liquid and having better cashflow as a business and being
able to extend those terms toyour clients.
Speaker 2 (03:35):
Okay.
So if someone comes to you fora loan, why wouldn't they go to
a bank?
Speaker 1 (03:42):
Banks aren't lending money.
Speaker 2 (03:45):
Well, some money have a mortgage.
Speaker 1 (03:47):
So these are uncollateralized loans, so you
don't have to put up your.
What does that mean?
Yeah, exactly, so you don'thave to put up your house.
You don't have to put up yourcar, you don't have to put up
any assets, so anything that youown.
You don't have to say, hey, ifI don't pay this loan, you get
this.
You're not collateralizing yourloan, so it's under the
(04:07):
business credit, it's not underyour personal credit, so you're
building your business credit inturn.
But also, if things go sideways, you're protected by your LLC.
Speaker 2 (04:18):
Okay.
So if you have no collateral,why would someone like you or
bigger lenders give the loan inthe first place?
What are you looking for?
Speaker 1 (04:29):
It's based upon your cash loan.
If you can handle the loan in away it's called revenue-based
finance.
So they're looking at, hey, inJune, july and August in last
quarter they brought in $300,000in sales and here is last
year's tax return and they did1.3 million.
They're going to do a run ratecalculation.
(04:51):
They're going to look at whatyou've been doing over the last
three months.
Extrapolate that over a wholeyear, so times it by four and
you have your run rate.
So you know what you'reprobably or projected to make it
a revenue for your business.
Speaker 2 (05:05):
Why wouldn't a regular bank look at the revenue
realm and say that we couldgive you money?
Speaker 1 (05:10):
It's too risky and they have their money thrown at
plenty of good other things.
Speaker 2 (05:14):
Because there's no collateral.
Speaker 1 (05:15):
Yeah, they're just.
They are not the backbone ofthe small business owner economy
.
They're just not.
Small business owners don'thave a lot of assets.
They might have their home,they might have their car, but
other than that, they'recontractors, medical
practitioners, restaurant owners, all the above.
Speaker 2 (05:37):
I'm sure you do a lot of medical practitioners Every
type.
If their profit margins areslim or at least accountable,
and the bank doesn't want totouch it because it's risky?
What if he went out of businesswhatever?
What would he or she maybe usefor their medical practice?
What kind of loan would theyneed?
Speaker 1 (05:54):
So if you're looking at buying equipment, so a lot of
medical practices they need tostay.
They need to stay current withthe newest tools or the newest
softwares and you're able to dothat and be able to acquire the
newest equipment financingprogram.
So, god forbid, you can't payyour loan, they'll come and
(06:15):
seize the equipment.
So now it's collateralized bythe actual equipment that you're
financing.
So the lenders are willing togo like five, 10 years on a
monthly payment because it'sless risky.
If you default they can comeand get the equipment.
So the lenders are willing togo like five, 10 years on a
monthly payment because it'sless risky.
If you default they can comeand get the equipment.
So it's not as risky of a loanfor the lender.
There is something backing it.
But it's not your business andit's not your home.
Speaker 2 (06:37):
Oh, that's a really good example.
So if you're getting a piece ofequipment for your medical,
private, whatever business thatyou need a piece of machinery
that they could come and collectif you don't pay off the loan
in a timely manner, what termsis the range that is normal or
that is not scary?
I know there's terms for loans,like my mortgage is a
(06:57):
percentage range every monthover 15, 30 years.
What is a sort of normal rangeyou look at?
Speaker 1 (07:04):
Typically within three to five years on any piece
of equipment.
It can be new or used as well.
So if it is titled piece ofequipment, like you're buying a
tractor or a trailer, you cantypically get a long term on
something like that because ithas a title and is verified that
way.
The ownership's verified thatway.
(07:25):
The ownership's verified thatway.
Any kind of equipment canqualify for equipment financing
as long as it makes sense foryour business.
So a restaurant can't go andfinance a bulldozer.
Speaker 2 (07:36):
What if they're building a new restaurant?
Speaker 1 (07:38):
There have been some exceptions.
Speaker 2 (07:41):
So maybe a higher loan.
Speaker 1 (07:42):
I've heard of crazier loans, but if you can make it
work, We'll ask about thoselater.
They want to lend it out.
They just want to make surethat you're going to be using it
for the business and there'sgoing to be a return on the
investment.
That's what they're interestedin.
They're interested in gettingpaid back, but also giving the
opportunity too.
Speaker 2 (07:57):
So I guess, what are the advantages of a small
business owner coming to someonelike you for a loan versus
going to like big bank?
Speaker 1 (08:04):
It's a quick and easy process.
So about a day or two and youcould get something financed if
you're purchasing equipment, oryou could get capital infused
into your bank account.
Banks are going to take acouple of weeks.
They're going to ask forcollateral, they're going to ask
for a lot of paperwork and atthe end of the day, they're
probably going to decline youunless you're putting up some
collateral.
So you know it is a loan, butit is kind of apples and oranges
(08:27):
, because we are built to lendto small businesses.
Banks are built to lend toeverybody.
Speaker 2 (08:37):
How do you define if somebody, what benefit does it
give if there's collateral andsomeone wants a piece of
machinery for their medicalpractice or whatever, and then
someone just needs cash to putwhere they need to in their
company?
How do you differential yoursales calls on where to hone in,
Like what is?
What is the big differences?
Speaker 1 (09:06):
so one of the first questions that our live agents
will ask you as a business owneris what are you doing with the
money?
And then we'll explain to themthat we'll come back to them
with the maximum funding sizeavailable and then they can take
what they need for theirbusiness out of that amount.
So say, I approve you for twohundred thousand dollars because
you make two million dollars ayear.
Two hundred thousand dollars.
And I say only take what youneed because you want to put the
capital to work as soon as youget it.
(09:26):
If it sits in your account.
If I give you a full 200, youonly need 50 grand right now.
The 150 is going to sit in youraccount and accrue interest for
no reason.
It's just sitting in youraccount doing nothing.
You need to put it to work andyou can always call me later and
get the rest of that money.
That's the thing.
Speaker 2 (09:40):
So you offer options and opportunities.
Yeah, different levels.
Speaker 1 (09:45):
And every entrepreneur thinks it's going
to work.
That's why I love lending tosmall business owners is because
they all think that their ideais going to work and, to some
circumstance, it already has.
They've created their realityand I like to feed that.
I like to see it come toreality for them.
Speaker 2 (10:03):
You'd like to up their game?
Yeah, okay, what kind of termslike long-term, short-term and
then percentages ranges are youused to seeing?
Speaker 1 (10:16):
On the cash that's uncollateralized, that there's
not a piece of equipment sittingin your yard that they can come
seize if you default, godforbid, you default them alone,
which doesn't happen a lot.
But I'm just trying to reallyreinforce the idea of risk and
how, if something has collateralbehind it, they can go out
longer terms On the stuff.
That's just cash.
(10:37):
We're seeing about 2.5% to 3%periodic rates per month.
So say you borrow like $10,000,you pay back $10,300 if you pay
it off at the so like per month.
So say you borrow like 10 grand, you pay back 10,300 if you pay
it off at the end of the month.
Speaker 2 (10:49):
But if you wait till the term is over.
Speaker 1 (10:51):
Yeah, if you go throughout the entire term, say
like line of credit, that's likea 24 month loan or a 36 month
line of credit you could end uppaying 30, 40 cents on the
dollar.
But that comes out to about 2cents per month and you can
always pay it off early wheneveryou want.
So the cost of money these days, with no collateral, it's a
really good opportunity forsmall business owners.
Speaker 2 (11:13):
Of your clientele.
I'm sure you've hit otherclientele that have looked for
lending elsewhere.
How do you caution them orreward them for not taking
predatory lender terms?
Speaker 1 (11:26):
them for not taking predatory lender terms.
Speaker 2 (11:28):
Yeah, yeah, so you want to work with an accredited
business what's accredited.
Speaker 1 (11:31):
You want to look them up online.
So you want to see if they'reaccredited through the BBB.
You want to maybe get areferral, see if they have any
kind of testimonials, thingslike that.
Speaker 2 (11:40):
Interesting A social aspect.
Speaker 1 (11:41):
Yeah, a trust pilot.
Any of those kind of ratingservices are great to look at
before you do anything.
Speaker 2 (11:47):
Okay, that's so awesome.
We had a couple of companieslooking to offer us investment
money or something and we'relike, well, you don't even have
a LinkedIn.
And we're like, okay, but Iguess it does show something to
someone that's putting up riskfor you.
You gotta check those boxes.
Okay, if you're going for acapital funding loan, that's
just the cash, right.
(12:07):
Yeah, that's the money you'regoing to put towards building
your business or growing adspend working capital, and then
the one that's with collateral.
What's that called?
Speaker 1 (12:17):
Collateral, so maybe like an equipment financing deal
.
Speaker 2 (12:20):
Oh so equipment financing.
Speaker 1 (12:21):
Yeah.
Speaker 2 (12:22):
Okay, equipment financing is your most I mean
fun to talk about.
But no-transcript.
Speaker 1 (12:54):
But after you talk to the same kind of industries
over and over and over, like ourreps, do you start to get a
pretty keen eye on where you canbuy equipment, the reasons why
people are taking money out forequipment and we're able to
custom tailor a financingsolution better for them once we
do understand that.
So that's why our seasonedveterans, our seasoned veteran
(13:16):
sales reps that work for us,really hone in on again, like
you said, on the need of thebusiness owner and make sure
that we are delivering a productthat is in line with their
needs.
Speaker 2 (13:26):
What is a really fun example of what an equipment
funding loan might look like,even if it's made up, could be
fictitious, could be factual.
Speaker 1 (13:36):
Yeah, I have a couple in mind, but I'm yeah, so say
you have a trucker and he'slooking to get a reefer trailer
so he can transport frozen goods.
A reefer trailer would be arefrigerated trailer.
Speaker 2 (13:47):
You needed to clarify that one.
Speaker 1 (13:50):
Construction.
You can say hey, are you guyslooking at buying a yellow iron
this quarter?
And yellow iron would be abulldozer or like a caterpillar,
Not a golf club.
That's weird.
No, not a golf club, but sayyou wanted to buy a golf cart or
golf cart the fleet of them foryour golf club.
Speaker 2 (14:08):
we can do that.
I see so when you're actuallybut okay.
So if you're buying a fleet ofgolf carts, is it because you
need new ones or you're juststarting?
Speaker 1 (14:15):
Either way.
Speaker 2 (14:16):
Really.
Speaker 1 (14:18):
As long as it makes sense for your business, the
actual what you're buying, theproduct, we'll do it.
Speaker 2 (14:23):
So if you're doing an application for a loan, what
are some red flags that you lookfor as a lender?
Speaker 1 (14:30):
So we're looking at time in business.
The longer time in businessthat you have, the better.
We're also looking for you knowwe take a really deep dive into
the cash flow of the business.
So we ask you to send in threemonths of bank statements and
we're going to look at that andwe're going to scour through it
and see if you have any negativedays, any insufficient funds
charges, any red flags that showthat your cashflow might not be
(14:51):
as strong as you think.
Speaker 2 (14:53):
But if you're just really irresponsible.
Speaker 1 (14:55):
They'll see that.
They'll see that in your creditprofile.
They're going to look at yourpersonal credit.
They're not going to hold itagainst you.
We do start at 500 FICO for thecash loans, for the working
capital loans.
But when you start to look atequipment financing because they
are going to be in bed with youfor three to five years, maybe
10 years, on these equipmentloans, they're going to be a
little more stingy about yourcredit being above 650.
Speaker 2 (15:18):
Oof 550.
Okay, yeah, Cool.
Why do you think banks don'tlook at equipment financing for
$550?
Speaker 1 (15:26):
Well, your credit says something about you.
It seems pretty much the same.
All your revolving loans thatyou have, you're going to have a
payment history on your creditreport.
So if you do ever look at yourown credit report like ones that
say a finance company like uswould pull you'll see that it
shows about 20 of your lastpayments that you've made for
that revolving line on eachrevolving line that you have.
(15:47):
And a revolving line would be acar payment, a mortgage, a
credit card, all that stuff isall outlined there and they can
see the history of you makingyour payments and on time.
So somebody historically whoacts this way has credit to
suggest that they're going toact the same way in the future.
So that's the point of creditand I think that it just again
(16:12):
assesses the risk that isinvolved with these loans.
It's not like the lendersaren't going to do business with
you.
You might just pay a little bitmore if you're not as qualified
.
You might pay less if you are.
Speaker 2 (16:22):
How often do you have someone that gets financing
from you and then doesn't pay itback?
Speaker 1 (16:28):
It doesn't happen very often because we really
push that you should be takingthe money if you have a need and
we dive into that and make surethat the owner is very well
versed on how the workingcapital works.
And look, the lender is notgoing to lend more money than
they think that a business ownercan pay back in a low impact
and manageable way.
They want to be paid back.
(16:48):
So they look at the cash flow.
They say if I inserted ourmoney into here and had you pay
it back on a weekly payment or amonthly payment from here on
out, would that help you orwould that even put you under,
even if you couldn't make thatpayment altogether?
So even with the opportunity,you should feel more money
coming into your business.
But they look at it and go theycan handle this loan in a way
(17:12):
they will pay it back.
Historically, their credit saysor the cash flow says they can
pay it back or they will.
So it's all about risk and thelenders assess risk through
their underwriting guidelinesand we adhere to those and make
sure that you know we'rematching with the best lender
possible.
Speaker 2 (17:28):
So I'll then give you the opposite question.
Speaker 1 (17:30):
Yeah.
Speaker 2 (17:30):
What are things when somebody fill out SNAP with you
to get some funding for eitherequipment or capital funding,
for cash that they need rightaway?
What are things that are majorgreen lights that you're excited
about?
Speaker 1 (17:41):
Annual revenue.
So the more annual revenue thatyou make, the more revenue that
you make, the more you qualifyfor.
So a lot of times people wantto qualify for 200 grand and
they only make $300,000.
You couldn't pay back $200,000within a year or two years or
even three years.
If you're making 200 grand ayear, you can't In profit or
(18:02):
revenue.
In gross revenue.
So you know there is somethingcalled the 10% rule.
That is a general rule that welike to work off of.
So say, your company is making2.2 million.
Typically we can get you about220,000 as a loan that you could
probably pay back in a year tothree years on the capital side.
Speaker 2 (18:22):
What if someone took a great terms loan and that's, I
know, very standard for youwould they do it again?
Speaker 1 (18:32):
Yeah, we have repeat customers that we've been
working with since 2014.
They keep coming back.
We're able to get them moremoney on top of the money that
they have, or restructure theirdeal and give them longer terms,
better costs.
And the thing is that this isall in the name of building your
business credit.
So, just like your personalcredit that you've been building
(18:53):
since you're 16 and bought acar or your first credit card
for 200 bucks, that was buildingyour personal credit.
A lot of business owners don'thave their business credit built
up, so when they want to takeout a big, big loan or they
don't want to put up their homeor everything, they have to get
the next opportunity.
It's good to start with $20,000loan payback, $45,000 loan
payback, get $100,000 loanpayback and a lot of our lenders
(19:14):
will go from like 5%origination fee or it usually
starts like three down to two,down to one, and it'll get like
free for life origination feeson their loans too.
Speaker 2 (19:26):
so it is building towards something there is light
at the end of the tunnel.
So I would tell you, forinternet marketers who do sales
and consulting and otherproducts, usually looking for
investment money, and they endup giving away assets you know,
shares of their company to getthe investment money because
they're just trying to grow it,and I would then suggest that
they look for outside financingand not go to the big banks, who
will reject them if they don'thave the scenario that big banks
(19:48):
are looking for.
I understand that they're muchmore difficult with risk and I
know you have a lot of repeatclients.
If someone is brand brand newto trying to figure out do I
need a loan?
Do I need you know?
Can I get funding?
What's it for?
Where would they send theirquestions and answers?
Could they still maybe justcall and ask?
Speaker 1 (20:08):
Absolutely.
Our agents are live 24 seven.
They're stationed in New York,texas, california, and you know
they'll always pick up andthey're always willing to talk
to you and build a relationship.
That we know because we knowwhat it takes.
We have to talk to the businessowner about their need, about
(20:29):
their dreams, about their nextmove.
Business owners can't confide intoo many people but we do make
some pretty good relationshipswith these business owners
because we do understand aboutopportunity and how it's kind of
lonely at the top.
So when you're able to talkabout taking money out, it might
be private.
(20:50):
We don't want to take out money.
It might be personal.
You might want to just, youknow, as a business owner, take
it out and get that opportunityand move your business forward
and not have anybody know aboutit.
We keep it discreet, we keep iteasy and you don't even have to
be a full owner of yourbusiness to take these loans out
.
You can be like a 25% owner andstill take a loan out and it
(21:11):
just gives a lot of freedom tobusiness owners.
It gives a lot of freedom toanybody who's looking to really
grab life by the horns.
Speaker 2 (21:21):
How many people do you think start businesses and
end up taking some sort of loanor investment or giving away
equity to get some extra funding?
That don't take working capitalloans no, I'm saying how many
do you think need to?
Whether they get.
So they either go forinvestment funding, where then
they give somebody a smallpercentage of their business, or
they end up getting there.
(21:41):
You're getting there, aren't you?
Well, yes, honestly, the givingequity is a very powerful
cash-free incentive for you toget funds for your company to
grow it.
However, if you do grow it,then it's worth more.
Then you're going to owe moreback than taking a loan that
they can afford.
Speaker 1 (21:57):
Yeah, taking the cash out on the business is
something that you need to do.
You, taking the cash out on thebusiness is something that you
need to do.
You need to build your businesscredit and I think it's a great
option, before you start givingaway equity, to bet on yourself
and put it on the business.
If you have the revenue toprove that you can qualify for
the money, you should go aheadand take it out and start that
journey.
Speaker 2 (22:19):
What do you mean?
Betting on yourself?
Speaker 1 (22:22):
You're not reaching out for someone else's help.
You're betting on your business.
You're betting on your hardwork, on yourself, and that will
come back and pay you tenfold.
Speaker 2 (22:31):
Damn, what a great answer.
I actually agree, like ifyou're going for a loan, you're
going to maybe give equity awayto investors, or you're going to
get a loan with decent fundingmargins or better payback
options, the big bank won't talkto you anyway.
Why not go that route and beton yourself as the entrepreneur
versus getting into debt youcan't handle.
A lot of businesses are builton debt, and if this is a debt
(22:52):
that most people have to payback pretty good and you know
they can qualify and you've doneyour research, then well done.
Speaker 1 (22:58):
Agreed.
Speaker 2 (23:00):
What else?
What else do you have tosuggest?
Obviously, this podcast is forbusiness owners.
Entrepreneurs and a lot of us,at the end of the day, seek
funding in some realm to start,continue, build or, you know,
cover, you know the lights inthe studio or whatever we need
yeah, I think it starts withtrust.
Speaker 1 (23:19):
You want to be able to talk to somebody who knows
what they're talking about.
Um, we've been doing it for 10years at Business Funds
Marketplace and then longer thanthat with all of our our sales
reps and our consultants.
But I just really want tostress that taking money is very
common.
It's not like it's not like youknow.
(23:40):
You're doing something thatnobody's ever done before.
I'd say like 90% of businesseshave taken money from somebody
or started it that way, maybeeven more.
I mean, if you think thateverybody's just making it on
their own cash flow and they'renot, they're not using credits
or get the credit system You'rewrong.
Me, everybody's on the creditcard, everybody's on a mortgage,
(24:00):
everybody's on the car loan,and playing the credit game is
really important, and do not letthe business credit game pass
you by because you are noteducated on it or you think that
that's too expensive to borrowmoney.
What is the cost of money toyou?
(24:21):
Would lend out a hundredthousand dollars, get paid back
105 in five years?
You wouldn't.
So the cost of money issomething that you need to
understand that sometimes itcosts money to make money and
you're you're never going to beable to just make enough cash
flow without using somebody elseor you delegating
responsibilities or usingcashflow to as like a multiplier
(24:43):
for your, your progress.
So you know you don't want tothwart that from your own
capacity and your own ability toraise funds for yourself.
You want to be able to tap intomore money, tapped into your
credit, and use that to propelforward.
Speaker 2 (25:01):
Well, honestly, I've been raised on the cash flow
positive.
You can't borrow money onsomething you don't have, so
might as well not.
But then as I got older and alittle more experienced in
business, I'm like, hey, if youcan borrow money, let's say
you're going to make 20 a monthin returns and you want to just
go that next step up.
What if you just took 10returns and then that extra 10
(25:21):
went towards paying that extramoney you just got, because
you've got a company that'sworth growing, or you believe in
yourself or you're growingsomething.
Amazing, weird question.
There are a lot of lendingcompanies.
How do you know what to lookfor?
What to look for won't makethem come back for another loan.
(25:59):
You want the reoccurring clientand you want them to
reoccurringly pay it off and behappy and keep on building step
by step.
So what are other practicesthat lenders do that are maybe
not beneficial or maybesomething that another client
should be aware of when they'relooking for a loan?
Speaker 1 (26:16):
I would encourage you to make sure that you're
getting the product that bestaligns with your need.
Speaker 2 (26:21):
What do you mean?
The product?
Speaker 1 (26:23):
So working capital, just straight cash,
non-collateralized loans.
It's going to be moreaggressive on the payback.
Get the payback faster.
On the term length it mightcost you more money because it's
just straight cash when you tieit to a piece of equipment, so
you're doing equipment financing.
You can stretch it out forthree to five years, the
(26:44):
payments, that is so, andthey're monthly payments, so
it's easier on your cashflow.
But really, if you're lookingfor something in between getting
a line of credit which areavailable in today's market now
too to just get cash and takethe money truly when you only
need it.
So now, instead of taking abunch of money up front and
having to commit that moneyright away to your entire
project, you can take out littlespurts of it as the project
(27:08):
moves forward and someindustries they work better with
something like that.
Speaker 2 (27:12):
Oh, you offer a line of credit.
Speaker 1 (27:14):
Yeah, so you can buy inventory, flip it, pay it off
early.
You don't only end up payinglike five, six cents on the
dollar, nine cents on the dollar.
So you know, if you only borrowfor three months and you flip
the inventory and you're able toput that profit into your next
buy, then you're really gettingsomewhere.
And that's what I mean aboutmultiplying your cash flow and
(27:35):
having it work for you that way.
Speaker 2 (27:36):
So what if they go to another lender?
That are different types ofmaybe predatory loans.
What do they look for on theapp process or the conversation
that is concerning yeah, they'regoing to be limited.
Speaker 1 (27:49):
They're probably going to try to push you into a
loan that seems very aggressiveunder nine months, under 12
months that's always a red flag.
Look out for something likethat that's being paid back
aggressively.
Read the contract when it'ssent to you.
They can't give you money ifyou don't sign the contract.
High five, fred.
There's a lot of addendums.
There's a lot of things thatyou can be looking for, and one
(28:12):
of those things is an earlyprepay payment schedule.
Speaker 2 (28:16):
Really, I thought it was the opposite.
Speaker 1 (28:18):
Yeah, you want to have that in there, sounds good.
Yeah, you want to have that inthere, sounds good.
Yeah, you want to have that inthere.
They can just say, hey, we haveno prepayment penalties, we'll
show it.
Where is it stated on thecontract?
This is in the handshakeagreement.
So you're going to want to seean actual schedule and a lot of
times, if they don't have themin there, it's going to in there
as like an exhibit A, anaddendum.
Speaker 2 (28:41):
So what do you do if your reps are selling a loan, If
there's those kinds ofarrangements like pre-early
payoff?
Do you instruct them to makesure to note in the calls all
those details?
Speaker 1 (28:52):
Yes, we notate all that kind of stuff and we really
look for lenders.
Look, we have a wholemarketplace of lenders that can
provide funding to you.
We might get 15, 20 approvalswhen it comes our way, but we're
going to present to you thebest terms, the best cost, and a
lot of times it's the terms ofthe deal, not just the term
length and the cost of the note.
A lot of times it's going to becan you pay it off early?
(29:13):
Is there a prepay schedule?
Is there a portal where you canlog in by yourself and just
take out money from line ofcredit and not have to call my
agent to get out money?
That all exists.
So you know good, always adviseto make it an easy process for
you, but also an educatedprocess for you that's so
interesting for me.
Speaker 2 (29:32):
I know in business it's always been um, you know,
don't go get funding, don't gointo debt, like silicon valley
companies always do, becausethen you're growing company
that's just got debt, you'repaying back the debt forever,
kind of like the US economy buyour trillions to fix the roads
but you don't take tax dollarsto fix the roads, that kind of
thing.
I think it's interesting thatyou run an actual ethical
(29:53):
company to loan where it'sresponsible and giving back to
the person that's taking theloan and making sure that they
are accepting the loanresponsibly.
Is there anything that yourreps look for that it's like
absolutely no veto black, we'renot touching that client.
Speaker 1 (30:10):
Oh, yeah, sure.
So if someone one thing to lookout for is someone is, of
course we pull a credit and wedo like a small background check
we make sure there's nothingbig red flags like that, like
criminal history or anythinglike that.
But you know we're looking forany kind of like you know,
misrepresented bank statementsor application, any marks like
(30:32):
that that come back to us andthen if they're, like you know,
leaving the country soon orthey're mentioning that they're
going to be selling theirbusiness soon, Vegas is a red
flag.
Yeah, yeah, we're gonna takethis all and put it on red.
That's the need.
Um, we're probably gonna try toskip on that person all right.
Speaker 2 (30:48):
What are some major green flags?
Like this person would benefitamazingly, get great terms, and
we're happy to help them.
What are good green flags?
Speaker 1 (30:57):
they understand it takes money to make money always
and they're down Like they havea big opportunity and they're
ready to go and we can really wecan deliver what we promised
quickly.
Those are the best deals.
Speaker 2 (31:09):
That was very vague.
What do you mean?
Ready to go?
Speaker 1 (31:12):
I'm going to buy some inventory $200,000.
I'm going to sell it for amillion dollars.
It's going to take me twomonths.
Oh, you cost 50 grand andborrow that money.
I just made $850,000 from thatopportunity.
I want to do it.
Speaker 2 (31:21):
What would be a good example of that?
Speaker 1 (31:27):
I'd say like an inventory purchase during the
holidays or something like that.
Say, you have like a flowercompany that wants to buy a
bunch of inventory and they knowthey're going to make 50% of
their money that month for thewhole year.
Black Friday, yeah, exactly.
So they want to do like a biginventory purchase and flip it
and they want to do a quickprepay once they get all that
payment in so they can pay alltheir vendors, take the profit
and leave.
Speaker 2 (31:44):
I know that's been some of your best clients.
They're pretty funny to hearabout.
Speaker 1 (31:47):
Yeah, it's really fun to see like them, you know,
turn money into more money usingour fuel.
I like it.
Speaker 2 (31:54):
Do you have any really interesting stories about
someone that needed equipmentfinancing?
That was very unique and kindof fun to do.
Speaker 1 (32:01):
Oh, shoot yeah off the top of my head.
Speaker 2 (32:07):
Okay, let me think For Kartra.
We always use the pony dressage, teaching how to run the horse
in a circle and how to train thepony, and it's our biggest
example of how you can useKartra to film your videos and
then teach dressage if you're adressage teacher and I actually
saw can use Kartra to film yourvideos and then teach dressage
if you're a dressage teacher,and I actually saw one on Kartra
and I was like wow, our examplecame true.
(32:28):
But I know some of yourexamples are pretty funny.
Speaker 1 (32:31):
Yeah, I've done anything from car washes the
whole unit, the whole carwashing unit, to doing like
carnival rides and things likethat, because it was a traveling
carnival company.
I mean, as long as theequipment makes sense for the
business, we can do it.
So you do run into a lot of funstuff.
Speaker 2 (32:47):
I mean we run into software for restaurants, POS
systems, lasers for medical Mostof it I thought would be POS
systems for somebody takingtheir business from the brick
and mortar to online.
Now you need to take creditcards without typing it in, or
cash.
Speaker 1 (33:04):
Right, you're going to find the 30 grand.
Speaker 2 (33:06):
That's where I thought most of the business
loans would come from.
Is somebody trying to updatetheir system from the brick and
mortar to more standard?
Speaker 1 (33:13):
Yeah, and doing that through a POS system or software
is the same as a truckerupgrading their trailer system
or adding to their fleet.
Speaker 2 (33:21):
How do you feel about donuts?
Speaker 1 (33:23):
Love them.
Yeah, I like the custard filledones.
Speaker 2 (33:26):
Because no one needs a donut machine.
Speaker 1 (33:28):
They do actually.
Oh do they, they do Restaurantequipment all day.
Speaker 2 (33:33):
Who needs?
Speaker 1 (33:34):
a donut machine.
The cops Donut maker.
Speaker 2 (33:46):
That's my favorite lending story of yours Is
actually lend it to someone thatis owns a donut shop that's
open at three in the morning andthey're busting their butts
making donuts for everybodyunder the sun probably mostly
cops yeah, long beach.
Speaker 1 (33:55):
Wow, you know you can get a donut and a purple optimo
really late at night but you'vedone the funding for that yes,
everybody across the nation, anykind of industry.
As long as it makes sense forthe business and you have
revenue and you've been inbusiness for over about a year
or two, you can get funding.
Speaker 2 (34:11):
So let's make that our favorite new little example
Like I say, pony dressage, likeI don't even know what that
means, necessarily.
But let's say someone that ownsa four in the morning open
donut shop and their donutmachine breaks.
Yeah, walk me through it.
Speaker 1 (34:26):
Go to the vendor of your choice.
What's a vendor of your choice?
A vendor, so say the donutmachine maker.
So whoever's actually makingthat donut machine?
Like the vendor, say they livein New York and you're in Cali.
Speaker 2 (34:39):
How many vendor donut machines are there?
Speaker 1 (34:41):
There's probably a lot of vendors that make donut
machines, a lot of manufacturersout there, so you buy it
straight from the manufacturer,new, or it can be used and you
can buy from a private party,like the donut say that you put
the donuts out of business thatwere down the street because
your donuts were so good, youcould buy their Based on the
machine, they own that equipment.
Based on the machine, they ownthat equipment.
You could buy from them througha private party purchase and
(35:03):
equipment finance.
Speaker 2 (35:04):
There's a whole nother level to lending.
I didn't even know abouttakeout the competition.
Yeah, they have one donutmachine, let's get two.
Speaker 1 (35:10):
You can buy theirs, you can buy new or used.
So pretty much what you do isyou get an invoice from your
vendor.
Speaker 2 (35:16):
Don't tell me that I have five kids.
We're going to get a donutmachine in the house.
Speaker 1 (35:19):
You can go online and just do a screenshot of the
machine that you want with theprice of it and you just send
that in for your quote.
It's a digital application wesend out to you on your phone.
You just fill out your digitalapplication, you send us a quote
and we get you approved by thenext day and pay the vendor.
You can go get your donutmachine.
Speaker 2 (35:35):
Yeah, okay, great, I would love a donut machine.
I just really want to stress that taking money is
very common.
It's not like you know.
You're doing something thatnobody's ever done before.
I'd say like 90% of businesseshave taken money from somebody
or started it that way.
Do not let the business creditgame pass you by because you are
not educated on it or you thinkthat that's too expensive to
borrow money.
Speaker 2 (00:21):
Hi, welcome to another episode of Pay2Create.
I am your host, Sarah Jenkins,and alongside me today is my
baby daddy and business owner.
Speaker 1 (00:30):
Ricky Brazy of Business Funds Marketplace.
Speaker 2 (00:32):
Well done.
What is Business FundsMarketplace?
Speaker 1 (00:36):
Thanks, for having me .
It's an online lendingmarketplace for businesses
seeking funding.
Speaker 2 (00:42):
Now, if you're a business owner, how long would
you be in business before youdecide to seek funding?
Not for your lemonade stand.
Speaker 1 (00:48):
We're probably not looking for the first year in
business.
You're probably just gettingeverything sorted out.
You're probably getting abusiness bank account, ein,
figuring out how to set upmarketing, hire people, start to
delegate tasks that you'reprobably doing as a business
owner, as we all do.
And I'd say probably after thefirst year you start looking at
funding, start to seek any kindof opportunity to build your
(01:12):
business credit at that time.
Speaker 2 (01:14):
If you're going back to hiring SOPs, who's answering
phones or whatever, at whatpoint?
If you're starting a business,would you say, maybe I need a
little extra capital to grow orcontinue.
Speaker 1 (01:26):
When you have an opportunity to use the money.
So we lend something calledworking capital.
That's the product that we lend, it's just money for the
business.
But it's called working capitalbecause you're supposed to put
the capital to work right away.
So you come and take money whenyou can inject it into your
company and you can use it rightaway for an opportunity that
you see fit.
And take money when you caninject it into your company and
you can use it right away for anopportunity that you see fit.
Speaker 2 (01:46):
If you are the lender or the broker for lending, what
opportunities would you not seefit?
Speaker 1 (01:54):
So lending is based upon risk.
So we are going to do anassessment, a small assessment.
So they look at three months ofbank statements, typically six
months of bank statements.
They'll take a look at yourcashflow.
Make sure you can handle a loan, so they look at three months
of bank statements, typicallysix months of bank statements.
So take a look at your cashflow.
Make sure you can handle a loan, so they'll look at your
average, your balances.
Also, look at your business too.
So they'll look at Secretary ofState and look at your time in
business, look you up on DunBradstreet, look at your
(02:16):
business credit and just makesure that you can handle the
loan in a manageable, low-impactway.
Speaker 2 (02:21):
So when you say somebody should put their
working capital to work for them, their loan to work right away
in their company, what might bea good example of that?
Speaker 1 (02:31):
Say you're a contractor any kind of
contractor, plumbing contractor,say you're a plumbing
contractor, okay, and Not aeuphemism.
You want to bid on someplumbing jobs Not a euphemism.
You want to bid on someplumbing jobs.
So there's going to be somecompetition, and sometimes when
you're bidding, it's not justhow much you're going to cost,
(02:53):
it's the terms of yourarrangement too.
So you might want to say, hey,you don't need to pay me 50% up
front in order to complete thisjob.
I don't need you to fund me soI can pay my materials and pay
my guys.
I can handle that as a businesson my own.
You might win that contract andwin that job because you didn't
(03:17):
have to borrow money to get thejob started.
You just started because youhad capital.
So you can gain morerelationships through being more
liquid and having better cashflow as a business and being
able to extend those terms toyour clients.
Speaker 2 (03:35):
Okay.
So if someone comes to you fora loan, why wouldn't they go to
a bank?
Speaker 1 (03:42):
Banks aren't lending money.
Speaker 2 (03:45):
Well, some money have a mortgage.
Speaker 1 (03:47):
So these are uncollateralized loans, so you
don't have to put up your.
What does that mean?
Yeah, exactly, so you don'thave to put up your house.
You don't have to put up yourcar, you don't have to put up
any assets, so anything that youown.
You don't have to say, hey, ifI don't pay this loan, you get
this.
You're not collateralizing yourloan, so it's under the
(04:07):
business credit, it's not underyour personal credit, so you're
building your business credit inturn.
But also, if things go sideways, you're protected by your LLC.
Speaker 2 (04:18):
Okay.
So if you have no collateral,why would someone like you or
bigger lenders give the loan inthe first place?
What are you looking for?
Speaker 1 (04:29):
It's based upon your cash loan.
If you can handle the loan in away it's called revenue-based
finance.
So they're looking at, hey, inJune, july and August in last
quarter they brought in $300,000in sales and here is last
year's tax return and they did1.3 million.
They're going to do a run ratecalculation.
(04:51):
They're going to look at whatyou've been doing over the last
three months.
Extrapolate that over a wholeyear, so times it by four and
you have your run rate.
So you know what you'reprobably or projected to make it
a revenue for your business.
Speaker 2 (05:05):
Why wouldn't a regular bank look at the revenue
realm and say that we couldgive you money?
Speaker 1 (05:10):
It's too risky and they have their money thrown at
plenty of good other things.
Speaker 2 (05:14):
Because there's no collateral.
Speaker 1 (05:15):
Yeah, they're just.
They are not the backbone ofthe small business owner economy
.
They're just not.
Small business owners don'thave a lot of assets.
They might have their home,they might have their car, but
other than that, they'recontractors, medical
practitioners, restaurant owners, all the above.
Speaker 2 (05:37):
I'm sure you do a lot of medical practitioners Every
type.
If their profit margins areslim or at least accountable,
and the bank doesn't want totouch it because it's risky?
What if he went out of businesswhatever?
What would he or she maybe usefor their medical practice?
What kind of loan would theyneed?
Speaker 1 (05:54):
So if you're looking at buying equipment, so a lot of
medical practices they need tostay.
They need to stay current withthe newest tools or the newest
softwares and you're able to dothat and be able to acquire the
newest equipment financingprogram.
So, god forbid, you can't payyour loan, they'll come and
(06:15):
seize the equipment.
So now it's collateralized bythe actual equipment that you're
financing.
So the lenders are willing togo like five, 10 years on a
monthly payment because it'sless risky.
If you default they can comeand get the equipment.
So the lenders are willing togo like five, 10 years on a
monthly payment because it'sless risky.
If you default they can comeand get the equipment.
So it's not as risky of a loanfor the lender.
There is something backing it.
But it's not your business andit's not your home.
Speaker 2 (06:37):
Oh, that's a really good example.
So if you're getting a piece ofequipment for your medical,
private, whatever business thatyou need a piece of machinery
that they could come and collectif you don't pay off the loan
in a timely manner, what termsis the range that is normal or
that is not scary?
I know there's terms for loans,like my mortgage is a
(06:57):
percentage range every monthover 15, 30 years.
What is a sort of normal rangeyou look at?
Speaker 1 (07:04):
Typically within three to five years on any piece
of equipment.
It can be new or used as well.
So if it is titled piece ofequipment, like you're buying a
tractor or a trailer, you cantypically get a long term on
something like that because ithas a title and is verified that
way.
The ownership's verified thatway.
(07:25):
The ownership's verified thatway.
Any kind of equipment canqualify for equipment financing
as long as it makes sense foryour business.
So a restaurant can't go andfinance a bulldozer.
Speaker 2 (07:36):
What if they're building a new restaurant?
Speaker 1 (07:38):
There have been some exceptions.
Speaker 2 (07:41):
So maybe a higher loan.
Speaker 1 (07:42):
I've heard of crazier loans, but if you can make it
work, We'll ask about thoselater.
They want to lend it out.
They just want to make surethat you're going to be using it
for the business and there'sgoing to be a return on the
investment.
That's what they're interestedin.
They're interested in gettingpaid back, but also giving the
opportunity too.
Speaker 2 (07:57):
So I guess, what are the advantages of a small
business owner coming to someonelike you for a loan versus
going to like big bank?
Speaker 1 (08:04):
It's a quick and easy process.
So about a day or two and youcould get something financed if
you're purchasing equipment, oryou could get capital infused
into your bank account.
Banks are going to take acouple of weeks.
They're going to ask forcollateral, they're going to ask
for a lot of paperwork and atthe end of the day, they're
probably going to decline youunless you're putting up some
collateral.
So you know it is a loan, butit is kind of apples and oranges
(08:27):
, because we are built to lendto small businesses.
Banks are built to lend toeverybody.
Speaker 2 (08:37):
How do you define if somebody, what benefit does it
give if there's collateral andsomeone wants a piece of
machinery for their medicalpractice or whatever, and then
someone just needs cash to putwhere they need to in their
company?
How do you differential yoursales calls on where to hone in,
Like what is?
What is the big differences?
Speaker 1 (09:06):
so one of the first questions that our live agents
will ask you as a business owneris what are you doing with the
money?
And then we'll explain to themthat we'll come back to them
with the maximum funding sizeavailable and then they can take
what they need for theirbusiness out of that amount.
So say, I approve you for twohundred thousand dollars because
you make two million dollars ayear.
Two hundred thousand dollars.
And I say only take what youneed because you want to put the
capital to work as soon as youget it.
(09:26):
If it sits in your account.
If I give you a full 200, youonly need 50 grand right now.
The 150 is going to sit in youraccount and accrue interest for
no reason.
It's just sitting in youraccount doing nothing.
You need to put it to work andyou can always call me later and
get the rest of that money.
That's the thing.
Speaker 2 (09:40):
So you offer options and opportunities.
Yeah, different levels.
Speaker 1 (09:45):
And every entrepreneur thinks it's going
to work.
That's why I love lending tosmall business owners is because
they all think that their ideais going to work and, to some
circumstance, it already has.
They've created their realityand I like to feed that.
I like to see it come toreality for them.
Speaker 2 (10:03):
You'd like to up their game?
Yeah, okay, what kind of termslike long-term, short-term and
then percentages ranges are youused to seeing?
Speaker 1 (10:16):
On the cash that's uncollateralized, that there's
not a piece of equipment sittingin your yard that they can come
seize if you default, godforbid, you default them alone,
which doesn't happen a lot.
But I'm just trying to reallyreinforce the idea of risk and
how, if something has collateralbehind it, they can go out
longer terms On the stuff.
That's just cash.
(10:37):
We're seeing about 2.5% to 3%periodic rates per month.
So say you borrow like $10,000,you pay back $10,300 if you pay
it off at the so like per month.
So say you borrow like 10 grand, you pay back 10,300 if you pay
it off at the end of the month.
Speaker 2 (10:49):
But if you wait till the term is over.
Speaker 1 (10:51):
Yeah, if you go throughout the entire term, say
like line of credit, that's likea 24 month loan or a 36 month
line of credit you could end uppaying 30, 40 cents on the
dollar.
But that comes out to about 2cents per month and you can
always pay it off early wheneveryou want.
So the cost of money these days, with no collateral, it's a
really good opportunity forsmall business owners.
Speaker 2 (11:13):
Of your clientele.
I'm sure you've hit otherclientele that have looked for
lending elsewhere.
How do you caution them orreward them for not taking
predatory lender terms?
Speaker 1 (11:26):
them for not taking predatory lender terms.
Speaker 2 (11:28):
Yeah, yeah, so you want to work with an accredited
business what's accredited.
Speaker 1 (11:31):
You want to look them up online.
So you want to see if they'reaccredited through the BBB.
You want to maybe get areferral, see if they have any
kind of testimonials, thingslike that.
Speaker 2 (11:40):
Interesting A social aspect.
Speaker 1 (11:41):
Yeah, a trust pilot.
Any of those kind of ratingservices are great to look at
before you do anything.
Speaker 2 (11:47):
Okay, that's so awesome.
We had a couple of companieslooking to offer us investment
money or something and we'relike, well, you don't even have
a LinkedIn.
And we're like, okay, but Iguess it does show something to
someone that's putting up riskfor you.
You gotta check those boxes.
Okay, if you're going for acapital funding loan, that's
just the cash, right.
(12:07):
Yeah, that's the money you'regoing to put towards building
your business or growing adspend working capital, and then
the one that's with collateral.
What's that called?
Speaker 1 (12:17):
Collateral, so maybe like an equipment financing deal
.
Speaker 2 (12:20):
Oh so equipment financing.
Speaker 1 (12:21):
Yeah.
Speaker 2 (12:22):
Okay, equipment financing is your most I mean
fun to talk about.
But no-transcript.
Speaker 1 (12:54):
But after you talk to the same kind of industries
over and over and over, like ourreps, do you start to get a
pretty keen eye on where you canbuy equipment, the reasons why
people are taking money out forequipment and we're able to
custom tailor a financingsolution better for them once we
do understand that.
So that's why our seasonedveterans, our seasoned veteran
(13:16):
sales reps that work for us,really hone in on again, like
you said, on the need of thebusiness owner and make sure
that we are delivering a productthat is in line with their
needs.
Speaker 2 (13:26):
What is a really fun example of what an equipment
funding loan might look like,even if it's made up, could be
fictitious, could be factual.
Speaker 1 (13:36):
Yeah, I have a couple in mind, but I'm yeah, so say
you have a trucker and he'slooking to get a reefer trailer
so he can transport frozen goods.
A reefer trailer would be arefrigerated trailer.
Speaker 2 (13:47):
You needed to clarify that one.
Speaker 1 (13:50):
Construction.
You can say hey, are you guyslooking at buying a yellow iron
this quarter?
And yellow iron would be abulldozer or like a caterpillar,
Not a golf club.
That's weird.
No, not a golf club, but sayyou wanted to buy a golf cart or
golf cart the fleet of them foryour golf club.
Speaker 2 (14:08):
we can do that.
I see so when you're actuallybut okay.
So if you're buying a fleet ofgolf carts, is it because you
need new ones or you're juststarting?
Speaker 1 (14:15):
Either way.
Speaker 2 (14:16):
Really.
Speaker 1 (14:18):
As long as it makes sense for your business, the
actual what you're buying, theproduct, we'll do it.
Speaker 2 (14:23):
So if you're doing an application for a loan, what
are some red flags that you lookfor as a lender?
Speaker 1 (14:30):
So we're looking at time in business.
The longer time in businessthat you have, the better.
We're also looking for you knowwe take a really deep dive into
the cash flow of the business.
So we ask you to send in threemonths of bank statements and
we're going to look at that andwe're going to scour through it
and see if you have any negativedays, any insufficient funds
charges, any red flags that showthat your cashflow might not be
(14:51):
as strong as you think.
Speaker 2 (14:53):
But if you're just really irresponsible.
Speaker 1 (14:55):
They'll see that.
They'll see that in your creditprofile.
They're going to look at yourpersonal credit.
They're not going to hold itagainst you.
We do start at 500 FICO for thecash loans, for the working
capital loans.
But when you start to look atequipment financing because they
are going to be in bed with youfor three to five years, maybe
10 years, on these equipmentloans, they're going to be a
little more stingy about yourcredit being above 650.
Speaker 2 (15:18):
Oof 550.
Okay, yeah, Cool.
Why do you think banks don'tlook at equipment financing for
$550?
Speaker 1 (15:26):
Well, your credit says something about you.
It seems pretty much the same.
All your revolving loans thatyou have, you're going to have a
payment history on your creditreport.
So if you do ever look at yourown credit report like ones that
say a finance company like uswould pull you'll see that it
shows about 20 of your lastpayments that you've made for
that revolving line on eachrevolving line that you have.
(15:47):
And a revolving line would be acar payment, a mortgage, a
credit card, all that stuff isall outlined there and they can
see the history of you makingyour payments and on time.
So somebody historically whoacts this way has credit to
suggest that they're going toact the same way in the future.
So that's the point of creditand I think that it just again
(16:12):
assesses the risk that isinvolved with these loans.
It's not like the lendersaren't going to do business with
you.
You might just pay a little bitmore if you're not as qualified
.
You might pay less if you are.
Speaker 2 (16:22):
How often do you have someone that gets financing
from you and then doesn't pay itback?
Speaker 1 (16:28):
It doesn't happen very often because we really
push that you should be takingthe money if you have a need and
we dive into that and make surethat the owner is very well
versed on how the workingcapital works.
And look, the lender is notgoing to lend more money than
they think that a business ownercan pay back in a low impact
and manageable way.
They want to be paid back.
(16:48):
So they look at the cash flow.
They say if I inserted ourmoney into here and had you pay
it back on a weekly payment or amonthly payment from here on
out, would that help you orwould that even put you under,
even if you couldn't make thatpayment altogether?
So even with the opportunity,you should feel more money
coming into your business.
But they look at it and go theycan handle this loan in a way
(17:12):
they will pay it back.
Historically, their credit saysor the cash flow says they can
pay it back or they will.
So it's all about risk and thelenders assess risk through
their underwriting guidelinesand we adhere to those and make
sure that you know we'rematching with the best lender
possible.
Speaker 2 (17:28):
So I'll then give you the opposite question.
Speaker 1 (17:30):
Yeah.
Speaker 2 (17:30):
What are things when somebody fill out SNAP with you
to get some funding for eitherequipment or capital funding,
for cash that they need rightaway?
What are things that are majorgreen lights that you're excited
about?
Speaker 1 (17:41):
Annual revenue.
So the more annual revenue thatyou make, the more revenue that
you make, the more you qualifyfor.
So a lot of times people wantto qualify for 200 grand and
they only make $300,000.
You couldn't pay back $200,000within a year or two years or
even three years.
If you're making 200 grand ayear, you can't In profit or
(18:02):
revenue.
In gross revenue.
So you know there is somethingcalled the 10% rule.
That is a general rule that welike to work off of.
So say, your company is making2.2 million.
Typically we can get you about220,000 as a loan that you could
probably pay back in a year tothree years on the capital side.
Speaker 2 (18:22):
What if someone took a great terms loan and that's, I
know, very standard for youwould they do it again?
Speaker 1 (18:32):
Yeah, we have repeat customers that we've been
working with since 2014.
They keep coming back.
We're able to get them moremoney on top of the money that
they have, or restructure theirdeal and give them longer terms,
better costs.
And the thing is that this isall in the name of building your
business credit.
So, just like your personalcredit that you've been building
(18:53):
since you're 16 and bought acar or your first credit card
for 200 bucks, that was buildingyour personal credit.
A lot of business owners don'thave their business credit built
up, so when they want to takeout a big, big loan or they
don't want to put up their homeor everything, they have to get
the next opportunity.
It's good to start with $20,000loan payback, $45,000 loan
payback, get $100,000 loanpayback and a lot of our lenders
(19:14):
will go from like 5%origination fee or it usually
starts like three down to two,down to one, and it'll get like
free for life origination feeson their loans too.
Speaker 2 (19:26):
so it is building towards something there is light
at the end of the tunnel.
So I would tell you, forinternet marketers who do sales
and consulting and otherproducts, usually looking for
investment money, and they endup giving away assets you know,
shares of their company to getthe investment money because
they're just trying to grow it,and I would then suggest that
they look for outside financingand not go to the big banks, who
will reject them if they don'thave the scenario that big banks
(19:48):
are looking for.
I understand that they're muchmore difficult with risk and I
know you have a lot of repeatclients.
If someone is brand brand newto trying to figure out do I
need a loan?
Do I need you know?
Can I get funding?
What's it for?
Where would they send theirquestions and answers?
Could they still maybe justcall and ask?
Speaker 1 (20:08):
Absolutely.
Our agents are live 24 seven.
They're stationed in New York,texas, california, and you know
they'll always pick up andthey're always willing to talk
to you and build a relationship.
That we know because we knowwhat it takes.
We have to talk to the businessowner about their need, about
(20:29):
their dreams, about their nextmove.
Business owners can't confide intoo many people but we do make
some pretty good relationshipswith these business owners
because we do understand aboutopportunity and how it's kind of
lonely at the top.
So when you're able to talkabout taking money out, it might
be private.
(20:50):
We don't want to take out money.
It might be personal.
You might want to just, youknow, as a business owner, take
it out and get that opportunityand move your business forward
and not have anybody know aboutit.
We keep it discreet, we keep iteasy and you don't even have to
be a full owner of yourbusiness to take these loans out
.
You can be like a 25% owner andstill take a loan out and it
(21:11):
just gives a lot of freedom tobusiness owners.
It gives a lot of freedom toanybody who's looking to really
grab life by the horns.
Speaker 2 (21:21):
How many people do you think start businesses and
end up taking some sort of loanor investment or giving away
equity to get some extra funding?
That don't take working capitalloans no, I'm saying how many
do you think need to?
Whether they get.
So they either go forinvestment funding, where then
they give somebody a smallpercentage of their business, or
they end up getting there.
(21:41):
You're getting there, aren't you?
Well, yes, honestly, the givingequity is a very powerful
cash-free incentive for you toget funds for your company to
grow it.
However, if you do grow it,then it's worth more.
Then you're going to owe moreback than taking a loan that
they can afford.
Speaker 1 (21:57):
Yeah, taking the cash out on the business is
something that you need to do.
You, taking the cash out on thebusiness is something that you
need to do.
You need to build your businesscredit and I think it's a great
option, before you start givingaway equity, to bet on yourself
and put it on the business.
If you have the revenue toprove that you can qualify for
the money, you should go aheadand take it out and start that
journey.
Speaker 2 (22:19):
What do you mean?
Betting on yourself?
Speaker 1 (22:22):
You're not reaching out for someone else's help.
You're betting on your business.
You're betting on your hardwork, on yourself, and that will
come back and pay you tenfold.
Speaker 2 (22:31):
Damn, what a great answer.
I actually agree, like ifyou're going for a loan, you're
going to maybe give equity awayto investors, or you're going to
get a loan with decent fundingmargins or better payback
options, the big bank won't talkto you anyway.
Why not go that route and beton yourself as the entrepreneur
versus getting into debt youcan't handle.
A lot of businesses are builton debt, and if this is a debt
(22:52):
that most people have to payback pretty good and you know
they can qualify and you've doneyour research, then well done.
Speaker 1 (22:58):
Agreed.
Speaker 2 (23:00):
What else?
What else do you have tosuggest?
Obviously, this podcast is forbusiness owners.
Entrepreneurs and a lot of us,at the end of the day, seek
funding in some realm to start,continue, build or, you know,
cover, you know the lights inthe studio or whatever we need
yeah, I think it starts withtrust.
Speaker 1 (23:19):
You want to be able to talk to somebody who knows
what they're talking about.
Um, we've been doing it for 10years at Business Funds
Marketplace and then longer thanthat with all of our our sales
reps and our consultants.
But I just really want tostress that taking money is very
common.
It's not like it's not like youknow.
(23:40):
You're doing something thatnobody's ever done before.
I'd say like 90% of businesseshave taken money from somebody
or started it that way, maybeeven more.
I mean, if you think thateverybody's just making it on
their own cash flow and they'renot, they're not using credits
or get the credit system You'rewrong.
Me, everybody's on the creditcard, everybody's on a mortgage,
(24:00):
everybody's on the car loan,and playing the credit game is
really important, and do not letthe business credit game pass
you by because you are noteducated on it or you think that
that's too expensive to borrowmoney.
What is the cost of money toyou?
(24:21):
Would lend out a hundredthousand dollars, get paid back
105 in five years?
You wouldn't.
So the cost of money issomething that you need to
understand that sometimes itcosts money to make money and
you're you're never going to beable to just make enough cash
flow without using somebody elseor you delegating
responsibilities or usingcashflow to as like a multiplier
(24:43):
for your, your progress.
So you know you don't want tothwart that from your own
capacity and your own ability toraise funds for yourself.
You want to be able to tap intomore money, tapped into your
credit, and use that to propelforward.
Speaker 2 (25:01):
Well, honestly, I've been raised on the cash flow
positive.
You can't borrow money onsomething you don't have, so
might as well not.
But then as I got older and alittle more experienced in
business, I'm like, hey, if youcan borrow money, let's say
you're going to make 20 a monthin returns and you want to just
go that next step up.
What if you just took 10returns and then that extra 10
(25:21):
went towards paying that extramoney you just got, because
you've got a company that'sworth growing, or you believe in
yourself or you're growingsomething.
Amazing, weird question.
There are a lot of lendingcompanies.
How do you know what to lookfor?
What to look for won't makethem come back for another loan.
(25:59):
You want the reoccurring clientand you want them to
reoccurringly pay it off and behappy and keep on building step
by step.
So what are other practicesthat lenders do that are maybe
not beneficial or maybesomething that another client
should be aware of when they'relooking for a loan?
Speaker 1 (26:16):
I would encourage you to make sure that you're
getting the product that bestaligns with your need.
Speaker 2 (26:21):
What do you mean?
The product?
Speaker 1 (26:23):
So working capital, just straight cash,
non-collateralized loans.
It's going to be moreaggressive on the payback.
Get the payback faster.
On the term length it mightcost you more money because it's
just straight cash when you tieit to a piece of equipment, so
you're doing equipment financing.
You can stretch it out forthree to five years, the
(26:44):
payments, that is so, andthey're monthly payments, so
it's easier on your cashflow.
But really, if you're lookingfor something in between getting
a line of credit which areavailable in today's market now
too to just get cash and takethe money truly when you only
need it.
So now, instead of taking abunch of money up front and
having to commit that moneyright away to your entire
project, you can take out littlespurts of it as the project
(27:08):
moves forward and someindustries they work better with
something like that.
Speaker 2 (27:12):
Oh, you offer a line of credit.
Speaker 1 (27:14):
Yeah, so you can buy inventory, flip it, pay it off
early.
You don't only end up payinglike five, six cents on the
dollar, nine cents on the dollar.
So you know, if you only borrowfor three months and you flip
the inventory and you're able toput that profit into your next
buy, then you're really gettingsomewhere.
And that's what I mean aboutmultiplying your cash flow and
(27:35):
having it work for you that way.
Speaker 2 (27:36):
So what if they go to another lender?
That are different types ofmaybe predatory loans.
What do they look for on theapp process or the conversation
that is concerning yeah, they'regoing to be limited.
Speaker 1 (27:49):
They're probably going to try to push you into a
loan that seems very aggressiveunder nine months, under 12
months that's always a red flag.
Look out for something likethat that's being paid back
aggressively.
Read the contract when it'ssent to you.
They can't give you money ifyou don't sign the contract.
High five, fred.
There's a lot of addendums.
There's a lot of things thatyou can be looking for, and one
(28:12):
of those things is an earlyprepay payment schedule.
Speaker 2 (28:16):
Really, I thought it was the opposite.
Speaker 1 (28:18):
Yeah, you want to have that in there, sounds good.
Yeah, you want to have that inthere, sounds good.
Yeah, you want to have that inthere.
They can just say, hey, we haveno prepayment penalties, we'll
show it.
Where is it stated on thecontract?
This is in the handshakeagreement.
So you're going to want to seean actual schedule and a lot of
times, if they don't have themin there, it's going to in there
as like an exhibit A, anaddendum.
Speaker 2 (28:41):
So what do you do if your reps are selling a loan, If
there's those kinds ofarrangements like pre-early
payoff?
Do you instruct them to makesure to note in the calls all
those details?
Speaker 1 (28:52):
Yes, we notate all that kind of stuff and we really
look for lenders.
Look, we have a wholemarketplace of lenders that can
provide funding to you.
We might get 15, 20 approvalswhen it comes our way, but we're
going to present to you thebest terms, the best cost, and a
lot of times it's the terms ofthe deal, not just the term
length and the cost of the note.
A lot of times it's going to becan you pay it off early?
(29:13):
Is there a prepay schedule?
Is there a portal where you canlog in by yourself and just
take out money from line ofcredit and not have to call my
agent to get out money?
That all exists.
So you know good, always adviseto make it an easy process for
you, but also an educatedprocess for you that's so
interesting for me.
Speaker 2 (29:32):
I know in business it's always been um, you know,
don't go get funding, don't gointo debt, like silicon valley
companies always do, becausethen you're growing company
that's just got debt, you'repaying back the debt forever,
kind of like the US economy buyour trillions to fix the roads
but you don't take tax dollarsto fix the roads, that kind of
thing.
I think it's interesting thatyou run an actual ethical
(29:53):
company to loan where it'sresponsible and giving back to
the person that's taking theloan and making sure that they
are accepting the loanresponsibly.
Is there anything that yourreps look for that it's like
absolutely no veto black, we'renot touching that client.
Speaker 1 (30:10):
Oh, yeah, sure.
So if someone one thing to lookout for is someone is, of
course we pull a credit and wedo like a small background check
we make sure there's nothingbig red flags like that, like
criminal history or anythinglike that.
But you know we're looking forany kind of like you know,
misrepresented bank statementsor application, any marks like
(30:32):
that that come back to us andthen if they're, like you know,
leaving the country soon orthey're mentioning that they're
going to be selling theirbusiness soon, Vegas is a red
flag.
Yeah, yeah, we're gonna takethis all and put it on red.
That's the need.
Um, we're probably gonna try toskip on that person all right.
Speaker 2 (30:48):
What are some major green flags?
Like this person would benefitamazingly, get great terms, and
we're happy to help them.
What are good green flags?
Speaker 1 (30:57):
they understand it takes money to make money always
and they're down Like they havea big opportunity and they're
ready to go and we can really wecan deliver what we promised
quickly.
Those are the best deals.
Speaker 2 (31:09):
That was very vague.
What do you mean?
Ready to go?
Speaker 1 (31:12):
I'm going to buy some inventory $200,000.
I'm going to sell it for amillion dollars.
It's going to take me twomonths.
Oh, you cost 50 grand andborrow that money.
I just made $850,000 from thatopportunity.
I want to do it.
Speaker 2 (31:21):
What would be a good example of that?
Speaker 1 (31:27):
I'd say like an inventory purchase during the
holidays or something like that.
Say, you have like a flowercompany that wants to buy a
bunch of inventory and they knowthey're going to make 50% of
their money that month for thewhole year.
Black Friday, yeah, exactly.
So they want to do like a biginventory purchase and flip it
and they want to do a quickprepay once they get all that
payment in so they can pay alltheir vendors, take the profit
and leave.
Speaker 2 (31:44):
I know that's been some of your best clients.
They're pretty funny to hearabout.
Speaker 1 (31:47):
Yeah, it's really fun to see like them, you know,
turn money into more money usingour fuel.
I like it.
Speaker 2 (31:54):
Do you have any really interesting stories about
someone that needed equipmentfinancing?
That was very unique and kindof fun to do.
Speaker 1 (32:01):
Oh, shoot yeah off the top of my head.
Speaker 2 (32:07):
Okay, let me think For Kartra.
We always use the pony dressage, teaching how to run the horse
in a circle and how to train thepony, and it's our biggest
example of how you can useKartra to film your videos and
then teach dressage if you're adressage teacher and I actually
saw can use Kartra to film yourvideos and then teach dressage
if you're a dressage teacher,and I actually saw one on Kartra
and I was like wow, our examplecame true.
(32:28):
But I know some of yourexamples are pretty funny.
Speaker 1 (32:31):
Yeah, I've done anything from car washes the
whole unit, the whole carwashing unit, to doing like
carnival rides and things likethat, because it was a traveling
carnival company.
I mean, as long as theequipment makes sense for the
business, we can do it.
So you do run into a lot of funstuff.
Speaker 2 (32:47):
I mean we run into software for restaurants, POS
systems, lasers for medical Mostof it I thought would be POS
systems for somebody takingtheir business from the brick
and mortar to online.
Now you need to take creditcards without typing it in, or
cash.
Speaker 1 (33:04):
Right, you're going to find the 30 grand.
Speaker 2 (33:06):
That's where I thought most of the business
loans would come from.
Is somebody trying to updatetheir system from the brick and
mortar to more standard?
Speaker 1 (33:13):
Yeah, and doing that through a POS system or software
is the same as a truckerupgrading their trailer system
or adding to their fleet.
Speaker 2 (33:21):
How do you feel about donuts?
Speaker 1 (33:23):
Love them.
Yeah, I like the custard filledones.
Speaker 2 (33:26):
Because no one needs a donut machine.
Speaker 1 (33:28):
They do actually.
Oh do they, they do Restaurantequipment all day.
Speaker 2 (33:33):
Who needs?
Speaker 1 (33:34):
a donut machine.
The cops Donut maker.
Speaker 2 (33:46):
That's my favorite lending story of yours Is
actually lend it to someone thatis owns a donut shop that's
open at three in the morning andthey're busting their butts
making donuts for everybodyunder the sun probably mostly
cops yeah, long beach.
Speaker 1 (33:55):
Wow, you know you can get a donut and a purple optimo
really late at night but you'vedone the funding for that yes,
everybody across the nation, anykind of industry.
As long as it makes sense forthe business and you have
revenue and you've been inbusiness for over about a year
or two, you can get funding.
Speaker 2 (34:11):
So let's make that our favorite new little example
Like I say, pony dressage, likeI don't even know what that
means, necessarily.
But let's say someone that ownsa four in the morning open
donut shop and their donutmachine breaks.
Yeah, walk me through it.
Speaker 1 (34:26):
Go to the vendor of your choice.
What's a vendor of your choice?
A vendor, so say the donutmachine maker.
So whoever's actually makingthat donut machine?
Like the vendor, say they livein New York and you're in Cali.
Speaker 2 (34:39):
How many vendor donut machines are there?
Speaker 1 (34:41):
There's probably a lot of vendors that make donut
machines, a lot of manufacturersout there, so you buy it
straight from the manufacturer,new, or it can be used and you
can buy from a private party,like the donut say that you put
the donuts out of business thatwere down the street because
your donuts were so good, youcould buy their Based on the
machine, they own that equipment.
Based on the machine, they ownthat equipment.
You could buy from them througha private party purchase and
(35:03):
equipment finance.
Speaker 2 (35:04):
There's a whole nother level to lending.
I didn't even know abouttakeout the competition.
Yeah, they have one donutmachine, let's get two.
Speaker 1 (35:10):
You can buy theirs, you can buy new or used.
So pretty much what you do isyou get an invoice from your
vendor.
Speaker 2 (35:16):
Don't tell me that I have five kids.
We're going to get a donutmachine in the house.
Speaker 1 (35:19):
You can go online and just do a screenshot of the
machine that you want with theprice of it and you just send
that in for your quote.
It's a digital application wesend out to you on your phone.
You just fill out your digitalapplication, you send us a quote
and we get you approved by thenext day and pay the vendor.
You can go get your donutmachine.
Speaker 2 (35:35):
Yeah, okay, great, I would love a donut machine.
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