I’m a business loan broker right now. And I have access to private lenders. I’m helping small businesses get access to capital. How does that really work?
Right now, small businesses really have very limited access to capital because banks only approve one out of every eight, nine deals. So, me and the lenders that we we’re part of, we help businesses and startups get anywhere from $5,000 to $500,000. And if they ask any further questions, then you can say, “Hey, we can provide from anywhere from 0% financing to really rapid financing within the first two, three days.”
First thing is you need to understand, “Well, how much do you need?” That’s really important because I mean, you can’t really help someone without understanding how much they need. And the response is, “X dollars.” It doesn’t matter what it is. “All right, perfect. How soon do you need it?” That’s another important question. “Well, I need it yesterday” or “No, we’re planning this for like the next 30 days” and all that stuff.
Whatever the answer, again, doesn’t really matter. It does matter, but you’re trying to build a case for this motion right now. The first one is how much do you need? Second one is when do you need to by? The third one is why do you need it? What are you going to do with the money? Well, that this is a very important question because if they say I’m going to buy some kind of machine to run my company, then well now we’re shaping things in our mind. Okay, so this could be a candidate for equipment financing or it could be a candidate for all others types of financing. Okay, and the fourth question is what kind of business do you own? As you can see, these are very basic questions. We’re not hard selling anyone or we’re not manipulating.
The fourth question is what kind of business do you have and how do you make money? “Oh, well, we own a landscaping business. So, we have a list of clients that we’ve hired over time and we’d go mow their lawn and they pay us on a monthly basis through checks and credit cards.” “And perfect, great. So, all the revenue generated by the business goes through a business checking account, right?” That’s important because you’re going to come across businesses, although they have a business on the surface level, but they don’t really have a business bank account, everything is either cash or this going through like a personal account. If that’s the case, there’s really not much you can do for that person because we need to be able to work with people who have a bank account. So, that’s important. So, now we know that yeah, of course, everything goes through a business bank account.
“All right, perfect, what’s the average revenue your company generated in the past four months? Can you walk me through it?” Well, that’s how we know if the company’s in a decline and it that’s not a bad thing. We have options for that. So you kind of go through this process. If it’s a brand new person, they don’t own a business. They just need funding like with the 0% interest and they want to get the funding they need, then great. “I don’t own a business right now.” “Okay, what do you think your credit score range is?” “Well, I don’t know, probably like 700, 720.” “Great, here’s what we can do. We can probably get you funded.” The process is then you follow the process on partner number one here on your screen. And you just pretty much asked them to send you a PDF of their credit report and so you showed them, you tell them, “Go create a free account. Download the free PDF and send it over to me.”
So, with that one, you don’t need any bank statements, you don’t really need any kind of other documentation from them. It just starts with that. That’s why a lot of our members are utilizing these products because it’s relatively easy, right? So, even if they do own a business, if they have that data, their credit might be shot, but then they might know someone who has better credit and they can still get qualified for this product. So, what you want to be cognizant of and remind your client is that while you’re getting this funding with the idea of making more out of that, right? So if you’re spending a dollar and run it through your business, you want that dollar to make you $5. That’s how business works.
That’s how business debt works, right? So you get funding, you put it through your business, and your business brings you more clients and it pays the bills, you make more money at the end. So, when you’re talking to a client about getting them the funding, you don’t want it to focus on just how much they’re going to pay in interest because that becomes sometimes they get fixated on that. “Oh yeah. You’re going to charge me 9% interest rate. Well, I can go to my bank and get 2.5%.” “Well then, why don’t you do it? Because you can’t.” The banks do not really lend money. You’re not a corporation with 50 employees.
So, they get focused on the rate question and then you find yourself in a position to justify the rate. We don’t want to do that because they already know that we’re an alternative lending industry. You want the conversation to be focused on what they were going to do with the money to start with because I mean, without money, it’s really tough to grow your business. Especially if you know you need the funds. So, bring the conversation back to them. And say, “Mr. Merchant, you told me that with the $20,000 we can get you, you will be able to buy another truck. And if you buy that truck, how much more money would that make for your company?” Oh, “I mean, annualized numbers, probably $100,000.” So, you’re telling me that if we get you to $20,000, that’s going to give you $100,000. In ROI terms, that’s you take $100,000 divided by 20 that’s like five times the money that you invested, you’re getting back. So, that’s how you do the ROI.
Governments might give them more money, but nothing to hinder our business because you’re not talking about a tiny industry at this point. Government really is not capable of pushing banks to change their lending criteria. Banks are supposed to be independent. So, they decide on who they qualify, who they do not qualify, but that creates a lot of problem for the small business community, which represents the 70, 75% of the entire economy. Some people that the government might want to do that, but it’s almost close to being impossible to kind of, let’s say, let’s think about the worst case scenario, banning alternative lending and the government wants everyone to go through the banks. Yeah, so the short answer is I don’t foresee anything ever happening to our industry. If anything, it’s been growing massively and we’re barely scratching the surface, honestly. And our industry will be expanding to other countries too because no one likes banks. The government doesn’t like banks, banks do not like banks. Customers do not like banks. It’s just one of those necessary evil type of things.
That’s why peer to peer financing started, people started funding each other’s businesses. Then alternative lending. Alternative lending has been growing like crazy. More industries are being added to it. Like when I started alternative lending, there was only like merchant cash advance or maybe one or two products. Right now there’s a lot more, we don’t have all the products here in the blueprint because that would be a crazy, we only have the ones that are most profitable and those who have the shortest sales cycle. So, we’re kind of picky on that. But yeah, I don’t foresee anything negative.
