In this episode of "Small Business, Big Moves,". Thomas Bennett is joined by guest Ryan Patient to explore creative strategies and innovative approaches that have propelled small businesses to new heights. Discover the power of business funding.
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Small Business Big Moves is a podcast where innovation meets entrepreneurship. Join Tom Bennett as he explores all things business growth! From business funding and business tax credits to conversations with leaders who have grown successful and innovative businesses!
In this episode of "Small Business, Big Moves,". Thomas Bennett is joined by guest Ryan Patient to explore creative strategies and innovative approaches that have propelled small businesses to new heights. Discover the power of business funding.
Connect with us on social media:
- Facebook: Thomas Bennett
- Instagram: @Thomas.mbennett
-YouTube:@SmallBusinessMoneyConnector
- LinkedIn: Thomas Bennett
Subscribe to "Small Business, Big Moves" on Your Favorite Podcast Platform for more inspiring episodes on innovation and entrepreneurship.
Small Business Big Moves is a podcast where innovation meets entrepreneurship. Join Tom Bennett as he explores all things business growth! From business funding and business tax credits to conversations with leaders who have grown successful and innovative businesses!
Welcome to Small Business Big Moves, the podcast where innovation meets entrepreneurship. I'm your host, Tom Bennett, and we'll explore all things business growth from business funding and business tax credits to conversations with leaders who have grown successful and innovative businesses. Welcome to the show. My guest today is my partner, Ryan Patient. Ryan, I'm excited to have you on the show. If you could introduce yourself. Absolutely. My name is Ryan Patient. I'm with One Finance. We specialize in unsecured term loans and we can kind of dive into that. So thank you for having me on. Yeah, definitely. thanks for introducing yourself and excited to go into this a little more for the audience and listeners out there. Right. I know We can jump into some startup options, business funding options personal funding options, and really some of these great programs that are available to a lot of people out there. But before we jump into that, I wanted to take a minute to go way back to the beginning and talk about your journey and what got you into this industry to realize, you know what, I actually get some some value I can provide and really make a difference on these business and personal lives. Yeah. Thanks for that. And I got started back in 2006, believe it or not. And I took a little time off and I jumped back in. So going way back to 2006, I was just working on the phones, calling people, talking about their credit, trying to get them approved for these unsecured loans that really nobody had kind of heard about back then. And we were, You know, very successful and then obviously 2008 hit and all the lenders that we were working with basically stopped immediately, right? So when the crash happened with the mortgage crisis And so because of that had to jump back into a different type of mindset different type of job and then you know fast forward a couple years I started dabbling my toes back into it, and I was doing some deals kind of on the side, and I was still working my day job, you know, in the restaurants, and then eventually I made the full transition into commission only sales, right? And I did that for a couple of years, and then I, you know, realized. After leading many restaurants, I was general manager of many different places. And I decided that I wanted to start my own business doing the same thing. And that's essentially what we did. Right. So we jumped right into that and you know, that was 2018, I want to say, like tail ended 2018 and then 2019, we were building up steam and then boom COVID hit. Right. And the cool thing about. That is the lenders that I work with. We're still aggressively lending and we helped a lot of small business owners make it through COVID when literally their business was shut down. They had nothing coming in. We had, you know, other than yes, the EIDL, but not everybody qualified for that. Right. And they. We're taking time to get that out. So the fact that we helped so many people in that, that time was, was amazing. And it was, it was, you know, a really a great thing. And then, you know, that's just basically transitioned into everything that we're still doing. So we help people with personal unsecured loans, business, unsecured loans, term loans. I mean, we do lines of credit, a little bit of everything. So it's been a heck of a ride. That's for sure. I know it seems like nowadays it's hard to find people that are in the same industry or been doing something for a consistent amount of time, right? It's like if you see someone doing the same thing for 5, 10, 15 years, it's exciting stuff to see, right? I just got into this industry probably two years ago and I don't see myself ever getting out of it. So it's just exciting seeing your journey, right? You said you got into it like 06. Boom, the financial crash happens. You're riding it, building up that momentum. Boom, the pandemic happens. And it's good to see that, like you said, being able to help these businesses that were Shut down and borderline about to close their doors for good and then you're able to come in and get them business funding and really turn that around. So I love hearing that. The other thing too, I wanted to touch on it. So I love the journey because I think you, me and my partner, Matt and me, and obviously, you know, I think we all got a similar background. I think we all started out in the food service industry. And ended up where we are here. So I think we all had that that same vision. So that's good stuff. But yeah, if you wanted to just kind of jump into we'll kind of start picking apart Each of the programs and talking about maybe how some of these businesses or on the personal side, how they can qualify and what it might be able to do for them. Yeah, absolutely. So you know, kind of touching back real quick on what you said about being in the restaurant industry, the food industry, you know, customer service, I think, is is, is probably one of my strongest suits. And I. You know, I over communicate, right? And I, I call text all the time with all my clients and just make sure we touch base probably once a day, you know, and I think for me, that's the most important thing to be as transparent as possible and to make sure that everybody knows. Because listen. Obviously, financing funding is a very important you know factor when it comes to your business. And the last thing you want to do is submit an application and somebody doesn't call you back for four or five days, you know, so that's why we, we try and stay on top of that. But you know, just jumping right into the the loans that we work with. I mean, so you've got a couple of different scenarios, so you have existing businesses and then you've got startups. Right. So with the existing businesses, what that really is what the most of the banks are going to be looking for is at least one year's worth of business tax returns that show that there's revenue coming through. The caveat is that you can't show any losses, right? So if you're showing a loss on the tax returns, you're not nine times out of 10, you're not going to qualify for a business term loan. Right. And the reason being is that Yeah, I mean, that's huge, right? Because I know a lot of these people decide to show a loss or end up showing a loss, and then I want you to kind of jump into that a little more because people, I don't think they realize how bad it can hurt their business. Yeah, your CPA tells you, oh, let's take this loss right now. Right. But what does that do for you for the next year? Right. That's going to minimize. First of all, on the business side, obviously. You're only going to qualify for more expensive money, right? Which will be the, like the short term advances, which listen, it happens. It works if, if you need to do it, that's what you got to do, but you're not going to be able to qualify for these types of loans. You're not going to qualify for an SBA with a loss to my knowledge anyways. And, you know, with that being said, it really does affect your, your ability to get, you know, cheaper type of financing or funding And that would be the first thing that I would say, you know, as soon as I look at a business tax returns, I can tell almost immediately, all right, this, this file is, you know, not going to pass underwriting or yet we've got a good opportunity with this one. So that, that's the, first thing when I look at you know, a business existing business. So for a startup, right, startup is everybody kind of like dances around this. It's very straightforward. The only way that. Again, to the best of my knowledge that you could do like an. A startup, straight up startup loan would be an unsecured personal loan, right? And when I say unsecured, that just means there's nothing tied to collateral. Now, personal loan just means they're going to base it off of your personal income and your personal credit. I think a common misconception is somebody comes up with a business idea and they, they say, well, on paper with my business plan, I'm going to generate, I'm just making this number up, but like 1. 5 million in the first year. So that's what I want that loan to be based off of. And that's not reality, right? Yes, that it looks good on paper, but that's just not how it really works. And I think a lot of people get confused. I think there's a lot of misinformation out there as well. Or just straight up lies is really what they are. Or there is just, Hey, I'm going to try and advertise this. And this is what it really is, or this is how we're really going to do it. So. You know, again, realistically, it's gonna be based off of your personal credit and your, your personal income. So there's other a couple of other factors that get involved with that things such as debt to income ratio. Right? So let's say somebody comes to me and they've got a 750 credit. Right. But their monthly payments, which would be like what the reports on the personal credit would be your like car loan, mortgage, credit card bills, et cetera. If your DTI is over 40%, so let's say if you make 10, 000 a month. And your bills are 4, 000 on, on your tax return. That's putting you DTI at 40 percent over that. You're going to start running into challenges with getting approvals, right? So you also have to be careful what's on your personal credit. For these types of loans. So you need to clean your credit up, right? If you're getting ready to start a business, you need to minimize all the items that are on there, right? And just make sure that you're not showing a, you know, what we would call a debt load. Make sure your debt load is fairly low on a monthly basis. Yeah, and I think that's a huge thing that a lot of people don't realize. One, I'm glad you really touched on the the show and the loss, because at the end of the day, if you do want to grow and scale the business, you've got to show profit. And you may save a little bit here and there on taxes, but you're really just digging yourself into a deeper hole. The other thing I'm glad you touched on is the personal credit, right? And I try to stress it too. As many people as I can. But at the end of the day, as you know, the better your credit score, the better program you're going to get. So it's one thing whether you're starting the business, growing the business, you just got to always, always keep that personal score in check for sure. Glad you touched on that. Absolutely. Yeah. And then as far as you know, what you had just touched on there with the, the business, you know, showing a loss, a lot of times what will happen is that rolls over into the personal side, right? So the business shows a loss and then they're showing a personal loss on the 1040 or very minimal income. Like there's Yeah. if your business generates like, and again, I'm just making these numbers up because these are realistic things that I've seen 1. 5 million, you're showing a 5, 000 loss on a business and on the personal taxes, you're showing like a 12, 000 that, that was your income Nobody's going to lend you money because it looks like you're barely you're, you're, you're below poverty level. Right. And I know people will say, Oh, it's just the numbers game and we're playing these, you know, these games are trying to save money on the taxes, but it's really going to cost you in the long run. Right. Because somebody like that's. You know, for a traditional type of mortgage, they're not going to qualify for a mortgage either. So yes, obviously there are other mortgage programs out there. I don't have to put an asterisk on everything that I say, but like you said, for the best type of program, you want to show the best numbers and you want to have the best credit score, plain and simple. For sure. Yeah, and I know I know that's I just wanted to kind of touch on that, too, because I think you mentioned it earlier but there's, there's so much misinformation, so many lies, all the bait and switch that you see online, right? I think you and I both see it all day, all these Facebook ads or Facebook posts, Instagram, TikTok, whatever it might be and I think that's a big issue because a lot of these business owners think that No matter what situation they're in that they can get these great programs, right? I talk to people all the time that are trying to start up a business, but they have a 500 credit score. They have a 600 credit score and making 10, 000 a year because they're bootstrapping to start the business. So it's, yeah, it's, it's tough to see. It is. Yeah, you know, and obviously. When I say you, you want to have, show a good profit, right? You want to show good revenue. You want to show, have good credit. We're all going to start somewhere, right? And sometimes when you're talking about somebody that has like 600 credit or, you know, below or, that's trying to bootstrap the business, you're not meant to grow that fast this early based on Everything that they're showing on your finances, once you start correcting that and you're showing better personal credit, that is building those habits that you need that will then allow you to borrow the money to leverage it to create more revenue for your business. Right. I think it's a just basic like, right. You got to crawl before you walk and walk before you run. So it's. It's probably, I mean, honestly, it's probably a good, way to, control the flow of that business to start off with. But you know, there's ways around that too. You know what I mean? You can get a co signer, right? You have somebody, let's say you got a relative that has. 700 credit or a friend or a business partner, right? I do that all the time. I help people out. So somebody comes to me with 600 credit and I've got this going on right now. Got a company. It's HPAC company. Dad's actually going to help sign for the loan. So they have really good income, but their credit's not that great. Dad's going to help be a co signer and he's got great credit, but his income isn't that good. So it just kind of blends together and, you know, help really helps things out. So. for sure. It's there's always options. And I think a lot of times I talk to business owners all day as well. And a lot of them it's, it's almost like a pride thing, right? They they don't want to have a co sign or they don't want to have a borrower, but when it's the difference between you can have a great. Monthly term loan program, or you can have one of these cash advances that you're paying daily on like we talked about it there. They're good programs if you need it and you're gonna actually benefit the cash advance, but when you can just ask the right person that's going to be willing to. Help you out and get you into a much better program. I mean, it's I think it's a no brainer at the day Yeah, I think it's it's very valid that you brought that up I think you know when you talk about those advances they're good for things like, you know Buying inventory really quickly because you can get a super big discount Right and you need the money tomorrow boom there, right? So those are when it's very ideal to take something like that. Now with you know, kind of circling back to what you had just said earlier about like the ads that we see online and everything. What always cracks me up is the 1. 99. Right. You'll see in ads, 1. 99%, well, what a lot of people don't realize they see that number that think fantastic, but that's the monthly interest rate. And when you calculate that out into an APR, it's like 40, 50 percent somewhere around there. It's, it's crazy. So I think it's insane. It's that to me is like a lot of misinformation, right? It's, it's clickbait is literally just having people click, click through and sign it. So you know, And then just kind of rolling that over into like on the personal, even on the business side, you know, the rates that we're seeing right now, I believe it or not, I actually had a client that was approved for 5. 13 percent on a two year term. Yeah. Two year term. So short. But that's fantastic. That's literally like three and a half points lower than the wall street journal primary right now. So, I mean, literally lower than prime rate short term. Right. And then, so we see rates as low as 5%. I've, I've had rates come back right now at 35%. It's just, this is. You know, these are trying times right now with the economy and the way that the interest rates are and everything. But you know, hey, at least we still have options, right? In 2008, there weren't, there weren't any options, so. Definitely. No, and I know we'll obviously be touched on. A little bit of the the personal funding, the startup funding, right? I know I think it seems to be now, and you can probably talk to this too, but I know there used to be more people that would kind of get into like capital raising or helping get a little fund for a startup to grow the business. I think it's just the hard truth is that unfortunately, most of these small businesses don't make it. Especially at the five year point. I mean, we've all seen the statistics, but is that, is that something that you've seen that it's really just like you mentioned that the best option right now really is that personal loan. So, There's a couple of different ways to look at it. Right now, personal, on the personal side, it's a lot quicker and easier to get funding, right? There's a lot less stipulations, a lot less paperwork, right? And that's usually the number one thing that most people, hey, you know, I really want to avoid all this paperwork. You know, what, what do you have where we could do that? And that would be it. So, on the business side, Thank you. Usually what we're seeing, we also see shorter terms on the business side, right? So I've got one lender that does 12 month, 24 month, and 36 month, right? You're borrowing 250, 000 and on a three year term, it's pretty high payment, right? Compared to if I had the same option, but in a 10 year term with a personal guarantee. So it's a, it's a big difference. Listen, and everything, technically everything has a personal guarantee. It just doesn't report to the personal credit. So if it, if you default on the loan, they're coming, they're coming after you. 100 percent exactly. I think a lot of people need to realize that. But yeah, I love, I love the post. No PG. I'm like. They're coming after you, don't worry. Oh yeah, They're gonna get their money back, they don't lend this money out. No, definitely not. But no, I know, back to that, obviously we touched on the like the startup and the personal options, I wanted to make sure I didn't leave anything out there, anything else that you wanted to cover on those two areas. Yeah, you know, I mean, when I tell my clients, right? So I've got, and I'll have people that are coming in for business and like, well, I really want this in my personal name. Like, is it your business or is it somebody else's business? Right? It's your business. Why wouldn't you, if, if we can get you this program, why wouldn't you want to take this and leverage it into, for your business? To me, And I'm going to piss a lot of people off, but it, it sounds like you don't believe in your business or you don't believe in yourself enough to where, well, I'm going to take this loan out and put it in my, you know, in my personal name, because at the end of the day, you need money, you need money, right? So times are trying, you never know what's going to happen next. It's, it's always important to make sure that that's, that happens and that. Best thing to do is to set yourself in a position where you can use that money. And if, again, if you have to use it personally, you do it right. But you technically, I mean, you, you take the loan, then you loan it to your business, talk to your CPA about it. Like, I mean, it's, it should be able to pay yourself interest, which covers the interest on that. I mean, it's a, it's pretty, it should be pretty straightforward. Absolutely. No, that's true. And I'm gonna go back to that as well, what you said. I mean, it really does seem like that, right? It's either that not believing in themselves or not believing in the business. But at that point, then I think you get a lot more to re evaluate at that point, if you should even be in business. So good stuff right there. And then what about some of the let's jump in and maybe some of those other programs or other options that you might have. I know you talked about some business funding, some lines of credit things along those lines, term loans, all that good stuff. I would say probably around It was about March of last year, we started to see a downturn on the, on the business term loans. We actually saw some places close up shop that were actual like loan originators. And, you know, there, there are a handful out there right now that still do like the, the bank term loans. I'm talking about like nationally. And now if you go into one of your local branches and maybe, you know, a little bit different, but, you know, we talk about people that. So you know, one of the banks could be located in Ohio and still lend to somebody in Florida, right? So these major corporations that do that type of lending, you know, we see offers that go out up to 500 K. Like I said earlier, up to 10 years. You know. Those type of big approvals, the, what I call the you know, like the lobby signs, you know, when you walk in the lobby of the bank and you see, you know, 1. 2 percent mortgage rates or whatever, crazy, it's, you know, obviously nobody qualifies for that, except for somebody that doesn't need the mortgage. Decorations. Exactly. And so it's the same with like, yeah, we approve up to 500k, but you know, you have to do. You know, 500 million and, you know, you have to have a couple million dollars in profit and yada, yada, yada. So realistically, like what we're seeing on the approval side on the business loans are, you know, up to about 250 K right now you know, three, five year terms I've seen some seven and eight year options come back. I mean. Right now, everybody's scared. So that's why, that's why you're seeing approvals kind of across the board go, you know, go down and you're, you're seeing the, you know, not as many term loan options as there was before. My thought process is once we see an initial drop in the, in the prime rate, you're going to start seeing some banks get a little bit more aggressive. So, but I mean, it stayed, stayed pretty much the same. Past two quarters. I believe it is. So it was like I actually was just checking on yesterday was 7. 5 percent last year at this time. It's 8. 5 percent now. So obviously it's gone up a full percent over the year. So we haven't seen any drops yet, but fingers crossed this, this first quarter, we'll see a drop. Yeah, that'd be great. Yeah. And then anything else you wanted to. Cover on some of the programs out there or other options that people may have. Yeah. So, I mean, they're different types of lines of credit out there that the ones that I work with their full monthly payments are usually based on a 612 or 18 month payback term. You know, they're actually pretty, pretty reasonable, like on their interest charges and whatnot, just the payments, again, the payments can be high. So you got to be careful what you're using your line of credit for, right? If you're using your line of credit for things like we talked about earlier, like inventory and I think you know, maybe some marketing things where you know that you're going to get a return on, that's good. Using things for things like paying off debt or using it for payroll. Those could be challenging in putting you yourself in jeopardy, because that money that you're using off that line wouldn't be for the you know, the we'll, we'll, we'll not have a quick turnaround time. You're not going to make any money off that, right? So no return on that. So that's where the term loan, I think we'd come in a little bit better. But we do the, the line, the lines of credit and, that's about it. We're working on some some business credit card stuff that it's still like in the preliminary workings, but I mean that's kind of the the spot to be right now, especially if we can get some 0 percent Because that's gonna help people save money over time as well. So but it's pretty much. Yeah, it's pretty much it so the the biggest thing I think between like this The lines of credit that I work with and the term loans, everything is simple interest, right? And it's all fixed rates. On the, it's fixed, sorry, let me rephrase that. It's fixed rate on the term loans. And then the lines of credit will be variable. It's just based on prime. The fact is with those loans, you're going to get locked into that rate, which means obviously the bank. They can never raise it up on you. And there's no, there's no prepayment penalty. So let's say rates drop because I mean, hopefully that's the only place it can go, right? Is down. Once rates drop, you could refinance that, that loan and get out of that higher rate, whatever. So right now, I think if anybody has an opportunity to get capital and it's, it's presented to them, they should pretty much take it right. And then refi it at a later time. Just like, I mean, even with mortgages right now. Definitely. Yeah, I was just going to say right in line with mortgages. I mean, if you need the capital and you can get it better to get it while you can and when you can't absolutely, especially these lines of credit. I mean, that's something that I'm a firm believer that every business should have some sort of line of credit. I mean, you, you see, you see what happened. I mean, you went through it in a way you went through it again with the pandemic. You never know what's coming. So at least having that line of credit while you can get it. I think it is an important thing. Every business should consider it. Yeah, and you know, it's funny you say that talking about the pandemic because I'm, pretty sure it was cabbage. Everybody's laying the credit off like Almost instantly and I had clients that I was talking to that said, yeah, well, I got this line of credit with cabbage. I'm like, have you checked it lately? Cause they shut it off. He's like, no, no. He's like, it's in good standing. I said, no, everybody that is, you know, that has a cabbage line of credit right now, they've, they've been shut down and he logged in and he's like, oh yeah, it is. And then he, we ended up taking the loan obviously. So yeah, definitely something you want to have in your back pocket. Yeah. For sure, and if you see, if you foresee something in the future coming up, you probably want to draw on that line sooner than later. Absolutely no. And then anything else you wanted to touch on? I know. you've had some great experience in the industry, so I wasn't sure if there's anything we missed out on or anything you wanted to dig into a little more. Yeah, I mean, I think at the end of the day, when you're looking for capital for your business, you know, you got to focus on those two things, right? Like, first of all, is it startup or is it a business that, you know, going into that so you understand, all right, well, it's a startup. So you already know, boom, I need to have good, well, really for both, you have to have good credit, but you have to have provable income. Right, to qualify for anything. That's the first thing. And then, you know, on the business side, as we just, you know, kind of covered in detail if you've got an existing business, you've got to make sure that your taxes are filed. Right, you've got to make sure you're filed, you don't have any tax liens on you. You know, these are big things. Absolutely. No, it's, crazy what we see too, right? I mean, I, I always have a conversation with every client, get to know, obviously, a lot more about them in the business, exactly what their needs and desires might be. But a lot of people will will hide some information from you. And obviously, you know that when we go through this, we're trying to help them out, trying to get them the best program available. When all these things start being uncovered, it's better off just letting us know up front so we can avoid all that. So, I mean, yeah, we could probably go over for days about, like, specific scenarios. I'll share with you a couple of my favorites, okay? A couple of my favorite scenarios. My first favorite scenario is when let's just say a client will have income coming in, right? But then they spread it out to four or five different banks, bank accounts, right? And when they, when this happens, obviously, it's going to make it a little bit more difficult for them to verify that, that income, right? So, especially, let's just say you've got a, and it. for personal and business. So if you have a business account and all your money's going into three or four different accounts, I'm not saying it's impossible for the lenders. It just, it raises a couple of questions, right? So first question is why do you have so many different accounts? And then, all right, so now we have to analyze each account. What's what's going through now again, I'm not a CPA, right? But. One would think that if you funnel all your money into the one account that's going to do nothing but boost That revenue in that account which is going to ultimately help you qualify for bigger and better things On the business side instead of having to submit instead of submitting six months worth of business bank statements now you're submitting 12 months because you have two bank, two bank accounts or, or 18 months because you have three different bank accounts. And it just, it kind of throws things off and it's going to slow down the funding process, right? Because they're going to analyze it now. Okay. Well, we see, you know, this trend here. So now I need to see an additional six months worth of bank statements from this one. So give me a full year's worth of bank statements. And then, you know, and it just, it's going to prolong the whole funding process. So that's one of my favorite ones that that I run into all the time. And then, you know, again, on the personal side, let's say somebody's doing a startup. And they have their check getting deposited in three different accounts, though, just some, some of the automations, the way that it's set up for a lot of these lenders, they, they make it difficult. Let's say you go to link your bank account, right? It makes it difficult to link multiple accounts because they just don't, a lot of times they won't allow that. So, I mean, it's just challenging, right? You know, why we do what we do though, to help, to help, help everybody out. That's why we ask all the questions that we ask. Absolutely. And it's the reason behind all of them. We're not just asking for fun. Yeah. I always tell, tell my clients like, Hey, this may seem a little redundant, but I'm going to ask you a couple of the same questions. And just because you got to get to the bottom of it. You definitely do. Ryan, I appreciate you being on here. Appreciate you sharing everything. I know we we threw a lot at them. So I think I think a lot of people will get some benefit out of this and that's going to be a wrap on this episode of small business, big moves. If you enjoyed this episode or know someone that can get value out of it, which I think is just about every business owner out there. If you can share this with them and in the meantime, we'll look forward to seeing you on the next episode.