Funding Your Business Without Giving Up Equity

In this episode of Curve Ahead, Brian Wiles interviews Michael Praver, founder and CFO of Funding Funding, about how entrepreneurs can secure funding without sacrificing ownership.

Why debt financing can be smarter than equity
How to stack loans effectively (without hurting your credit)
The Loan Navigator process and how it works
Common mistakes founders make when raising capital
Timing your funding to avoid running out of cash

If you’re a small business owner, startup founder, or solopreneur, this episode is packed with actionable funding strategies you need to grow your business on your terms!

#BusinessFunding #StartupLoans #DebtFinancing #Entrepreneurship #CurveAheadPodcast

Transcript

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Welcome back to Curve Ahead. Today I'm joined by Michael Praver, the founder of Funding Funding, a company dedicated to helping startups and small businesses secure financing they need to grow without giving up equity. In this episode, Michael shares how he pivoted from real estate finance to help entrepreneurs fund their dreams and why he chose to specialize in debt financing over traditional venture capital or angel investing. In this episode, we dig into two topics. The loan navigator approach. How his team educates business owners on stacking loans, the right way to maximize funding without wrecking their credits. And the pitfalls entrepreneurs face when seeking funding too late. And why planning ahead can make or break your business's future. If you ever wonder how to fund your business without losing control, this episode is packed with practical strategies you can start using today. Hey, Michael, welcome to the podcast. Do you mind introducing yourself? So, Brian, Michael Praver. I'm the owner and CFO of Funding Funding and several other companies. We do startup and small business funding in all 50 states. Can you tell me about your background? What led you to start Funding Funding? Well, my background is commercial real estate. That led me to corporate finance and large scale real estate finance all over the country. I started buying defaulted mortgages from the banks, small banks, all the way up to bank of America. And I would buy, you know, a single mortgage, 20, 50, 100 mortgages at a time that were broken, and I would fix them. And, and I loved solving puzzles and helping people. I mean, this is kind of my two favorite things to do. So, you know, I buy a broken mortgage and the people were often avoiding the bank like the plague. And I would, you know, I hired a private investigator that got me private investigators all over the country. And I'd send them over to the property and I'd hand them, I'd have them hand a cell phone to the people, and I'd be on the other end and say, hey, I just bought your mortgage. What are you doing? How can I help? All of a sudden they'd say, oh, well, were thinking about moving to another state, or we owe money on this house and we have another mortgage and we don't know what to do. And I would help them solve the problem instead of what the bank would do, which they don't know what to do on a mortgage broken. All they do is call and say, could I have a payment? Which is not fixing anyone's problem. So we do cash for keys, or we'd help them sell, or we'd help them refinance. But you understand Refinancing, refinanced us out of the mortgage. So it was a good thing. So I loved helping people and solving problems. And lo and behold, comes 2008. At the time, I owned 296 mortgages. Personally, you could imagine how that went. You know, the market fell with a lot of second mortgages at the time, they had no value. But I was getting a lot of phone calls for startup businesses. Now, why I was getting mortgage calls for startup businesses, it was literally people calling the wrong person. But I realized that there were hundreds of thousands of startups, most of them poorly funded, and they would go out of business often before they even opened or under six months. People say under a year, but really it wasn't even six months. And I realized if I could help fund startup businesses, I would never run out of clients. And if I did it well, I would help people stay in front of their needs as they grow their businesses. So if their business could catch on, they would be properly funded. And that's how this whole thing was born. I love that idea and that story. Knowing that there are a lot of organizations who invest in early startups, venture capitalist funds, angel investors. Why don't you necessarily consider yourself one or the other of those? Kind of felt like I had to pick a lane. Okay. I had worked with equity investors previously, and honestly, it was a really good way for me to starve. Okay. Because I might work on deal for literally 12 months, and the investor might be looking at literally a thousand deals over that year, and they might choose two. So my project had to be one of those two, and I was in no control whatsoever. And that's not a good way to live. I mean, to me, that's. That's just not working on something that I know I have no control over. Just didn't ever make sense to me. What I do is help people understand, not just access, but understand finance, the many different types of finance, and sort of the growth strategy. If I can get them 100, 150,000, and a ton of people start with us literally at the bottom, often 75 to $150,000, but do it in such a way that I'm not screwing up their credit. So they could, if the business goes well, they could access more money and more money and better, meaning less expensive, more readily available, more flexible terms as they grow their business. So we really have, you might say, kind of five focuses. But you'll understand how this grows. It starts with personal finance. It moves into business finance, of which there Are many flavors, Brian. You can imagine how many flavors. Then it goes to sba, Small Business Administration, which is often used for buying a building or buying an existing business and then equipment financing and then investment real estate. Because people that make enough money eventually want to go buy a duplex or go. Go buy a small apartment building or. And that's my background. Anyway, now we've only added investment real estate in the last couple of years. We weren't doing that in the very beginning. It was really the four, not the five. But you see how this is more of a progression. You know, it's not a one and done. And my style is very educational. So we spend so much time and energy educating the client to work with them only once is basically a failure for me. And I don't want a failure, I want a success. So if their business is succeeding and we can keep them in front of the next needs for their business, that's success. Yeah. One of the things that came up when I was looking at and about your organization is kind of the loan navigator service that you guys offer. Offer. Can you tell me more about what it is that you're doing to help, you know, small businesses educate themselves on the right path forward when it comes to taking funds? Okay, so again, we only deal with loans. No equity investment, no grants. Now that doesn't mean that we can't work with companies that have equity investors and grants. That's fine because, you know, at very least they need a fleet of vehicles or something else we can help with equipment. But the first thing we're often doing is we're matching. So it's the capability of the borrower. If the borrower is a single borrower, it's easier. Just talk about a person. If they're looking for $2 million and we can get them $125,000, it's a simple mismatch. But if they're looking for, you know, 100,000 and we can get them 100 to 200 or maybe a little more, then at least it's a match. At that point, it's educating them to, let's say they qualify for three. There's often three. I'm going to call them startup types of funding, which would be personal credit cards, business credit cards, and we love business credit cards because we only do the ones that don't show up on your personal credit and personal loans. Those are products that don't require you to have any income whatsoever. So again, calling it startup now, you have to open a business to have a Business credit card, but your business could be one day old. So I'm calling that startup, even though you have to open an entity. So if you qualify for three types of funding, it doesn't mean we can't do all three. But now we got to get into the nitty gritty of here's the benefits and the drawbacks of each type of funding to better match the needs of the borrower. Does that help? Not just how much I can get you, it's the best type of funding for you. Yeah, absolutely. I think that the thing that's coming to my mind when it comes to the consumer side of it is like Nerdwall Wallet. Right. And I. I don't mean that in. In a bad way or it's just a comparison of where the nerds. Well, a typical consumer would have an understanding of is NerdWallet offers a lot of these. These services. It's like, okay, well, this is who you are. This is kind of your credit score. This is what you can qualify for. And now I think they have, like, even a guaranteed service that they'll guarantee that you'll be qualified for one of their recommendations. So that's what I'm hearing. Right. Or we're gonna. We take it to a. To a very. We take it much further than that. First of all, we do a lot of stacking. Stacking is a little bit of a dirty word. Are you familiar with that word? No. Oh, okay. If you qualified for a $20,000 business credit card, there are, let's say, seven of them available to you. We would never go after anything less than all seven ever. Doesn't mean we're going to get all seven, but we would apply for all seven. Now, to apply for seven, you have to do that in a very specific way in a very specific time frame. You also have to do a lot of prep work. Okay? So we're not going to take you through that process until you are ready. Okay? Ready. Could be something very minor, like, you know, you have to pay down a credit card. Ready. Could be we have to perfect your name because it's misspelled on the credit report. And trust me, one digit and you don't get funded. Your birthday, your job, your address have to be perfect. And I mean perfect. You might have some old negatives, and I don't. We are not judgmental at all. We don't care if it was, you know, a divorce, an illness, a death in the family, a business breakup. Those are the most common. But it doesn't matter. We're just dealing with what is and what is now. So if it's removing things from our credit report, just perfecting the ratios, making sure the name and address are perfect, this is all prep work. Nerd Wallet's not going to do prep work. Nerd Wallet's going to guarantee you get one credit card. We would never go after less than seven. If you have two businesses, that's 14. If you have three, it's 21. You know, that's stacking. And that stacking concept is not just in the beginning, although we use it always in the beginning stages for somebody because they need a lot more money than they're going to get otherwise. But we do it for, you know, if a company comes to us and can't get more than 50,000 and they need 250,000, well, we're going to get them 50,000 at five banks on the same day. So they get their 250. But no bank in the country would give them 250. Not a chance. But we don't have to get one bank to give them 250. Like I said, there's always an upside and a downside. The downside is you have five loans, not one. The upside is you got funded. You know, so there's always an upside and a downside, even if it's a minor downside. And we're going to guide you through that, you know, and educate you. So again, it's a. It's a lot more in depth than an undone wallet kind of thing. So take me through some of, like, the common misconceptions businesses have of your organization when they first approach you. Well, first of all, you know, it's. It's the biggest misconception, and that is we're equity investors and we're not. We only help people access bank debt. So that's the first. It's just debt. The second, I would say, is that people think that business loans are not personally guaranteed and they're not right. Business loans are almost always personally guaranteed. And I have. I don't want to fight with clients, but clients call me up and say, I have two business loans that I'm not. I never. I'm not personally signed on them. And it's just actually wrong. I mean, there is no two ways about that. There is such a thing as corporate finance. We can talk about that later. So I'm using the word corporate separate from business. Okay? A business credit card is a personal credit card. Okay? The only difference. That's not true. They're one of the main differences is that when we do them, they don't show up on your personal credit. But that doesn't mean you're not personally signing again. How can they give it to you one day after you opened your company? Your business doesn't have any credibility after 24 hours. So obviously they're using your personal credit to make the decision and you as the owner are signing for the card. So it's personal. People just don't understand that they have signed personally and somehow they've heard, hey, I'm going to do it through my corporation. So I'm not personal. And trust me, they're all personal. I would say someone's got to biggest. No, no. You could. There is such a thing as corporate finance that I'm actually doing myself as a client right now. But we're also doing it for some of our clients. I would say. I don't really want to get into that because it's going to take our entire podcast. But I will tell you that corporate finance could be a goal because it's not an immediate thing, it's a process. That process is often six to nine months. And you know, there's 200 things on our checklist that have to be correct to do corporate finance. Corporate finance is not business finance. Business finance is personally guaranteed. Corporate finance is not. But you might have to get multiple accounts in corporate finance that are 10,000 each and then move them to 20,000 each, then move them to 40,000 each, then move them To 100,000 each. It's a process, not a go get a loan right now. I love using examples. Tell you the name of the people or I could tell you as an example. So I'm going to give you just the example. I have a client in Los Angeles, California who's doing about $7 million gross right now. We're closing. We're tempting to close this week, but, you know, with all the rockiness in the market right now, we think the lenders are going to probably push us to next week, but we're closing re loans for her that will be somewhere between 6 and 700,000 in aggregate now. And that sounds great and that is great. It's what she needed. It's what we're going to get done. Here's the thing. I'm actually going out to California in the next month or so. So when I do, I'm going to go have lunch with her and I'm going to walk her through this. So she's personally signing for $600,000 for her business. But if she'd like to go through that whole nine month process with me, I can get her up to 50% of her gross. So let's call it even.3, $3.5 million that she doesn't personally sign for. But that's going to take nine months. So my recommendation to her will be to take these loans or she will have already had these loans by the time I go have lunch with her. When we get the, let's say $3 million worth of non personally guaranteed, the first thing she could do is pay off her 600,000 in loans that she is personally signing for, shifting that responsibility to her company. Yeah, who wouldn't like that deal? Yeah. So how much of your time are you spending creating strategies for your clients to, you know, to balance their loans and debts to ensure that they are getting what they need to continue to operate, but also not overextending themselves in a bad way? Yeah, no, it's a great conversation. I think it's, there's no one answer to that. It's, it's different person. But the general goal and as I describe it is I don't want to just help you get funding right now. I want to get you funded. I want to over explain the process because I want to educate you and then I want to educate you about, let's say the next one to types of funding that I think you're going to need as you grow. Now if the time frame is 3 months or 9 months or 12 months for that next round of loans, that has to do with your growth and your type of business. So the time frame is more up to the client and their success, not up to me. But if they understand, let's say at least the next one or two types of funding and what's required. So, and I don't know if you could read between the lines, but where I'm really going here is things like tax returns. I have lots of people because I work with a lot of solopreneurs and those solopreneurs often don't want to pay taxes. And because they control their accountant and their bookkeeper and their expenses, they just increase their expenses to make it look like they didn't make any money. And I have to explain to them that's perfectly fine but it's going to limit the type of loans I can get you. And you're basically handcuffing me because you're telling the bank I didn't make any money, but you want to borrow from the bank. I mean, it's literally screaming, I didn't make any money. So, you know, if somebody is making a million dollars a year and it looks like they're making zero, they could make a hundred thousand dollars a year then. And if they want to do it the best way, they literally will hire a paychecks or some other payroll company and pay put themselves on payroll. But these are the kind of tweaks that we talk about now. Do they have to do it? Not at all. But it's a way for them to open up more possibilities in the future. Because if I don't have options, then it means you're going to end up paying a lot more because you're going to end up with expensive loans. That's what you're going to end up with. So what I'm hearing is that one of the things that you're, you do with your clients, especially consider myself, I currently am a solopreneur. You would help coach me on, hey, you know, you are established right now as an llc. You should take an income as an S corp. So we can in the future allow you to borrow more funds if you need to. Yes, but it's not always required to convert from an LLC to an S. That's really an option. That would be kind of a conversation between your accountant, your attorney, and me. But you could, as a solo entrepreneur in an llc, you could still just not jack up your expenses so it looks like you made more money. I mean, it's not very hard to do. You're going to have to pay taxes on that money. I'm not saying pay taxes on $1 million worth of income, especially if you have legitimate expenses. But come on, you could pay taxes on 100,000 and make yourself $100,000 salary. If, if you're making a million, if you're netting $1 million a year, but you're not showing it. Come on, 10% of that you're paid taxes on. But it opened up our ability to get you other types of funding. And so that's the kind of stuff that we're going to talk about in advance. Because how do you have solo entrepreneurs that make a lot of money, but they three, four times a year they write themselves a personal check from their business bank account? Well, that's not going to do it. Nobody's going to believe that. You know, even with a copy of the check, no one's going to believe that. But if you hired a payroll company, everyone's going to believe that. Especially if it was a national payroll. In fact, the banks, again, depending on the type of loan and depending on the banks could analyze your bank account and analyze your like they may already have a link to paychecks. So you're giving them the right to see your entire history with paychecks so they could tell it's not a photoshopped stub that we handed them. You know, I mean things are getting more sophisticated today and again I am literally recommending to some people, pay yourself, you know, don't hide it. Pay yourself and let everybody see it and pay yourself with a payroll company. That's the best way to guarantee that you could prove it. So you had mentioned something before that I kind of want to circle back to and dig into a little bit when it comes to see if it's a trend right now. We've seen some volatility in the marketplace. In your example of the client that you're working with. You didn't think that they would close until next week as part of this. What are some of the like the big things to pay attention to in 2025 because of volatility in market and when it comes to seeking loans for a business. Yeah, I can't really speak to, you know, everything that's going to happen in 2025. I will tell you that certain types of loans. Let's talk about two different types of loans, okay. One is a line of credit that means you take the money as you need it. Think, think credit card, your credit card of credit so your balance goes up and down. But the bank can change the limit on that credit card anytime they want. Think about the beginning of COVID A lot of banks were getting hit by a tremendous amount of default and willy nilly, all of a sudden they were lowering balances all over the place, including some of their best clients. So you think you have a $50,000 credit card and you have $20,000 on it. You go to use it and you find out it's now been lowered to a $25,000 credit card and you were about to charge 6,000. It doesn't go through and you're very confused and you call and they will never tell you have to call when it doesn't go through. They don't announce to you that they do this. It just happens. Well, if that was a business line of credit, it operates similar to a credit card. So you have a hundred thousand dollar line of credit, all of a sudden it's 50 that you didn't do anything about that External forces made that bank make a decision. Now can you get it back? Sometimes yes, sometimes no. But those are not some things that you can really control. If you took a loan, then you'd have the money in your bank account. Well, the downside of that is you're paying for it. Because if you got $100,000 deposited your bank account, but you only used 5,000 this month of it, you're paying for the whole hundred. The upside is they can't take it back. It's already in your bank account. Like I said, each loan and each loan type has ups and downs. And in 2025, if things stay on this trend, there's going to be a lot of default and, you know, people are going to have their lines of credit that includes a credit card, lines of credit reduced. Happened to, in fact, this afternoon we're talking to one client, it happened on two of his Chase cards. His personal credit score is over 560. His balances are all below 30%. I mean, he's very well trained by us, very proud of his stats. But based on that, we might be able to get it back. But we're going to attempt to get it back. But it's also time, because we work with him, let's say every six to 12 months, it's also time for him to get additional funding. So we'll start with trying to get him his balances back because two of his cards lowered to either 4 or $500 over the current balance. And these are not small cards we're talking, I think one was 25,000 balance. So that one is like 25,500 limit now. And I think that was a 35. The other, I think it was a $60,000 limit and it was like an $18,000 card. So now it's 18 5. He lost a lot of capability on those cards. So this is not a small amount of money that we're talking about here. So that's the stuff that happens more when there's a lot of volatility. Do you think that'll impact operability of certain businesses in the future? Certain businesses, yes. Certain, no. Some businesses might even be able to take advantage of it. You know, if you were an egg producer and you didn't get hit with the virus, then all of a sudden your eggs are worth more. So it's going to be a total mixed bag. Think about, I was seeing this morning the bourbon might go down for you and I, because there's a bourbon surplus because they took it right off, physically off the shelves in Canada. And they're state run stores, so it's the entire country of Canada that pulled American bourbon right off their shelf. And there's a little sign, you know, the, a government made sign that said we will no longer be supplying. Mean. Yeah, things are, we don't know what's going to happen. I think the, that's the answer. But the more volatility, the more surprises. And I don't want my clients to ever run out of funding because that's often the last day of their business is when they run out of funding. What are some of the pitfalls business owners fall into when seeking funding? Like if I were to go out and seek funding now, not necessarily being as educated, like, is the education gap the biggest pitfall that you see a lot of business owners when it comes to seeking funding? Absolutely, yes. I have people that, I mean after 15 years I have story after story, but I have people that come to me with the world's greatest credit, you know, 800 plus personal credit. And they say, why would I need your service? I could go to the bank and get money. I'm like, okay, that's not true. Most people couldn't get a dollar at the bank. Also, those same people often come to me six months later and I'm telling you, I've had it as little as three months later. You know, all their credit cards were at zero. And let's say all their credit cards are 30,000 a piece and they have a stack of them. Well, but a $30,000 bill comes in and they pay it with a credit card and then a second one and then a hiccup in their business. But when they call me three or four months later and they're at 75% on their personal credit, no business product is available to them because of their high utilization on the personal. If they had let three or six months earlier get them more funding than they would have been using either business credit cards that don't show up on their personal or business loans or business lines of credit or other products. So the same people that said, I mean literally like, are you kidding, I don't need anything. Sometimes three months later, six months later are the same people that I, I really feel bad for them because I cannot fund them anymore. But they were so certain they didn't have an issue that they didn't want the funding. And you know, it's hard to say you could have too much money, but you certainly could run out. And when I say Run out. You're not necessarily running out of money, but at the point that your personal credit doesn't qualify you for business products, you're out of options of that. Want my clients to have the options. You know, we don't know what's going to happen. It was, it's easy now that Covid has happened. You can use Covid as a great example. But it, I've been doing this 15 years and wasn't there always the possibility that something is going to. What if nothing negative happens? But all of a sudden you get an incredible opportunity to buy another company and it's only a hundred thousand dollars and you think it's worth 300,000, but you could make a million dollars a year after a year or two of transition with that company. But you don't have the availability, which means you don't have the option. Think of it as one side protecting you, on the other side opening up the options. So again, my focus is keeping them in front of the need, not waiting till it's too late. Yeah. And I think that's one of the things as being an operator, you just have to kind of weigh your risk, adversity and your need for, hey, what is, what does next year look like? What is the year after that? Am I going to need funds to support the growth that I have in my mind? Do I need like what levers do I have available for me to pull to make sure that these things happen? As a business operator, there's only so many levers you can pull. And capital, having access to capital is one of those things because that opens up a lot of other possibilities. It gives you equipment, it gives you people, it gives you all sorts of other things that you wouldn't necessarily have access to without it. Sure. But it's also timing. You don't ask for money when you need it. You ask for money ahead of the need or you make sure you have enough Runway that you're not going to run out. Now we do get paid fees based on how much we help somebody with. So it's no money upfront whatsoever. It's 100% success based. So it sounds, it's often going to sound self serving. If I can get you 250 and you only wanted 100, you know it'll sound self serving. I want you to get 200 or 250. But the truth is my biggest fear is you come back to me. I don't care if you come back to me one month later, depending on the product a month later saying, oh, Michael, you said I could get 250, I only took 100. Could I have more? Well, depends on the product. If the product is personal loan stacking, the answer is absolutely zero. If I get you even one $25,000 personal loan today, you come back to me tomorrow, that's fine, but you come back to me in a month, nothing. So if we go after 12 and we get seven or eight of them, I mean eight $25,000 loans is still $200,000. But you only took 75, you were absolutely certain you didn't want a dollar more than 75. That's fine, as long as I'm going to push you five times and five times you say no. Then I know you're really, you know it's real. But you come back to me a month later and say, I need another hundred. That product is closed to you because it's going to report on your personal credit. Not a problem on your personal credit, but it will stop you from getting more of that product. That's all. So now if it was business credit cards, no one would know you even had them. No one would see it. There are no negative effect whatsoever. Now they do show up as inquiries on your credit, but we could remove even the inquiries. So literally we could make it so it looks like it never happened. Now if we did that product first and then you came back to us for personal loans, it would be fine. But if you personal loans and more personal loans will never happen. You have to pay off all of the personal loans, all of them, before getting you any more. The other option there would be bring in a second person. I work with people and their husbands, people and their wives, sisters, mothers, fathers, parents. I've. I mean, after this many years, every scenario you could imagine, I had a person come to me and he was over utilized on his credit. And he brought me his friend and the friend, he told me after they both were funded, they were ex husband, ex wife, but they didn't know. You know, he's like a little nervous about telling me. I mean, you got to tell me everything. But he wasn't qualified on his own because he was overusing his personal credit. She wasn't qualified because she was overusing. I helped him transfer his extra balances over to her, got her funded. She transferred enough money into his to get him funded. Two people working together, both get funded, but on their own, neither. There's hardly a scenario I haven't run into in 15 years, but I love telling that story. Because they, the funniest thing is when he admitted later that they were exes. You know, like a short lived college, but college thing. But they remain friends and I love the fact that they were able to help each other. Yeah, that makes me happy. So, Michael, it's been a great conversation so far. At the end of each one of my episodes, I give all of my guests 90 seconds to plug anything that they're passionate about. So in your case, that could be funding, funding. It could be something else that you're working on. So without further ado, the next 90 seconds belong to you. I thank you so much, first of all, for this opportunity. This was great, Brian. I'm just passionate about getting people funded, starting their startups and growing their businesses. We do this usually from 100,000 to 10 million, but most people start with this at the very bottom. And I love that, you know, because I could literally guide them to the next and the next step and watch them grow. And I love it and I hope that passion kind of comes through in this conversation. I, you know, anyone could just go to fundingfundingfunding.com and there's a button for a free consultation, all done by Zoom. All goes straight onto my calendar. And it's very easy and it's literally no charge. So if I talk to somebody for one, you know, one time, two times, three times, five times, there is just, there's no fee. There is only a fee when you actually receive funding and no other topic. But our goal again is once you're funded, the doors open for you to communicate, to ask questions. You know, what's the best practices? You know, should I open up a separate bank account, Should I put things on autopay? We'll guide you through as much help as we can give you and we will help you prepare for the next round of the next as your business grows. Great. Michael, thank you so much for your time today. Thank you so much, Brian.