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Speaker 1: Welcome to the show.

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Speaker 2: I'm Rashan McDonald, the host of money Making Conversations Masterclass,

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Speaker 2: where we encourage people to stop reading other people's success

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Speaker 2: stories and start planning their own. Listen up as I

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Speaker 2: interview entrepreneurs from around the country, talk to celebrities and

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Speaker 2: ask them how they are running their companies.

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Speaker 1: And speak with nod profits who are making a difference

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Speaker 1: in their local communities.

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Speaker 2: Now, sit back and listen as we unlock the secrets

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Speaker 2: to their success on Money Making Conversations Masterclass. Hi, I'm

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Speaker 2: Rashan McDonald, our host this weekly money Making Conversation Masterclass show.

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Speaker 2: The interviews and information that this show provides off for everyone.

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Speaker 2: It's time to stop reading other people's success stories and

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Speaker 2: start living your own. My guess is the executive vice

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Speaker 2: President and Director of Lending for Arkaso Capital Corporation. Alkassol

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Speaker 2: Capital Corporation is a private, nonprofit lending corporation dedicated to

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Speaker 2: empowering entrepreneurs in Arkansos and surrounding states. Please work for

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Speaker 2: the Money Making Conversation Masterclass. Craig Kalafati, how you doing, sir?

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Speaker 3: I'm doing well. How are you well?

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Speaker 2: First of all, I got to find out about are

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Speaker 2: your football man? Because football season is starting. Uh in

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Speaker 2: Arches state of Arkansas. That's razorback Country who.

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Speaker 3: Album.

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Speaker 1: Well, they're joined you in sec so you know in

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Speaker 1: the territory.

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Speaker 3: I'm very happy about that because now I get my

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Speaker 3: long horns on TV.

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Speaker 1: There you got, my friend. I appreciate you.

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Speaker 3: Now.

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Speaker 2: When you say surrounding areas, I'm I'm from Houston, Texas,

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Speaker 2: so I'm very familiar with that whole area, especially that

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Speaker 2: Texallcana area.

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Speaker 1: I've been through that many times. What do you mean

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Speaker 1: when you're surrounding states.

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Speaker 3: Well, something happened that that kind of caused us to

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Speaker 3: expand in the surrounding states. About six months ago, SBA

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Speaker 3: made available an SBOC license, which is a small business

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Speaker 3: Lending Company license which allows a non bank to lend

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Speaker 3: nationwide for the ESBA program. We received one of those,

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Speaker 3: one of the three that were available first time in

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Speaker 3: forty years they've made them available. So we were limited

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Speaker 3: Darkansas up to that point. We're allowed to go nationwide,

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Speaker 3: but my thinking is I want to be sure we're

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Speaker 3: doing it right, so we're going to start with a

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Speaker 3: slow rollout. We're doing basically, be honest with you, it's

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Speaker 3: not just surrounding states, it's the SEC's the that's the

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Speaker 3: outbo which shows because everybody knows it right right right.

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Speaker 3: So initially that's what we're going to start with, just

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Speaker 3: the surrounding areas, this area of the South, and then

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Speaker 3: when we feel that we've got everything in place, everything

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Speaker 3: that's necessary to do the job right, then we'll take

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Speaker 3: it nationwide.

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Speaker 2: Now that's rest really impressive because of the fact that

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Speaker 2: I had never heard of that. Why was that restriction

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Speaker 2: in place and you said it the first time in

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Speaker 2: forty years.

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Speaker 3: Well, the non bank lenders are not regulated. So every

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Speaker 3: bank is regulated by the fdi C or the OCC

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Speaker 3: the Office of the Control of the Currency, and so

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Speaker 3: you have non bank lenders that are out there that

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Speaker 3: really aren't regulated. We're we have to be regulated by

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Speaker 3: the state, but some aren't regulated by anybody. So it's

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Speaker 3: incumbent on SBA. If they're going to let you lend

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Speaker 3: across the country, they have to regulate you. They have

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Speaker 3: to do the auditing and everything else, and frankly they

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Speaker 3: just didn't have the manpower and so they beef that

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Speaker 3: part up of SBA. So so now we are regulated

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Speaker 3: not only by the state of Arkansas, but by the SBA.

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Speaker 2: Now speaking of Korean, he's the executive vice president director

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Speaker 2: of lending for Arkansas Capital Corporation. Now, I say, as

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Speaker 2: a private nonprofit. Now, this whole show is going to

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Speaker 2: be by educating me because my banking is you know,

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Speaker 2: Bank of America, fifth Third, Wills Fogo. Now I'm talking

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Speaker 2: to you, please educate me on a different.

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Speaker 3: Okay, well, we're not a bank, so we don't take

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Speaker 3: deposits or anything else. A quick background in Arkansas Capital

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Speaker 3: we are a non bank lender. As I said, we're

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Speaker 3: a nonprofit. We are and we will let me back up.

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Speaker 3: We were formed in nineteen fifty seven by the governor

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Speaker 3: of Arkansas, Governor Rockefeller, and at the time, what he

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Speaker 3: did was he had a barbecue and he took together

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Speaker 3: he got together all the business leaders in Arkansas and said, look,

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Speaker 3: we're sitting in a very agrarian society. We need to

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Speaker 3: build up industry, we need to foster entrepreneurship. You're the

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Speaker 3: guys that are going to help me do it. And

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Speaker 3: he had them all kick in some money and start

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Speaker 3: a company to do just that. And that that was us.

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Speaker 3: So since nineteen fifty seven. Our mandate has been to

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Speaker 3: not only foster entrepreneurship small business, but to get into

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Speaker 3: underserved communities, rural communities, which we have plenty of here

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Speaker 3: in the South, and so that's really our focus. We

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Speaker 3: do a number of different things other than just small

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Speaker 3: business lending. We also have what's called an EB five Hub,

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Speaker 3: which is a program through a Department of Treasury and

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Speaker 3: Homeland Security that lends money to approved projects that create

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Speaker 3: American jobs via immigrants that come to this country. So

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Speaker 3: you were immigrating safe from China or India and you

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Speaker 3: had to spare nine hundred thousand dollars lying around, you

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Speaker 3: can invest it in this program and get your Green

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Speaker 3: card right away, but also create American jobs at the

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Speaker 3: same time. We do that. We do also do New

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Speaker 3: Market Tax Credits, which is another program through Department of

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Speaker 3: Treasury which fosters larger developments, typically over seventy nine million dollars,

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Speaker 3: and we do those across the South. And then our

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Speaker 3: educational arm we put on a contest called the Governor's Cup,

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Speaker 3: which is a contest for college students college team from

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Speaker 3: different universities, very much like Shark Tank, kind of an

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Speaker 3: elevator pitch contest where they win up to twenty thirty

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Speaker 3: thousand dollars to take their plans forward. Well, we've been

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Speaker 3: doing that for I think twenty one years, so the

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Speaker 3: small while lending is our primary focus. It's not the

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Speaker 3: only thing we do here, but yeah, it was. It

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Speaker 3: was a big boost for us to get that get

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Speaker 3: the SBLC license. It was a huge compliment.

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Speaker 2: That allows me to talk to you because you know,

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Speaker 2: my show is nationwide.

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Speaker 1: Yeah, and that's one of.

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Speaker 2: The reasons I was excited about it because of the

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Speaker 2: fact that when you start talking about underserved communities, that's

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Speaker 2: my audience. I'm not saying my audience is that feeled

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Speaker 2: with entrepreneurs. Sixty percent African American, twenty white. Fifty five

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Speaker 2: thousand dollars is the media income from our audience as

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Speaker 2: seventy percent mail. You know, so when I when I

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Speaker 2: look at the breakdowns, four percent mail and the great things.

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Speaker 2: At the start of the conversation, we was talking about

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Speaker 2: the Arkansas Capital Corporation. He was talking about it was

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Speaker 2: established for entrepreneurs and rural communities and underserved communities. Listening

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Speaker 2: to my audience, a lot of them in big cities.

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Speaker 2: So I think that this qualifies rural communities.

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Speaker 3: But not the underserved necessarily rights.

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Speaker 1: That's why I'm going, what is what qualifies as the underserved?

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Speaker 3: The communities of color obviously, and you know Rurle fits

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Speaker 3: into that. I would say, when we're talking about underserved communities,

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Speaker 3: we're talking about community of color, awesome, primarily Hispanic and

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Speaker 3: Black communities.

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Speaker 2: Awesome, awesome, And so again, you know, when I do

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Speaker 2: the interviews, Craig as always, can you tell everybody the

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Speaker 2: website that they can go to who wants to see

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Speaker 2: the applications if they want to fill out the application

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Speaker 2: and the process again one more time.

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Speaker 3: Yeah, it's arcapital dot com. Pretty easy to remember. And

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Speaker 3: you'll go on there and you'll see.

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Speaker 1: That's pretty easy.

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Speaker 2: Aarcapital dot com, A capital dot com.

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Speaker 1: I love it is a R C A P I

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Speaker 1: T O L T A L.

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Speaker 2: T A l dot com dot com. And then do

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Speaker 2: you is it a registration button that says loans or what?

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Speaker 1: Do you go?

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Speaker 3: It? Just it says apply here, apply here, apply here. Great,

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Speaker 3: and then you do that and then uh, there's also

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Speaker 3: contact information if you need to call us your questions.

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Speaker 3: Remember we're also watching you. Uh, you know, as the

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Speaker 3: application is being done, and if all of a sudden

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Speaker 3: you disappear, we're probably gonna call you and say, do

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Speaker 3: you need help or do you need I love that,

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Speaker 3: I love that.

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Speaker 4: Please don't go anywhere. We'll be right back with more

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Speaker 4: money Making Conversations Masterclass. Welcome back to the Money Making

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Speaker 4: Conversations Masterclass, host by Rashaan McDonald. Money Making Conversations Masterclass

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Speaker 4: continues online at Moneymakingconversations dot com and follow money Making

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Speaker 4: Conversations Masterclass on Facebook, Twitter, and Instagram.

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Speaker 2: The mentorship that you was talking about, you're not there

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Speaker 2: just to take applications.

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Speaker 1: You're trying to assist them.

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Speaker 2: And like you said, this is honest conversation, Greig, I

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Speaker 2: commend you on it because so many people in this

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Speaker 2: business can be frustrated and need to hear the truth.

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Speaker 1: It's not time right now.

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Speaker 2: You know, get that business plan together, see it out

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Speaker 2: a lot better, make sure you understand your profit more

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Speaker 2: and your costs on this particular product, all these things,

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Speaker 2: because I'm telling you, I get a lot of businesses

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Speaker 2: that start, you know, they're doing all right, but they're struggling.

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Speaker 1: But they're struggling to the.

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Speaker 2: Point that they cannot qualify for a business loan a

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Speaker 2: line of credit, and then so they stuck.

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Speaker 1: They kind of like stuck, and so.

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Speaker 2: Trying to provide opportunities for them.

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Speaker 1: Then they peoplework on look good, will not look good.

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Speaker 3: Right, And also through through that application process is also

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Speaker 3: where you find out exactly how much money do you

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Speaker 3: really need? Because one of the worst things we could

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Speaker 3: do is underfund somebody. That's why you see most of

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Speaker 3: these businesses go out of Everybody wonders this business was

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Speaker 3: around for six months and their doors closed. What happened.

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Speaker 3: It's because they thought they were going to be full

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Speaker 3: on day one. Yes, and that doesn't happen. And you've

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Speaker 3: got to have some cushion in there, and you've got

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Speaker 3: to build that in up front or you're not going

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Speaker 3: to make it. And and under capitalization is far and

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Speaker 3: away the biggest reason for failure.

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Speaker 2: I want to be if somebody was listening to my

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Speaker 2: show Creed and they contacted you, what is the procedure

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Speaker 2: of doing a lending relationship with Arkansas Capital Corporation.

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Speaker 3: Well, it's kind of interesting. One thing that we brought

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Speaker 3: online in the last year is an online application, and

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Speaker 3: it's it's not what a lot of people are used

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Speaker 3: to seeing when they go on a bank site or

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Speaker 3: some other lender site, is kind of an inquiry form. Hey,

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Speaker 3: this is what I'm looking for. Give me a call

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Speaker 3: that's not ours. Ours is a full blown application. It's

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Speaker 3: it's the complete application. They can fill it out at home.

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Speaker 3: I mean, let's face it, the people that we're talking

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Speaker 3: to and talking about here are people that are working

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Speaker 3: all day for the most part, they got jobs, they

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Speaker 3: got businesses, so they you know, they can come in

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Speaker 3: this thing two in the morning. They can fill out

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Speaker 3: their application. Once they submit that, it takes them to

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Speaker 3: another page which shows them all the documents that they

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Speaker 3: need to upload. So it's a pretty seamless, pretty easy

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Speaker 3: process to get into. We are notified the moment they

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Speaker 3: open the application. We get emails it says, hey, so

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Speaker 3: and so open the application so we can watch it

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Speaker 3: in case they have problems. But once they submit it,

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Speaker 3: we get another notification and we know to contact them

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Speaker 3: at that point. So it's a pretty slick, pretty slick

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Speaker 3: and easy to navigate process like that.

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Speaker 2: Because I get I don't like those little forms. You

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Speaker 2: feel out and then you go back. Because I'm a

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Speaker 2: member of the National Minorities Supply Development Council, which is

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Speaker 2: the feeling of charge of Minority Supplyed Development Council. And

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Speaker 2: I would tell you it's like filling out a bank

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Speaker 2: loan to apply for that, you know, because they ask

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Speaker 2: you for your tax All that they did don't ask

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Speaker 2: you for is your bank statements and so, which you

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Speaker 2: have to have at least four months of consecutive months

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Speaker 2: of recent bank statement.

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Speaker 1: So just just here.

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Speaker 2: I know it's online, but if you can give us

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Speaker 2: a kind of like an overview, like like I just

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Speaker 2: mentioned tax returns, doue have to be signed bank statements,

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Speaker 2: What are you looking for as far as that that

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Speaker 2: that credit score? Just an overview of what if one

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Speaker 2: goes to online prior to going if they have an

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Speaker 2: insight of an insight of what it's to be expected

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Speaker 2: of them.

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Speaker 3: Well, yeah, obviously it's going to ask them about their

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Speaker 3: you know, the project and what they're looking for, right,

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Speaker 3: And you'd be amazed how many people aren't really even

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Speaker 3: sure about that part when they when they get into it.

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Speaker 3: But yeah, so we'll ask them what their project is,

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Speaker 3: what their background is. Then when you get into the

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Speaker 3: document uploads, we want three years of well we want

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Speaker 3: a business plan first and foremost. If it's a new

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Speaker 3: and I'm talking about a new business here, I want

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Speaker 3: a business plan, and we want a detail business plan

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Speaker 3: that shows that you actually know the business and you

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Speaker 3: know what you're going into. I mean, that's that's the key.

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Speaker 3: You know, a lot of it I can glean just

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Speaker 3: from looking at numbers. I can tell roughly what you

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Speaker 3: want to do, but I'm going to get into your

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Speaker 3: business plan and see how you plan to manage day

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Speaker 3: to day operations, how you see it going, what what

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Speaker 3: you see as your challenges, how you're going to overcome them,

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Speaker 3: that kind of thing. That that's what we really put

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Speaker 3: a lot of weight into that and the work that's

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Speaker 3: put into that. So you'll have that, you'll have any

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Speaker 3: cost documents, any any invoices that you're going to need

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Speaker 3: to pay, We'll have you upload all that stuff. It's

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Speaker 3: really the information that we're going to need to make

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Speaker 3: a credit decision. Your resume is going to be involved, obviously. Yeah,

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Speaker 3: the most important thing when you're laying all this out

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Speaker 3: is that you know exactly what it is you're asking

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Speaker 3: for and why you need that. I mentioned earlier, it's

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Speaker 3: surprising how many people show up to the process and

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Speaker 3: really you ask them, okay, first and foremost, what would

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Speaker 3: what are you looking for? And they really they look

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Speaker 3: at you and say, well how much can I get? Yes,

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Speaker 3: that's not the answer that we want to.

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Speaker 1: Hear, right, and I think anybody wants to say.

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Speaker 2: The thing about it is, this is really cool having

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Speaker 2: you on the show because of the fact that you know,

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Speaker 2: so many people are funding companies out of their pockets

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Speaker 2: or funding their companies through family relationships, you know. And

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Speaker 2: some people go online try to do go FuMB these

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Speaker 2: to try to get revenue for that.

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Speaker 1: But that business plan, and for.

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Speaker 2: The life of me, I never heard it associated with

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Speaker 2: a loan expectation.

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Speaker 1: But it has to be.

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Speaker 2: That has to be one on one and let's talk

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Speaker 2: to that business plan because so many people just start

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Speaker 2: a business based on a dream, are based on faith.

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Speaker 2: You're a lot of faith conversation when people go out

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Speaker 2: and become entrepreneurs. So talk about that business plan and

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Speaker 2: why people make a mistake and put that at the

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Speaker 2: back end before they open their business.

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Speaker 3: Yeah, it really surprised me because the business plan is

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Speaker 3: really your your bible. It's showing how you're going to

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Speaker 3: open the doors, how you're going to keep them open,

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Speaker 3: and and how you're going to pass that on to

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Speaker 3: the next person. So what you know, we're looking for

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Speaker 3: every aspect of the business. And the other thing that

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Speaker 3: that people find when they start doing their business plan

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Speaker 3: is that they didn't realize how much they didn't know

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Speaker 3: about this particular business when when they start we're having

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Speaker 3: to work through different ideas within the plan and they say, oh,

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Speaker 3: I didn't think of that, and I didn't think of that,

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Speaker 3: And that's where really a mentor can come in, you know,

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Speaker 3: maybe find somebody who's already in that business talking through

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Speaker 3: these things with those people. There are also what are

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Speaker 3: called SBDCs all over the country. In every major university

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Speaker 3: in the country has what's called SPDC. It is a

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Speaker 3: small business I can't remember what the acronym stand for,

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Speaker 3: but basically what it is, it's a free service that's

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Speaker 3: paid for by the SBA and you can go in.

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Speaker 3: They will help you with your business plan, They'll they'll

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Speaker 3: show you how to do your books. They do a

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Speaker 3: number of different things for free and they can really

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Speaker 3: help you flesh out what is important in a business plan.

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Speaker 3: But but like I said that that's really the proof

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Speaker 3: is in the putting in that thing that we look

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Speaker 3: through that and say, if you have a restaurant, we

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Speaker 3: want to know you know, and this will be not

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Speaker 3: just us, this is any lender. You know, how many table?

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Speaker 3: How many times is that one particular table gonna gonna

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Speaker 3: be sat turned? We call it, how many times is

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Speaker 3: that table going to be turned? What's the average ticket price?

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Speaker 3: What you know, what are the prices your menu, what's

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Speaker 3: your food costs going to run? There's a lot of

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Speaker 3: different aspects to that, and that's really what we're looking

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Speaker 3: for because so much of what we call underwriting and lending,

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Speaker 3: at least here, is not based as much on the

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Speaker 3: business as it is on the person. Who is this person?

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Speaker 3: Do they have the background that they need, Do they

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Speaker 3: have the skills that they need to do this? Have

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Speaker 3: they really put in the effort everything to get this

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Speaker 3: business off the ground, Because this is gonna be the

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Speaker 3: hardest job you've ever had. If you start your own business,

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Speaker 3: and you know this, you start your own business, that's

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Speaker 3: the hardest you're ever going to work in your entire life.

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Speaker 3: And a lot of people realize business plans setting you back.

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Speaker 3: You're gonna have real problems once you open the door.

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Speaker 2: And I really wanted to bring that out because of

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Speaker 2: the fact that a lot of people will get frustrated

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Speaker 2: in cerch situations. People might say, Hey, you know, I'm

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Speaker 2: being rejected because of the color of my skin. In

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Speaker 2: some cases it does happen, but there is a process,

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Speaker 2: and the process can frustrate you because it's so detailed,

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Speaker 2: ask a lot of you and sometimes the frustration of

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Speaker 2: because you're not ready at that moment. You might be

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Speaker 2: ready six monthsly, or you shouldn't open a business at

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Speaker 2: all because you are ready.

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Speaker 3: Right, No, that's exactly right, And you know that is

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Speaker 3: a big part of my job, our job as a lender.

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Speaker 3: Sometimes it's just to say no. It's because you're these

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Speaker 3: people are going into a contract. They're gonna borrow a

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Speaker 3: lot of money. They're gonna put a lot of their

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Speaker 3: life on the line here in terms of you know,

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Speaker 3: their their their business, everything that they do. If that

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Speaker 3: business fails, they're not even gonna lose all that money.

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Speaker 3: They're gonna owe all the money that they borrowed from

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Speaker 3: the lender that's going to follow him around. I mean,

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Speaker 3: this is a huge decision. So sometimes it's up to

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Speaker 3: us to say, you know what, you're not ready yet.

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Speaker 3: You need to do this, this and this and then

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Speaker 3: we can talk. But it's a huge decision and it's

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Speaker 3: a huge responsibility on our part too, because you have

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Speaker 3: the capability of ruining somebody's life if you don't make

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Speaker 3: the right decision.

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Speaker 1: Kreik.

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Speaker 2: He has some really interesting questions that I wanted to

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Speaker 2: bring into the show because I think it provides variable

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Speaker 2: insight to people. Because when we're talking to Currier Califari,

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Speaker 2: you know he's the executive vice president director of Lending

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Speaker 2: for Arkansas Capital Corporation. Arkansas Capital, if you don't know,

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Speaker 2: it's a private, nonprofit lending corporation dedicated to empowering entrepreneurs

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Speaker 2: in Arkansas and the surrounding state. That's how he's starting

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Speaker 2: out right now. He wants to work because he just

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Speaker 2: got approved to do this hadn't been done in forty

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Speaker 2: years to go national, but he only works with the

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Speaker 2: surrounding states. Initially, I'm not saying if you listen to

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Speaker 2: this show, you can't go to the website and fill

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Speaker 2: out the form.

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Speaker 1: It's an online form, very detail.

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Speaker 2: You're basically filling out an application you're filling out an application.

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Speaker 2: If you click the registration button, it's not one of them.

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Speaker 2: We're gonna contact you later and it's going to ask

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Speaker 2: you for all the new necessary documents that will.

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Speaker 1: Require you to qualify for what.

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Speaker 2: You're trying to attempt here, and what I'm not trying

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Speaker 2: to do on the show is encourage you not to

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Speaker 2: do anything.

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Speaker 1: I'm encourage you to prepare to do with different things.

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Speaker 2: And one of the things you said in your questions

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Speaker 2: is that small business ownership establish a line of credit

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Speaker 2: with immediate access, especially for small businesses with payroll employees.

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Speaker 3: Talk to me, well, yeah, a line of credit is

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Speaker 3: important because every business has unexpected expenses that pop up.

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Speaker 3: Let's assume it's not a business that needs an lining

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Speaker 3: credit in normal course of business. You just wanted a security.

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Speaker 3: It doesn't necessarily have to be a large line of credit.

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Speaker 3: You're not going to pay on the money that you're

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Speaker 3: not using. But it's a good idea for a lot

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Speaker 3: of different businesses to have that just as a backup, because,

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Speaker 3: like I said, things always pop up. You don't want

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Speaker 3: a big a rock going through a picture window shut

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Speaker 3: down your business because you didn't have enough money to

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Speaker 3: fix the window, right, you know, stilly little things like that.

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Speaker 3: So a lot of times a line of credit is

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Speaker 3: very important. Some businesses just can't function with that line

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Speaker 3: of credit. If you get into construction or something where

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Speaker 3: you're laying out a lot of money up front before

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Speaker 3: you're going to get paid, then those lines of credit

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Speaker 3: become absolutely necessary.

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Speaker 1: Well, you know, but when I'm.

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Speaker 3: Small businesses should look at just having a little cushion

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Speaker 3: in the bagree.

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Speaker 2: You know, I will tell you, Correig, I've broken all

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Speaker 2: the rules, the wrong rules, you know, opening up you know,

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Speaker 2: on the on faith. This is what I want to do,

413
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Speaker 2: getting in business with partners with no contract. The whole

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Speaker 2: idea was just to make money.

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Speaker 1: That was my goal.

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Speaker 2: And I think that's the average entrepreneur. They just want

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Speaker 2: to make money. They see the possibilities, but they don't

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Speaker 2: see the ramifications of not setting it up correctly. And

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Speaker 2: I'm talking to you, not trying to get you to

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Speaker 2: do a book one on one some advice like three

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Speaker 2: pointers about starting your own business.

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Speaker 3: Great, know what you want meaning exactly, Let's let's talk

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Speaker 3: about what what you need to do when you come

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Speaker 3: to a lender like me. Know what you want and

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Speaker 3: know why, not only why you need it, but how

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Speaker 3: much it's going to cost. M h that I mean,

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Speaker 3: that's I keep going back to that. That is the key.

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Speaker 3: You really want to know you and this is going

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Speaker 3: to happen in your business plan. It's going to flesh

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Speaker 3: out a lot of this you're you're going to see.

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Speaker 3: You know, you might have said, oh, well, I'm going

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Speaker 3: to open this this plumbing company and we're going to

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Speaker 3: have this big, really cool, you know, antique truck that's

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Speaker 3: going to drive around town.

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Speaker 1: Right.

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Speaker 3: Oh you know it's going to cost one hundred thousand dollars,

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00:22:46,280 --> 00:22:48,840
Speaker 3: but it'll give me great advertising. Well, you start going

438
00:22:48,840 --> 00:22:51,359
Speaker 3: through the numbers of everything. How important is that really?

439
00:22:51,400 --> 00:22:55,239
Speaker 3: It's that's maybe something you do down the road. So

440
00:22:55,359 --> 00:22:58,000
Speaker 3: you get down to the nuts and bolts. What you

441
00:22:58,080 --> 00:23:00,359
Speaker 3: need to open, what you need to operate, You need

442
00:23:00,400 --> 00:23:03,159
Speaker 3: to keep the doors open. That's it, and you but

443
00:23:03,280 --> 00:23:08,120
Speaker 3: you got to know it. And it's that that first

444
00:23:08,160 --> 00:23:10,359
Speaker 3: and port that's the most important thing is know.

445
00:23:10,240 --> 00:23:13,439
Speaker 2: What you're talking about in that business plan that you

446
00:23:14,600 --> 00:23:15,600
Speaker 2: that they tend to forget.

447
00:23:15,680 --> 00:23:18,280
Speaker 1: Because I'm gonna keep coming back to that greatause.

448
00:23:18,520 --> 00:23:21,800
Speaker 2: My big takeaway is that business plan, because I kid

449
00:23:21,840 --> 00:23:24,280
Speaker 2: you not. I opened my comedy club in nineteen ninety two.

450
00:23:24,520 --> 00:23:28,359
Speaker 2: I did not have a business plan. I counted people

451
00:23:28,440 --> 00:23:31,080
Speaker 2: who came through that door. I knew how to you know,

452
00:23:31,240 --> 00:23:34,040
Speaker 2: have my budget, you know, fly comedian in charge, ten

453
00:23:34,119 --> 00:23:37,000
Speaker 2: dollars advertisement for the radio stations.

454
00:23:37,440 --> 00:23:40,160
Speaker 1: But who I was going to have working that weekend.

455
00:23:40,680 --> 00:23:43,000
Speaker 2: But that's not a business plan because I was just

456
00:23:43,280 --> 00:23:46,800
Speaker 2: doing weekend the weekend. I wasn't projecting ninety days. I

457
00:23:46,880 --> 00:23:50,360
Speaker 2: wasn't projecting a year or let alone five years. I

458
00:23:50,400 --> 00:23:54,199
Speaker 2: was just going day to day basically, And that's not

459
00:23:54,280 --> 00:23:55,120
Speaker 2: a business plan.

460
00:23:55,440 --> 00:23:57,320
Speaker 1: And that's what you're talking about, correct.

461
00:23:57,640 --> 00:24:00,479
Speaker 3: That's exactly right. Yeah, I'm a former business owner. I've

462
00:24:00,680 --> 00:24:04,560
Speaker 3: right out of college, I opened restaurants, and yeah, we

463
00:24:04,920 --> 00:24:06,960
Speaker 3: didn't do it with a business plan, and I really

464
00:24:07,000 --> 00:24:10,000
Speaker 3: wish I had because I spent probably a year undoing

465
00:24:10,119 --> 00:24:13,600
Speaker 3: things that I had done, you know, that I wouldn't

466
00:24:13,600 --> 00:24:16,080
Speaker 3: have done had I really thought it out ahead of time.

467
00:24:16,920 --> 00:24:19,960
Speaker 2: Yeah, I want to ask you about the SBA, you know, yeah,

468
00:24:20,119 --> 00:24:23,879
Speaker 2: a small business administration, And my reading is said the

469
00:24:24,119 --> 00:24:28,240
Speaker 2: SBA does not lend money. Instead, it provides guarantees, so

470
00:24:28,400 --> 00:24:32,080
Speaker 2: lenders are more inclined to lend money to small business owners.

471
00:24:32,280 --> 00:24:33,320
Speaker 1: Please explain that to me.

472
00:24:34,080 --> 00:24:36,239
Speaker 3: Yeah, that's what a lot of people don't realize that.

473
00:24:36,280 --> 00:24:39,600
Speaker 3: The SBA does not lend out money. What the SBA

474
00:24:39,680 --> 00:24:43,119
Speaker 3: does is they provide guarantees to lenders. So if I

475
00:24:43,240 --> 00:24:46,800
Speaker 3: were to do a small business loan, let's pick a

476
00:24:46,840 --> 00:24:50,200
Speaker 3: round number, like, you know, one hundred thousand dollars, right,

477
00:24:50,920 --> 00:24:55,120
Speaker 3: they would give me, as a lender, a guarantee of

478
00:24:55,800 --> 00:24:58,439
Speaker 3: let's say it's a higher amount, like five hundred thousand.

479
00:24:58,560 --> 00:25:00,720
Speaker 3: On one hundred thousand, they would give me a guarantee

480
00:25:00,720 --> 00:25:04,280
Speaker 3: of eighty five percent. On a half million or a million,

481
00:25:04,320 --> 00:25:06,560
Speaker 3: they would give you a guarantee of seventy five percent.

482
00:25:07,080 --> 00:25:09,919
Speaker 3: So what that does for me is a lender, I

483
00:25:10,119 --> 00:25:12,879
Speaker 3: know that I've got the SBA behind me for seventy

484
00:25:12,880 --> 00:25:14,640
Speaker 3: five percent of the money I'm going to lend out.

485
00:25:14,880 --> 00:25:17,560
Speaker 3: I'm only on the hook now for twenty five That

486
00:25:17,680 --> 00:25:21,840
Speaker 3: lowers my risk to the point where I might take

487
00:25:21,920 --> 00:25:25,280
Speaker 3: a chance on somebody who's starting a business who's you know,

488
00:25:26,800 --> 00:25:32,640
Speaker 3: maybe doesn't you know. SBA loans are usually lacking one

489
00:25:32,800 --> 00:25:35,520
Speaker 3: component that a bank likes to see, and it can

490
00:25:35,560 --> 00:25:38,320
Speaker 3: be a number of different things. Maybe there's a collateral

491
00:25:38,400 --> 00:25:41,760
Speaker 3: short pall. Maybe they're new, you know in town. Maybe

492
00:25:41,840 --> 00:25:44,679
Speaker 3: it's most banks don't even want to talk about startup

493
00:25:44,720 --> 00:25:50,640
Speaker 3: businesses and so that that's a big one. So it's

494
00:25:52,600 --> 00:25:55,399
Speaker 3: the SBA will allow us. It gives us just that

495
00:25:55,560 --> 00:25:57,760
Speaker 3: comfort level to be able to take that leap.

496
00:25:58,040 --> 00:26:01,840
Speaker 2: Okay, let me just great, you know, okay, SB Because

497
00:26:01,840 --> 00:26:04,399
Speaker 2: I always hear them talking about loans, especially when COVID happened,

498
00:26:04,400 --> 00:26:06,320
Speaker 2: they was talking about these different types of loans and

499
00:26:06,359 --> 00:26:09,320
Speaker 2: these these integrate different tied to the loans. Is that

500
00:26:09,320 --> 00:26:10,879
Speaker 2: different than what we're talking about now.

501
00:26:10,800 --> 00:26:15,320
Speaker 3: Yeah, completely different that those those the PPP load programs

502
00:26:15,320 --> 00:26:18,960
Speaker 3: are over. Okay, all that money has been allotted and

503
00:26:19,000 --> 00:26:20,760
Speaker 3: everything else. And as a matter of fact, that's one

504
00:26:20,760 --> 00:26:23,439
Speaker 3: thing that's really changed things quite a bit is we

505
00:26:23,480 --> 00:26:25,679
Speaker 3: get a lot of people that come on our website

506
00:26:26,040 --> 00:26:28,600
Speaker 3: think it is free money, and they did. They come

507
00:26:28,640 --> 00:26:31,439
Speaker 3: on there and then we'll give a call say you know,

508
00:26:31,520 --> 00:26:33,159
Speaker 3: this is a loan. They're like, oh, I have to

509
00:26:33,160 --> 00:26:33,720
Speaker 3: pay a pack.

510
00:26:34,240 --> 00:26:38,840
Speaker 2: Yeah did you hear that, my listeners, you have to

511
00:26:38,880 --> 00:26:39,560
Speaker 2: pay this back?

512
00:26:39,680 --> 00:26:41,400
Speaker 1: Why would they have that? Why would they think that?

513
00:26:41,920 --> 00:26:44,920
Speaker 3: Why would they because the PPP loans we were forgiven

514
00:26:45,040 --> 00:26:47,199
Speaker 3: most of them. You can you could apply to have

515
00:26:47,240 --> 00:26:50,320
Speaker 3: those forgiven, and so people just thought, oh, yeah, that's

516
00:26:50,359 --> 00:26:53,600
Speaker 3: still going on. It's not. You know that the programs

517
00:26:53,600 --> 00:26:56,800
Speaker 3: we're talking about primarily are the seven A program and

518
00:26:56,840 --> 00:27:00,959
Speaker 3: the five H four program. Those are specifically for small businesses,

519
00:27:02,560 --> 00:27:07,480
Speaker 3: owner occupied businesses. So if you're looking to build a

520
00:27:07,520 --> 00:27:11,119
Speaker 3: residential neighborhood, this is not for you. If you're going

521
00:27:11,200 --> 00:27:14,440
Speaker 3: to buy a building for your plumbing company or whatever,

522
00:27:14,840 --> 00:27:15,840
Speaker 3: this is where you want to.

523
00:27:15,760 --> 00:27:17,720
Speaker 1: Go, right right right.

524
00:27:17,880 --> 00:27:20,640
Speaker 2: You know the thing about it is that now we're

525
00:27:20,680 --> 00:27:23,520
Speaker 2: not talking about PPPR SBA.

526
00:27:24,040 --> 00:27:27,720
Speaker 1: You're saying that they do not lend money.

527
00:27:28,040 --> 00:27:31,199
Speaker 3: In this sense. PvP they did, and for disasters they

528
00:27:31,280 --> 00:27:34,080
Speaker 3: lend out some money. These two programs they do not

529
00:27:34,240 --> 00:27:34,800
Speaker 3: lend money.

530
00:27:35,560 --> 00:27:36,959
Speaker 1: So what does SBA do.

531
00:27:37,119 --> 00:27:39,440
Speaker 3: You're saying that they are They provide a guarantee.

532
00:27:39,720 --> 00:27:41,040
Speaker 1: Okay, that's what I'm confused.

533
00:27:41,240 --> 00:27:45,080
Speaker 2: Okay, So you go to SBA, and what's that conversation

534
00:27:45,160 --> 00:27:48,360
Speaker 2: that you're going to have with them so they can

535
00:27:48,400 --> 00:27:50,119
Speaker 2: go to you and get the money.

536
00:27:50,320 --> 00:27:54,960
Speaker 3: Okay, the borrower will never talk to SBA, They'll come

537
00:27:55,000 --> 00:28:00,080
Speaker 3: to us. Okay, the borrower doesn't ever interact with SBA.

538
00:28:00,160 --> 00:28:02,879
Speaker 3: The SBA deals strictly with the banks, and if you

539
00:28:02,960 --> 00:28:05,640
Speaker 3: contact the SBA, although do is give you a list

540
00:28:05,640 --> 00:28:07,960
Speaker 3: of banks that do SBA loans because you have to

541
00:28:07,960 --> 00:28:12,280
Speaker 3: be an approved lender with SBA. Okay, so you come

542
00:28:12,320 --> 00:28:15,240
Speaker 3: to you come to us. We deal with the SBA,

543
00:28:15,600 --> 00:28:19,719
Speaker 3: and Arkansas Capital is called what's called a preferred lender,

544
00:28:20,119 --> 00:28:22,280
Speaker 3: So we don't even go through SBA underwriting. Now a

545
00:28:22,320 --> 00:28:25,159
Speaker 3: lot of banks have to go through SBA underwriting and

546
00:28:25,200 --> 00:28:28,560
Speaker 3: that adds time and a lot of other things to

547
00:28:28,600 --> 00:28:30,720
Speaker 3: the process, but we don't even have to do that.

548
00:28:30,880 --> 00:28:33,639
Speaker 3: SBA trust us, they know we've been around, so we

549
00:28:33,680 --> 00:28:38,000
Speaker 3: do our own underwriting and when we close the loan,

550
00:28:38,520 --> 00:28:42,560
Speaker 3: there's certain documentation that we send SBA and they provide

551
00:28:42,640 --> 00:28:46,120
Speaker 3: us with a guarantee. So if you didn't pay your

552
00:28:46,160 --> 00:28:50,480
Speaker 3: loan back and you still owed me, after we liquidate

553
00:28:50,560 --> 00:28:53,680
Speaker 3: everything and everything's all done and there's still say one

554
00:28:53,720 --> 00:28:58,280
Speaker 3: hundred thousand dollars that's still owed, the SBA would would

555
00:28:58,360 --> 00:29:01,720
Speaker 3: pay us seventy five thousand. That would we would be

556
00:29:01,760 --> 00:29:04,800
Speaker 3: out twenty five and then the SBA would go and

557
00:29:04,840 --> 00:29:07,520
Speaker 3: collect on that that hundred It would be up to

558
00:29:07,560 --> 00:29:11,240
Speaker 3: them from that point right on and they would give

559
00:29:11,240 --> 00:29:13,600
Speaker 3: it to treasury. And that's what I was talking about earlier,

560
00:29:14,080 --> 00:29:15,920
Speaker 3: and Treasury will follow you around for the rest of

561
00:29:15,960 --> 00:29:19,560
Speaker 3: your life, right, so it's really important that you you

562
00:29:19,640 --> 00:29:20,440
Speaker 3: want this loan.

563
00:29:22,400 --> 00:29:24,880
Speaker 2: You dropped a nugget on it with the business plan,

564
00:29:25,160 --> 00:29:28,760
Speaker 2: even though I know that's important that he had come

565
00:29:28,800 --> 00:29:30,720
Speaker 2: out of your mouth and this is what you do

566
00:29:30,920 --> 00:29:33,640
Speaker 2: financial lending. Because I had a conversation with a client

567
00:29:33,680 --> 00:29:35,840
Speaker 2: of mind the day talking about getting the line of credit,

568
00:29:36,200 --> 00:29:39,640
Speaker 2: and I talked about a business plan, but I didn't

569
00:29:39,680 --> 00:29:42,840
Speaker 2: say the words business plan, you know, And I think

570
00:29:42,920 --> 00:29:45,240
Speaker 2: that that has to become a normal point of my

571
00:29:45,400 --> 00:29:49,080
Speaker 2: vernacular so they can understand the role that when you

572
00:29:49,120 --> 00:29:49,720
Speaker 2: start playing.

573
00:29:49,880 --> 00:29:51,080
Speaker 1: Because I always tell people the advice.

574
00:29:51,160 --> 00:29:53,160
Speaker 2: You know, I always live at least six months of

575
00:29:53,200 --> 00:29:55,200
Speaker 2: income on your bank just in case something go wrong.

576
00:29:55,560 --> 00:29:58,800
Speaker 2: Certain terms, but certain terms you say. But until you

577
00:29:59,080 --> 00:30:02,120
Speaker 2: say the right term, the right buzzwords, it doesn't win,

578
00:30:02,520 --> 00:30:05,400
Speaker 2: and more importantly winning with what you're.

579
00:30:05,240 --> 00:30:05,720
Speaker 1: Trying to do.

580
00:30:05,800 --> 00:30:07,680
Speaker 2: Again, thank you Greg for coming to my show, Money

581
00:30:07,680 --> 00:30:11,640
Speaker 2: Making Conversation master Class. Great interview, made, really really great interview,

582
00:30:11,800 --> 00:30:14,000
Speaker 2: and we'll be talking again if we can like, you know,

583
00:30:14,320 --> 00:30:15,640
Speaker 2: twice a year just talk to you.

584
00:30:15,840 --> 00:30:18,040
Speaker 1: I love that. I think that it's important.

585
00:30:18,560 --> 00:30:21,240
Speaker 2: Things happen seasonal, you know, and what we're talking about

586
00:30:21,280 --> 00:30:23,440
Speaker 2: now is different from what we were talking about in

587
00:30:23,440 --> 00:30:27,560
Speaker 2: the spring because tax season and employment types of leads

588
00:30:27,560 --> 00:30:29,320
Speaker 2: and all those things. So again, thank you for coming

589
00:30:29,360 --> 00:30:30,800
Speaker 2: on Money Making Conversation Club CREG.

590
00:30:30,840 --> 00:30:31,240
Speaker 3: Thank you.

591
00:30:31,520 --> 00:30:34,800
Speaker 2: This has been another edition of Money Making Conversation Masterclass

592
00:30:34,840 --> 00:30:37,960
Speaker 2: posted by me Rashaun McDonald. Thank you to our guests

593
00:30:38,000 --> 00:30:41,440
Speaker 2: on the show today, and thank you listening to audience now.

594
00:30:41,440 --> 00:30:43,440
Speaker 2: If you want to listen to any episode I want

595
00:30:43,440 --> 00:30:46,640
Speaker 2: to be a guest on the show, visit Moneymaking Conversations

596
00:30:46,680 --> 00:30:50,200
Speaker 2: dot com. Our social media handle is money Making Conversation.

597
00:30:50,640 --> 00:30:53,000
Speaker 2: Join us next week and remember to always.

598
00:30:52,720 --> 00:31:00,240
Speaker 1: Leave with your gifts. Keep winning the