1 00:00:05,160 --> 00:00:07,960 Speaker 1: Welcome to the show. I am Rashawn McDonald, the host 2 00:00:08,000 --> 00:00:11,680 Speaker 1: of Money Making Conversations Masterclass, where we encourage people to 3 00:00:11,720 --> 00:00:15,440 Speaker 1: stop reading other people's success stories and start planning their own. 4 00:00:16,060 --> 00:00:19,450 Speaker 1: Listen up as I interview entrepreneurs from around the country, 5 00:00:19,770 --> 00:00:22,570 Speaker 1: talk to celebrities and ask them how they are running 6 00:00:22,610 --> 00:00:25,590 Speaker 1: their companies and speak with nonprofits who are making a 7 00:00:25,670 --> 00:00:28,900 Speaker 1: difference in their local communities. Now sit back and listen 8 00:00:29,220 --> 00:00:32,060 Speaker 1: as we unlock the secrets to their success on Money 9 00:00:32,100 --> 00:00:36,840 Speaker 1: Making Conversations Masterclass. Hi, I'm Rashawn McDonald. I host this 10 00:00:36,880 --> 00:00:40,920 Speaker 1: weekly Money Making Conversations Masterclass show. The interviews and information 11 00:00:41,020 --> 00:00:43,729 Speaker 1: that this show provides are for everyone. It's time to 12 00:00:43,750 --> 00:00:47,089 Speaker 1: stop reading other people's success stories and start living your own. 13 00:00:47,590 --> 00:00:49,970 Speaker 1: My guest is the Executive Vice President and Director of 14 00:00:50,030 --> 00:00:54,370 Speaker 1: Lending for Arkansas Capital Corporation. Arkansas Capital Corporation is a 15 00:00:54,470 --> 00:00:59,880 Speaker 1: private nonprofit lending corporation dedicated to empowering entrepreneurs in Arkansas 16 00:01:00,100 --> 00:01:04,140 Speaker 1: and surrounding states. Please welcome to Money Making Conversation Masterclass, 17 00:01:04,420 --> 00:01:06,740 Speaker 1: Craig Calafate. How you doing, sir? 18 00:01:07,260 --> 00:01:08,240 Speaker 2: I'm doing well. How are you? 19 00:01:08,620 --> 00:01:10,270 Speaker 1: Well, first of all, I got to find out about, 20 00:01:10,480 --> 00:01:13,589 Speaker 1: are you a football man? Because football season is starting 21 00:01:14,770 --> 00:01:17,030 Speaker 1: in the state of Arkansas. That's Razorback country. 22 00:01:17,340 --> 00:01:21,580 Speaker 2: Who do you align yourself with? I'm a longhorn in exile, man. 23 00:01:22,380 --> 00:01:25,650 Speaker 1: Well, they joined you in SEC, so you're in their territory. 24 00:01:26,069 --> 00:01:27,670 Speaker 2: I'm very happy about that because now I get my 25 00:01:27,690 --> 00:01:28,649 Speaker 2: longhorns on TV. 26 00:01:28,950 --> 00:01:31,310 Speaker 1: There you go, my friend. I appreciate that. Now, when 27 00:01:31,330 --> 00:01:35,270 Speaker 1: you say surrounding areas, I'm from Houston, Texas, so I'm 28 00:01:35,370 --> 00:01:39,009 Speaker 1: very familiar with that whole area, especially that Texarkana area. 29 00:01:39,530 --> 00:01:41,650 Speaker 1: I've been through that many times. What do you mean 30 00:01:41,670 --> 00:01:42,929 Speaker 1: when you say surrounding states? 31 00:01:44,370 --> 00:01:48,670 Speaker 2: Well, something happened that kind of caused us to expand 32 00:01:48,690 --> 00:01:52,800 Speaker 2: into the surrounding states. About six months ago, SBA made 33 00:01:52,840 --> 00:01:58,020 Speaker 2: available an SBLC license, which is a small business lending 34 00:01:58,100 --> 00:02:03,320 Speaker 2: company license, which allows a non-bank to lend nationwide for 35 00:02:03,340 --> 00:02:06,730 Speaker 2: the SBA program. We received one of those, one of 36 00:02:06,770 --> 00:02:09,510 Speaker 2: the three that were available. First time in 40 years 37 00:02:09,570 --> 00:02:12,800 Speaker 2: they've made them available. So we were limited to Arkansas 38 00:02:12,860 --> 00:02:16,080 Speaker 2: up to that point. We're allowed to go nationwide, but 39 00:02:16,680 --> 00:02:19,280 Speaker 2: my thinking is I want to be sure we're doing 40 00:02:19,340 --> 00:02:22,260 Speaker 2: it right. So we're going to start with a slow rollout. 41 00:02:22,680 --> 00:02:26,579 Speaker 2: We're doing basically, be honest with you, it's not just 42 00:02:26,600 --> 00:02:30,400 Speaker 2: surrounding states, it's the SEC. That's the outline we chose 43 00:02:30,680 --> 00:02:32,000 Speaker 2: because everybody knows it, right? 44 00:02:32,120 --> 00:02:32,740 Speaker 3: Right, right. 45 00:02:33,320 --> 00:02:35,440 Speaker 2: So initially, that's what we're going to start with, just 46 00:02:35,940 --> 00:02:39,020 Speaker 2: the surrounding areas, this area of the South. And then 47 00:02:39,419 --> 00:02:42,639 Speaker 2: when we feel that we've got everything in place, everything 48 00:02:42,660 --> 00:02:45,240 Speaker 2: that's necessary to do the job right, then we'll take 49 00:02:45,280 --> 00:02:46,000 Speaker 2: it nationwide. 50 00:02:46,650 --> 00:02:49,669 Speaker 1: Now, that's really impressive because of the fact that I 51 00:02:49,690 --> 00:02:52,370 Speaker 1: had never heard of that. Why was that restriction in place? 52 00:02:52,430 --> 00:02:54,169 Speaker 1: And you said it's the first time in 40 years. 53 00:02:56,510 --> 00:03:01,190 Speaker 2: Well, the non-bank lenders are not regulated federally. So every 54 00:03:01,230 --> 00:03:05,769 Speaker 2: bank is regulated by the FDIC or the OCC, the 55 00:03:05,830 --> 00:03:08,840 Speaker 2: Office of the Control of the Currency. And so you 56 00:03:08,860 --> 00:03:12,520 Speaker 2: have non-bank lenders that are out there that really aren't regulated. 57 00:03:12,560 --> 00:03:14,820 Speaker 2: We happen to be regulated by the state, but some 58 00:03:14,860 --> 00:03:18,180 Speaker 2: aren't regulated by anybody. So it's incumbent on SBA if 59 00:03:18,200 --> 00:03:21,500 Speaker 2: they're going to let you lend across the country, they 60 00:03:21,540 --> 00:03:24,370 Speaker 2: have to regulate you. They have to do the auditing 61 00:03:24,380 --> 00:03:27,430 Speaker 2: and everything else. And frankly, they just didn't have the manpower. 62 00:03:27,970 --> 00:03:32,370 Speaker 2: And so they beefed that part up of SBA. So 63 00:03:32,410 --> 00:03:34,869 Speaker 2: now we are regulated not only by the state of Arkansas, 64 00:03:35,210 --> 00:03:36,430 Speaker 2: but by the SBA. 65 00:03:38,290 --> 00:03:40,520 Speaker 1: Now, I'm speaking to Craig. He's the Executive Vice President 66 00:03:40,540 --> 00:03:44,240 Speaker 1: and Director of Lending for Arkansas Capital Corporation. Now, I 67 00:03:44,260 --> 00:03:48,900 Speaker 1: say it's a private nonprofit. Now, this whole show is 68 00:03:48,940 --> 00:03:52,020 Speaker 1: going to be about educating me because my banking is 69 00:03:52,640 --> 00:03:57,600 Speaker 1: Bank of America, Fifth Third, Wells Fargo. Now, I'm talking 70 00:03:57,620 --> 00:04:00,060 Speaker 1: to you. Please educate me on the difference. 71 00:04:00,830 --> 00:04:03,670 Speaker 2: Okay. Well, we're not a bank, so we don't take 72 00:04:03,710 --> 00:04:09,470 Speaker 2: deposits or anything else. Quick background on Arkansas Capital. We 73 00:04:09,690 --> 00:04:13,490 Speaker 2: are a non-bank lender, as I said. We're a nonprofit. 74 00:04:13,910 --> 00:04:18,310 Speaker 2: We are, and we, well, let me back up. We 75 00:04:18,330 --> 00:04:22,950 Speaker 2: were formed in 1957 by the governor of Arkansas, Governor Rockefeller. 76 00:04:23,540 --> 00:04:24,940 Speaker 2: And at the time, what he did was he had 77 00:04:24,960 --> 00:04:27,719 Speaker 2: a barbecue and he got together all the business leaders 78 00:04:27,760 --> 00:04:30,440 Speaker 2: in Arkansas and said, look, we're sitting in a very 79 00:04:30,540 --> 00:04:35,060 Speaker 2: agrarian society. We need to build up industry. We need 80 00:04:35,080 --> 00:04:38,140 Speaker 2: to foster entrepreneurship. you're the guys that are going to 81 00:04:38,180 --> 00:04:40,200 Speaker 2: help me do it. And he had them all kick 82 00:04:40,260 --> 00:04:43,170 Speaker 2: in some money and start a company to do just that. 83 00:04:43,529 --> 00:04:47,350 Speaker 2: And that, that was us. So since 1957, our mandate 84 00:04:47,390 --> 00:04:53,730 Speaker 2: has been to not only foster entrepreneurship, small business, but 85 00:04:53,790 --> 00:04:57,969 Speaker 2: to get into underserved communities, rural communities, which we have 86 00:04:58,029 --> 00:05:01,240 Speaker 2: plenty of here in the South. Right. And, and so 87 00:05:01,279 --> 00:05:03,919 Speaker 2: that's really our focus. We do a number of different 88 00:05:03,940 --> 00:05:06,919 Speaker 2: things other than just small business lending. We, We also 89 00:05:07,000 --> 00:05:10,710 Speaker 2: have what's called an EB-5 hub, which is a program 90 00:05:10,730 --> 00:05:15,029 Speaker 2: through the Department of Treasury and Homeland Security that lends 91 00:05:15,170 --> 00:05:21,469 Speaker 2: money to approved projects that create American jobs via immigrants 92 00:05:21,550 --> 00:05:23,930 Speaker 2: that come to this country. So if you were immigrating, say, 93 00:05:23,950 --> 00:05:30,120 Speaker 2: from China or India, and you had a spare $ 900, 000 94 00:05:27,540 --> 00:05:30,740 Speaker 2: lying around, you could invest it in this program and 95 00:05:31,040 --> 00:05:34,580 Speaker 2: get your green card right away, but also create American 96 00:05:34,600 --> 00:05:37,160 Speaker 2: jobs at the same time. We do that. We'd also 97 00:05:37,220 --> 00:05:41,849 Speaker 2: do new market tax credits, which is another program through 98 00:05:41,900 --> 00:05:47,770 Speaker 2: Department of Treasury, which fosters larger developments, typically over $ 79 million. 99 00:05:48,050 --> 00:05:51,710 Speaker 2: And we do those across the South. And then our 100 00:05:51,830 --> 00:05:56,410 Speaker 2: educational arm, we put on a contest called the Governor's Cup, 101 00:05:56,890 --> 00:06:00,830 Speaker 2: which is a contest for college students, college teams from 102 00:06:00,890 --> 00:06:04,880 Speaker 2: different universities, very much like Shark Tank, kind of an 103 00:06:04,940 --> 00:06:08,970 Speaker 2: elevator pitch contest. where they win up to $ 20, 000, $ 30, 000 104 00:06:08,430 --> 00:06:13,810 Speaker 2: to take their plans forward. But we've been doing that for, 105 00:06:14,210 --> 00:06:19,040 Speaker 2: I think, 21 years. So while lending is our primary focus, 106 00:06:19,320 --> 00:06:23,080 Speaker 2: it's not the only thing we do here. But yeah, 107 00:06:23,860 --> 00:06:26,400 Speaker 2: it was a big boost for us to get the 108 00:06:26,520 --> 00:06:29,010 Speaker 2: SPLC license. It was a huge compliment. 109 00:06:30,060 --> 00:06:32,140 Speaker 1: Well, it allows me to talk to you because, you know, 110 00:06:32,360 --> 00:06:34,040 Speaker 1: my show is nationwide. 111 00:06:34,300 --> 00:06:34,580 Speaker 2: Yeah. 112 00:06:34,660 --> 00:06:36,440 Speaker 1: And that's one of the reasons I was excited about 113 00:06:36,480 --> 00:06:38,400 Speaker 1: it because of the fact that when you start talking 114 00:06:38,420 --> 00:06:41,700 Speaker 1: about underserved communities, that's my audience. I'm not saying my 115 00:06:41,779 --> 00:06:44,440 Speaker 1: audience is filled with entrepreneurs. There's 60% African-American, 20% white. 116 00:06:44,440 --> 00:06:46,200 Speaker 1: $ 55, 000 is the medium income. My audience is 78% male. 117 00:06:46,220 --> 00:06:59,850 Speaker 1: You know, so when I... Look at the breakdown. Excuse me, 118 00:06:59,910 --> 00:07:03,510 Speaker 1: it's 54% male. The great thing at the start of 119 00:07:03,540 --> 00:07:07,140 Speaker 1: the conversation, we was talking about the Arkansas Capital Corporation. 120 00:07:07,620 --> 00:07:13,900 Speaker 1: It was established for entrepreneurs in rural communities and underserved communities. 121 00:07:14,900 --> 00:07:17,320 Speaker 1: Listening to my audience, a lot of them in big cities, 122 00:07:17,360 --> 00:07:19,960 Speaker 1: so I think that disqualifies rural communities. 123 00:07:20,260 --> 00:07:22,470 Speaker 2: The rural, but not the underserved necessarily. Right. 124 00:07:22,950 --> 00:07:26,570 Speaker 1: That's where I'm going. What qualifies as the underserved? 125 00:07:28,200 --> 00:07:33,080 Speaker 2: Communities of color, obviously, and rural fits into that. I 126 00:07:33,120 --> 00:07:37,010 Speaker 2: would say when we're talking about underserved communities, we're talking 127 00:07:37,030 --> 00:07:37,790 Speaker 2: about communities of color. 128 00:07:38,190 --> 00:07:38,530 Speaker 1: Awesome. 129 00:07:38,850 --> 00:07:40,869 Speaker 2: Primarily Hispanic and black communities. 130 00:07:41,570 --> 00:07:46,410 Speaker 1: Awesome. Awesome. And so again, when I do these interviews, Craig, 131 00:07:46,450 --> 00:07:50,750 Speaker 1: as always, can you tell everybody the website that they 132 00:07:50,800 --> 00:07:53,740 Speaker 1: can go to who wants to see the application, if 133 00:07:53,780 --> 00:07:55,440 Speaker 1: they want to fill out the application? 134 00:07:55,460 --> 00:07:55,530 Speaker 3: Yes. 135 00:07:55,780 --> 00:07:57,640 Speaker 1: And the process again. One more time, Craig. 136 00:07:58,040 --> 00:08:02,400 Speaker 2: Yeah, it's arcapital.com. Pretty easy to remember. And you go 137 00:08:02,500 --> 00:08:03,860 Speaker 2: on there and you'll see. 138 00:08:04,400 --> 00:08:13,710 Speaker 1: That's pretty easy. arcapital.com. arcapital.com. I love it. It's A-R-C-A-P-I-T-O-L. 139 00:08:14,150 --> 00:08:14,670 Speaker 2: T-A-L. 140 00:08:14,910 --> 00:08:16,590 Speaker 1: T-A-L.com. 141 00:08:16,970 --> 00:08:17,410 Speaker 2: Dot com. 142 00:08:17,850 --> 00:08:20,930 Speaker 1: And then is it a registration button that says loans 143 00:08:20,990 --> 00:08:21,870 Speaker 1: or where do you go? 144 00:08:21,970 --> 00:08:23,070 Speaker 2: It says apply here. 145 00:08:23,670 --> 00:08:24,210 Speaker 1: Apply here. 146 00:08:24,230 --> 00:08:27,620 Speaker 2: Apply here. great and then you do that and then 147 00:08:27,980 --> 00:08:30,550 Speaker 2: uh there's also contact information if you need to call 148 00:08:30,580 --> 00:08:33,410 Speaker 2: us you have questions remember we're also watching you uh 149 00:08:33,870 --> 00:08:36,550 Speaker 2: you know as the application is being done and and 150 00:08:37,429 --> 00:08:39,110 Speaker 2: if all of a sudden you disappear we're probably going 151 00:08:39,130 --> 00:08:41,150 Speaker 2: to call you and say do you need help or 152 00:08:41,190 --> 00:08:43,110 Speaker 2: do you need you know i love that. 153 00:08:43,270 --> 00:08:47,090 Speaker 3: I love that please don't go anywhere we'll be right 154 00:08:47,150 --> 00:08:57,320 Speaker 3: back with more money making conversations masterclass Welcome back to 155 00:08:57,340 --> 00:09:01,700 Speaker 3: the Money Making Conversations Masterclass hosted by Rashawn McDonald. Money 156 00:09:01,740 --> 00:09:08,120 Speaker 3: Making Conversations Masterclass continues online at moneymakingconversations.com and follow Money 157 00:09:08,160 --> 00:09:12,000 Speaker 3: Making Conversations Masterclass on Facebook, Twitter, and Instagram. 158 00:09:12,850 --> 00:09:15,020 Speaker 1: The mentorship that you was talking about, you're not there 159 00:09:15,120 --> 00:09:18,410 Speaker 1: just to take applications. You're trying to assist them. And 160 00:09:18,429 --> 00:09:21,090 Speaker 1: like you said, this is an honest conversation, Greg. I 161 00:09:21,130 --> 00:09:23,850 Speaker 1: commend you on it because so many people in this 162 00:09:23,910 --> 00:09:26,630 Speaker 1: business can be frustrated and need to hear the truth. 163 00:09:26,820 --> 00:09:30,040 Speaker 1: It's not time right now. You know, get that business 164 00:09:30,059 --> 00:09:33,219 Speaker 1: plan together. See it out a lot better. Make sure 165 00:09:33,260 --> 00:09:37,000 Speaker 1: you understand your profit margin, your cost on this particular product, 166 00:09:37,120 --> 00:09:39,300 Speaker 1: all these things. Because I'm telling you, I get a 167 00:09:39,420 --> 00:09:42,660 Speaker 1: lot of businesses that start, you know, they're doing all right, 168 00:09:42,700 --> 00:09:44,740 Speaker 1: but they're struggling, but they're struggling to the point that 169 00:09:45,100 --> 00:09:48,740 Speaker 1: they cannot qualify for a business loan, a line of credit. 170 00:09:49,080 --> 00:09:51,440 Speaker 1: And then, so they stuck. They kind of like stuck. 171 00:09:51,900 --> 00:09:57,719 Speaker 1: And so trying to provide business opportunities for them, then 172 00:09:57,740 --> 00:09:59,970 Speaker 1: their paperwork won't look good. It will not look good. 173 00:10:00,420 --> 00:10:04,699 Speaker 2: Right. And also through that application process is also where 174 00:10:04,720 --> 00:10:07,680 Speaker 2: you find out exactly how much money do you really need? 175 00:10:07,750 --> 00:10:10,270 Speaker 2: Because one of the worst things we could do is 176 00:10:10,429 --> 00:10:13,350 Speaker 2: underfund somebody. Right. That's why you see most of these 177 00:10:13,410 --> 00:10:16,690 Speaker 2: businesses go out of business. Everybody wonders, this business was 178 00:10:16,730 --> 00:10:19,590 Speaker 2: around for six months and their doors closed. What happened? Mm-hmm. 179 00:10:20,360 --> 00:10:22,210 Speaker 2: It's because they thought they were going to be full 180 00:10:22,290 --> 00:10:26,010 Speaker 2: on day one. Yes. And that doesn't happen. And you've 181 00:10:26,050 --> 00:10:28,270 Speaker 2: got to have some cushion in there and you've got 182 00:10:28,290 --> 00:10:30,030 Speaker 2: to build that in up front or you're not going 183 00:10:30,050 --> 00:10:33,630 Speaker 2: to make it. And undercapitalization is far and away the 184 00:10:34,000 --> 00:10:35,040 Speaker 2: biggest reason for failure. 185 00:10:35,800 --> 00:10:38,679 Speaker 1: I want to be if somebody was listening to my show, Craig, 186 00:10:39,620 --> 00:10:42,660 Speaker 1: and they contacted you, what is the procedure of doing 187 00:10:42,800 --> 00:10:46,520 Speaker 1: a lending relationship with Arkansas Capital Corporation? 188 00:10:48,230 --> 00:10:51,429 Speaker 2: Well, it's kind of interesting. One thing that we brought 189 00:10:51,510 --> 00:10:55,240 Speaker 2: online in the last year is an online application. And 190 00:10:55,890 --> 00:10:57,979 Speaker 2: it's not what a lot of people are used to 191 00:10:58,040 --> 00:10:59,839 Speaker 2: seeing when they go on a bank site or some 192 00:10:59,880 --> 00:11:02,859 Speaker 2: other lender site is kind of an inquiry form. Hey, 193 00:11:02,900 --> 00:11:05,400 Speaker 2: this is what I'm looking for. Give me a call. 194 00:11:06,320 --> 00:11:09,479 Speaker 2: That's not ours. Ours is a full blown application. It's 195 00:11:09,580 --> 00:11:12,360 Speaker 2: the complete application. They can fill it out at home. 196 00:11:12,380 --> 00:11:14,560 Speaker 2: I mean, let's face it, the people that we're talking 197 00:11:14,620 --> 00:11:17,890 Speaker 2: to and talking about here are people that are working 198 00:11:17,929 --> 00:11:20,280 Speaker 2: all day for the most part. They got jobs, they 199 00:11:20,320 --> 00:11:23,260 Speaker 2: got businesses. So they, you know, they can come in 200 00:11:23,280 --> 00:11:24,780 Speaker 2: this thing two in the morning, they can fill out 201 00:11:24,820 --> 00:11:28,960 Speaker 2: their application. Once they submit that, it takes them to 202 00:11:29,000 --> 00:11:31,080 Speaker 2: another page, which shows them all the documents that they 203 00:11:31,120 --> 00:11:34,970 Speaker 2: need to upload. So it's a pretty seamless, pretty easy 204 00:11:35,070 --> 00:11:38,910 Speaker 2: process to get into. We are notified the moment they 205 00:11:39,050 --> 00:11:42,689 Speaker 2: open the application, we get emails that says, Hey, so-and-so 206 00:11:42,750 --> 00:11:45,179 Speaker 2: opened the application so we can watch it. in case 207 00:11:45,200 --> 00:11:47,900 Speaker 2: they have problems. But once they submit it, we get 208 00:11:47,940 --> 00:11:51,600 Speaker 2: another notification and we know to contact them at that point. 209 00:11:52,000 --> 00:11:59,400 Speaker 2: So it's a pretty slick and easy to navigate process. 210 00:11:59,720 --> 00:12:02,480 Speaker 1: Well, I like that because I don't like those little 211 00:12:02,960 --> 00:12:05,480 Speaker 1: forms you fill out and then you go back because 212 00:12:05,780 --> 00:12:09,120 Speaker 1: I'm a member of the National Minority Supply Development Council, 213 00:12:09,450 --> 00:12:12,190 Speaker 1: which is the affiliate of Georgia Minority Supply Development Council. 214 00:12:12,390 --> 00:12:14,110 Speaker 1: And I would tell you, it's like filling out a 215 00:12:14,130 --> 00:12:16,870 Speaker 1: bank loan to apply for that, you know, cause they're 216 00:12:16,890 --> 00:12:19,110 Speaker 1: asking you for your tax. The only thing they don't 217 00:12:19,210 --> 00:12:21,670 Speaker 1: ask you for is your bank statements. And so would 218 00:12:21,700 --> 00:12:23,900 Speaker 1: you have to have at least four months or consecutive 219 00:12:23,920 --> 00:12:26,900 Speaker 1: months of recent bank statement? So just, just here, I 220 00:12:27,220 --> 00:12:28,719 Speaker 1: know it's online, but if you can give us a 221 00:12:29,179 --> 00:12:31,880 Speaker 1: kind of like an overview, like, like I just mentioned, 222 00:12:32,260 --> 00:12:36,430 Speaker 1: tax returns, do it have to be signed bank statements? 223 00:12:36,970 --> 00:12:38,510 Speaker 1: What is, what is, what are you looking for as 224 00:12:38,550 --> 00:12:41,950 Speaker 1: far as that, that, that credit score, just an overview 225 00:12:41,990 --> 00:12:45,290 Speaker 1: of what, if one goes to online prior to going, 226 00:12:45,309 --> 00:12:48,670 Speaker 1: they have an insight of what is to be expected 227 00:12:48,720 --> 00:12:48,910 Speaker 1: of them. 228 00:12:49,500 --> 00:12:51,380 Speaker 2: Well, yeah, obviously it's going to ask them about their, 229 00:12:51,520 --> 00:12:53,320 Speaker 2: you know, the project and what they're looking for. 230 00:12:53,660 --> 00:12:53,880 Speaker 1: Right. 231 00:12:54,700 --> 00:12:56,620 Speaker 2: And you'd be amazed how many people aren't really even 232 00:12:56,679 --> 00:13:01,200 Speaker 2: sure about that part when they get into it. But yeah, 233 00:13:01,220 --> 00:13:03,239 Speaker 2: so we'll ask them what their project is, what their 234 00:13:03,280 --> 00:13:08,229 Speaker 2: background is. Then when you get into the document uploads, 235 00:13:09,120 --> 00:13:11,969 Speaker 2: We want three years of, well, we want a business 236 00:13:12,010 --> 00:13:14,130 Speaker 2: plan first and foremost. So if it's a new, and 237 00:13:14,170 --> 00:13:16,689 Speaker 2: I'm talking about a new business here, we want a 238 00:13:16,730 --> 00:13:19,390 Speaker 2: business plan and we want a detailed business plan that 239 00:13:19,530 --> 00:13:22,290 Speaker 2: shows that you actually know the business and you know 240 00:13:22,330 --> 00:13:25,380 Speaker 2: what it is you're going into. I mean, that's the key. 241 00:13:25,390 --> 00:13:28,380 Speaker 2: You know, a lot of it I can glean just 242 00:13:28,420 --> 00:13:30,500 Speaker 2: from looking at numbers. I can tell roughly what you 243 00:13:30,520 --> 00:13:32,380 Speaker 2: want to do, but I'm going to get into your 244 00:13:32,420 --> 00:13:36,280 Speaker 2: business plan and see how you plan to manage day-to-day operations, 245 00:13:36,700 --> 00:13:39,550 Speaker 2: how you see it going, what what you see as 246 00:13:39,570 --> 00:13:42,250 Speaker 2: your challenges, how you're going to overcome them, that kind 247 00:13:42,270 --> 00:13:46,189 Speaker 2: of thing. We really put a lot of weight into 248 00:13:46,230 --> 00:13:49,689 Speaker 2: that and the work that's put into that. So you'll 249 00:13:49,710 --> 00:13:53,230 Speaker 2: have that. You'll have any cost documents, any invoices that 250 00:13:53,250 --> 00:13:55,430 Speaker 2: you're going to need to pay. We'll have you upload 251 00:13:55,450 --> 00:13:58,490 Speaker 2: all that stuff. It's really the information that we're going 252 00:13:58,510 --> 00:14:02,679 Speaker 2: to need to make a credit decision. Your resume is 253 00:14:02,720 --> 00:14:06,209 Speaker 2: going to be involved, obviously. Yeah, the most important thing 254 00:14:06,490 --> 00:14:08,650 Speaker 2: when you're laying all this out is that you know 255 00:14:08,730 --> 00:14:11,850 Speaker 2: exactly what it is you're asking for and why you 256 00:14:11,890 --> 00:14:15,630 Speaker 2: need that. I mentioned this earlier, it's surprising how many 257 00:14:15,670 --> 00:14:19,240 Speaker 2: people show up to the process. And really, you ask them, okay, 258 00:14:19,260 --> 00:14:22,360 Speaker 2: first and foremost, what are you looking for? And they 259 00:14:22,440 --> 00:14:24,760 Speaker 2: look at you and say, well, how much can I get? 260 00:14:24,780 --> 00:14:28,140 Speaker 2: That's not the answer that we want to hear. Right. 261 00:14:28,300 --> 00:14:30,390 Speaker 1: And I think anybody wants to. The thing about it 262 00:14:30,400 --> 00:14:32,770 Speaker 1: is it's really cool having you on the show because 263 00:14:32,790 --> 00:14:35,479 Speaker 1: of the fact that You know, so many people are 264 00:14:35,800 --> 00:14:39,120 Speaker 1: funding companies out of their pockets or funding their companies 265 00:14:39,180 --> 00:14:42,840 Speaker 1: through family relationships, you know. And some people go online 266 00:14:42,860 --> 00:14:45,260 Speaker 1: and try to do GoFundMes to try to get revenue 267 00:14:45,280 --> 00:14:48,950 Speaker 1: for that. But that business plan, and for the life 268 00:14:48,990 --> 00:14:54,190 Speaker 1: of me, I never heard it associated with a loan expectation, 269 00:14:54,550 --> 00:14:57,430 Speaker 1: but it has to be. That has to be one-on-one. 270 00:14:57,830 --> 00:15:00,560 Speaker 1: And let's talk to that business plan because so many 271 00:15:00,580 --> 00:15:03,820 Speaker 1: people just start a business based on a dream. are 272 00:15:03,840 --> 00:15:06,980 Speaker 1: based on faith. You hear a lot of faith conversation 273 00:15:07,440 --> 00:15:11,140 Speaker 1: when people go out and become entrepreneurs. So talk about 274 00:15:11,180 --> 00:15:14,530 Speaker 1: that business plan and why people make a mistake and 275 00:15:14,910 --> 00:15:18,170 Speaker 1: put that at the back end before they open their business. 276 00:15:18,970 --> 00:15:22,050 Speaker 2: Yeah, it really does surprise me because the business plan 277 00:15:22,110 --> 00:15:26,610 Speaker 2: is really your Bible. It's showing how you're going to 278 00:15:26,730 --> 00:15:28,530 Speaker 2: open the doors, how you're going to keep them open, 279 00:15:28,550 --> 00:15:31,050 Speaker 2: and how you're going to pass that on to the 280 00:15:31,090 --> 00:15:34,989 Speaker 2: next person. So So we're looking for every aspect of 281 00:15:35,010 --> 00:15:39,010 Speaker 2: the business. And the other thing that people find when 282 00:15:39,030 --> 00:15:43,610 Speaker 2: they start doing their business plan is that they didn't 283 00:15:43,650 --> 00:15:46,190 Speaker 2: realize how much they didn't know about this particular business. 284 00:15:46,730 --> 00:15:51,250 Speaker 2: When they start having to work through different ideas within 285 00:15:51,290 --> 00:15:53,229 Speaker 2: the plan and they say, oh, I didn't think of that. 286 00:15:53,290 --> 00:15:55,270 Speaker 2: And I didn't think of that. And that's where really 287 00:15:55,670 --> 00:15:59,280 Speaker 2: a mentor can come in. Maybe find somebody who's already 288 00:15:59,300 --> 00:16:01,960 Speaker 2: in that business, start talking through these things with those people. 289 00:16:02,820 --> 00:16:06,560 Speaker 2: There are also what are called SBDCs all over the country. 290 00:16:07,580 --> 00:16:11,490 Speaker 2: Every major university in the country has what's called an SBDC. 291 00:16:11,520 --> 00:16:16,050 Speaker 2: It is a small business. I can't remember what the 292 00:16:16,110 --> 00:16:18,550 Speaker 2: acronym stands for, but basically what it is, it's a 293 00:16:18,590 --> 00:16:21,650 Speaker 2: free service that's paid for by the SBA. And you 294 00:16:21,690 --> 00:16:24,090 Speaker 2: can go in. They will help you with your business plan. 295 00:16:24,130 --> 00:16:27,489 Speaker 2: They'll show you how to do your books. They do 296 00:16:27,510 --> 00:16:30,650 Speaker 2: a number of different things for free. and they can 297 00:16:30,670 --> 00:16:33,710 Speaker 2: really help you flesh out what is important in a 298 00:16:33,770 --> 00:16:38,950 Speaker 2: business plan. But like I said, that's really, the proof 299 00:16:39,010 --> 00:16:40,980 Speaker 2: is in the pudding in that thing. We look through 300 00:16:41,040 --> 00:16:44,280 Speaker 2: that and say, if you have a restaurant, we want 301 00:16:44,320 --> 00:16:46,840 Speaker 2: to know, and this would be not just us, this 302 00:16:46,860 --> 00:16:51,680 Speaker 2: is any lender, how many times is that one particular 303 00:16:51,720 --> 00:16:55,000 Speaker 2: table going to be sat, turned, we call it? How 304 00:16:55,020 --> 00:16:56,950 Speaker 2: many times is that table going to be turned? What's 305 00:16:56,990 --> 00:17:00,640 Speaker 2: the average ticket price? What are the prices in your menu? 306 00:17:00,960 --> 00:17:03,280 Speaker 2: What's your food cost going to run? There's a lot 307 00:17:03,320 --> 00:17:06,280 Speaker 2: of different aspects to that. And that's really what we're 308 00:17:06,300 --> 00:17:10,639 Speaker 2: looking for because so much of what we call underwriting 309 00:17:10,680 --> 00:17:14,760 Speaker 2: and lending, at least here, is not based as much 310 00:17:14,820 --> 00:17:17,360 Speaker 2: on the business as it is on the person. Who 311 00:17:17,680 --> 00:17:20,300 Speaker 2: is this person? Do they have the background that they need? 312 00:17:20,340 --> 00:17:22,940 Speaker 2: Do they have the skills that they need to do this? 313 00:17:23,900 --> 00:17:27,370 Speaker 2: Have they really put in the effort everything to get 314 00:17:27,410 --> 00:17:29,790 Speaker 2: this business off the ground, because this is going to 315 00:17:29,830 --> 00:17:32,340 Speaker 2: be the hardest job you've ever had. If you start 316 00:17:32,359 --> 00:17:34,859 Speaker 2: your own business and you know this, you start your 317 00:17:34,880 --> 00:17:36,340 Speaker 2: own business. That's the hardest you're ever going to work 318 00:17:36,380 --> 00:17:38,060 Speaker 2: in your entire life. And a lot of people don't 319 00:17:38,080 --> 00:17:40,240 Speaker 2: realize business plans, setting you back. You're going to have 320 00:17:40,260 --> 00:17:41,560 Speaker 2: real problems once you open the door. 321 00:17:41,940 --> 00:17:43,740 Speaker 1: And I really wanted to bring that up because of 322 00:17:43,780 --> 00:17:46,250 Speaker 1: the fact that a lot of people get frustrated and 323 00:17:46,650 --> 00:17:49,550 Speaker 1: in certain situations, people might say, Hey, you know, I'm 324 00:17:49,570 --> 00:17:51,409 Speaker 1: being rejected because of the color of my skin. In 325 00:17:51,450 --> 00:17:54,530 Speaker 1: some cases it does happen, but there is a process. 326 00:17:54,990 --> 00:17:58,669 Speaker 1: And the process can frustrate you because it's so detailed 327 00:17:59,790 --> 00:18:02,389 Speaker 1: and it asks a lot of you. And sometimes the 328 00:18:02,470 --> 00:18:06,050 Speaker 1: frustration of, because you are not ready at that moment, 329 00:18:06,609 --> 00:18:09,109 Speaker 1: you might be ready six months later, or you shouldn't 330 00:18:09,150 --> 00:18:11,889 Speaker 1: open a business at all because you aren't ready. 331 00:18:13,050 --> 00:18:15,780 Speaker 2: Right. No, that's exactly right. And you know, that is 332 00:18:15,840 --> 00:18:19,900 Speaker 2: a big part of my job, our job as a lender. 333 00:18:20,840 --> 00:18:25,869 Speaker 2: Sometimes it's just to say, no, it's, Because these people 334 00:18:26,130 --> 00:18:29,129 Speaker 2: are going into a contract. They're going to borrow a 335 00:18:29,270 --> 00:18:32,050 Speaker 2: lot of money. They're going to put a lot of 336 00:18:32,130 --> 00:18:38,129 Speaker 2: their life on the line here in terms of their business, 337 00:18:38,230 --> 00:18:41,939 Speaker 2: everything that they do. If that business fails, they're not 338 00:18:41,960 --> 00:18:43,639 Speaker 2: going to lose all that money. They're going to owe 339 00:18:43,720 --> 00:18:46,920 Speaker 2: all the money that they borrowed from the lender. That's 340 00:18:46,960 --> 00:18:48,399 Speaker 2: going to follow them around. I mean, this is a 341 00:18:48,520 --> 00:18:51,480 Speaker 2: huge decision. So sometimes it's up to us to say, 342 00:18:51,500 --> 00:18:54,050 Speaker 2: you know what? You're not ready yet. You need to 343 00:18:54,109 --> 00:18:56,939 Speaker 2: do this, this, and this, and then we can talk. 344 00:18:57,640 --> 00:19:00,760 Speaker 2: But it's a huge decision, and it's a huge responsibility 345 00:19:00,840 --> 00:19:03,980 Speaker 2: on our part, too, because you have the capability of 346 00:19:04,060 --> 00:19:08,200 Speaker 2: ruining somebody's life if you don't make the right decision. 347 00:19:08,550 --> 00:19:11,150 Speaker 1: Craig, you have some really interesting questions that I wanted 348 00:19:11,190 --> 00:19:13,550 Speaker 1: to bring into the show because I think it provides 349 00:19:13,590 --> 00:19:17,050 Speaker 1: valuable insight to people. Because I'm talking to Craig Califati. 350 00:19:17,410 --> 00:19:19,570 Speaker 1: You know, he's the executive vice president and director of 351 00:19:19,690 --> 00:19:24,200 Speaker 1: lending for Arkansas Capital Corporation. Arkansas Capital, if you don't know, 352 00:19:24,300 --> 00:19:29,020 Speaker 1: is a private nonprofit lending corporation dedicated to empowering entrepreneurs 353 00:19:29,040 --> 00:19:32,240 Speaker 1: in Arkansas and the surrounding state. That's how he's starting 354 00:19:32,290 --> 00:19:34,480 Speaker 1: out right now. He wants to work because he just 355 00:19:34,510 --> 00:19:37,210 Speaker 1: got approved to do this, hasn't been done in 40 years, 356 00:19:37,250 --> 00:19:39,389 Speaker 1: to go national. But he wants to work with the 357 00:19:39,430 --> 00:19:42,369 Speaker 1: surrounding states initially. I'm not saying if you listen to 358 00:19:42,410 --> 00:19:45,250 Speaker 1: this show, you can't go to the website and fill 359 00:19:45,290 --> 00:19:48,660 Speaker 1: out the form. It's an online form, very detailed. You're 360 00:19:48,680 --> 00:19:52,200 Speaker 1: basically filling out an application. You're filling out an application 361 00:19:52,320 --> 00:19:55,580 Speaker 1: if you click the registration button. It's not one of 362 00:19:55,600 --> 00:19:58,220 Speaker 1: them we're going to contact you later. It's going to 363 00:19:58,460 --> 00:20:02,530 Speaker 1: ask you for all the necessary documents that will require 364 00:20:02,630 --> 00:20:05,470 Speaker 1: you to qualify for what you're trying to attempt here. 365 00:20:05,950 --> 00:20:07,650 Speaker 1: What I'm not trying to do on this show is 366 00:20:07,710 --> 00:20:10,850 Speaker 1: encourage you not to do anything I'm encouraging you to 367 00:20:10,970 --> 00:20:14,050 Speaker 1: prepare to do different things. And one of the things 368 00:20:14,070 --> 00:20:16,730 Speaker 1: you said in your questions is that small business owners 369 00:20:16,750 --> 00:20:20,630 Speaker 1: should establish a line of credit with immediate access, especially 370 00:20:20,690 --> 00:20:24,310 Speaker 1: for small businesses with payroll employees. Talk to me. 371 00:20:25,330 --> 00:20:29,250 Speaker 2: Well, yeah, a line of credit's important because every business 372 00:20:30,190 --> 00:20:35,690 Speaker 2: has unexpected expenses that pop up. Let's assume it's not 373 00:20:35,710 --> 00:20:37,369 Speaker 2: a business that needs a line of credit in a 374 00:20:37,390 --> 00:20:41,450 Speaker 2: normal course of business. You just wanted a security. It 375 00:20:41,490 --> 00:20:43,510 Speaker 2: doesn't necessarily have to be a large line of credit. 376 00:20:43,570 --> 00:20:45,450 Speaker 2: You're not going to pay on the money that you're 377 00:20:45,470 --> 00:20:49,500 Speaker 2: not using. But it's a good idea for a lot 378 00:20:49,540 --> 00:20:52,640 Speaker 2: of different businesses to have that just as a backup. 379 00:20:52,740 --> 00:20:55,760 Speaker 2: Because like I said, things always pop up. You don't 380 00:20:55,800 --> 00:21:00,290 Speaker 2: want a big rock going through a picture window shut 381 00:21:00,350 --> 00:21:02,629 Speaker 2: down your business because you didn't have enough money to 382 00:21:02,690 --> 00:21:05,430 Speaker 2: fix the window. You know, silly little things like that. 383 00:21:05,490 --> 00:21:07,090 Speaker 2: So a lot of times a line of credit is 384 00:21:07,150 --> 00:21:10,250 Speaker 2: very important. Some businesses just can't function without a line 385 00:21:10,270 --> 00:21:12,890 Speaker 2: of credit. If you get into construction or something where 386 00:21:12,910 --> 00:21:15,550 Speaker 2: you're laying out a lot of money up front before 387 00:21:15,570 --> 00:21:17,810 Speaker 2: you're going to get paid, then those lines of credit 388 00:21:17,910 --> 00:21:23,200 Speaker 2: become absolutely necessary. But even small businesses should look at 389 00:21:23,260 --> 00:21:25,220 Speaker 2: just having a little cushion in the back. 390 00:21:25,280 --> 00:21:27,960 Speaker 1: And I 100% agree. You know, I would tell you, Craig, 391 00:21:28,040 --> 00:21:31,300 Speaker 1: I've broken all the rules, the wrong rules. You know, 392 00:21:31,380 --> 00:21:34,770 Speaker 1: opening up, you know, on the, on faith. This is 393 00:21:34,810 --> 00:21:37,350 Speaker 1: what I want to do. Uh, getting in business with 394 00:21:37,390 --> 00:21:42,150 Speaker 1: partners with no contract. Um, the whole idea was just 395 00:21:42,190 --> 00:21:44,940 Speaker 1: to make money. That was my goal. And I think 396 00:21:44,960 --> 00:21:48,020 Speaker 1: that's the average entrepreneur. They just want to make money. 397 00:21:48,080 --> 00:21:51,960 Speaker 1: They see the possibilities, but they don't see the ramifications 398 00:21:52,320 --> 00:21:55,960 Speaker 1: of not setting it up correctly. And I'm talking to you, 399 00:21:56,380 --> 00:21:59,399 Speaker 1: not trying to get you to do a book one-on-one, 400 00:22:00,740 --> 00:22:05,770 Speaker 1: some advice, like three pointers to, about starting your own business, Craig? 401 00:22:08,150 --> 00:22:12,990 Speaker 2: Know what you want, meaning exactly, let's talk about what 402 00:22:13,030 --> 00:22:14,590 Speaker 2: you need to do when you come to a lender 403 00:22:14,630 --> 00:22:18,689 Speaker 2: like me. Know what you want and know why, not 404 00:22:18,750 --> 00:22:21,210 Speaker 2: only why you need it, but how much it's going 405 00:22:21,230 --> 00:22:26,520 Speaker 2: to cost. I mean, that's, I keep going back to that. 406 00:22:26,540 --> 00:22:28,700 Speaker 2: That is the key. You really want to know you, 407 00:22:28,780 --> 00:22:30,640 Speaker 2: and this is going to happen in your business plan. 408 00:22:30,700 --> 00:22:33,270 Speaker 2: It's going to flesh out a lot of this. You 409 00:22:33,490 --> 00:22:37,669 Speaker 2: might have said, oh, well, I'm going to open this 410 00:22:37,869 --> 00:22:40,310 Speaker 2: plumbing company and we're going to have this big, really 411 00:22:40,410 --> 00:22:44,750 Speaker 2: cool antique truck that's going to drive around town. It's 412 00:22:44,770 --> 00:22:48,220 Speaker 2: going to cost $ 100, 000, but it'll give me great advertising. Well, 413 00:22:48,260 --> 00:22:50,540 Speaker 2: you start going through the numbers and everything. How important 414 00:22:50,600 --> 00:22:54,580 Speaker 2: is that really? That's maybe something you do down the road. 415 00:22:55,119 --> 00:22:57,840 Speaker 2: So you get down to the nuts and bolts. What 416 00:22:57,859 --> 00:22:59,859 Speaker 2: do you need to open? What do you need to operate? 417 00:22:59,920 --> 00:23:02,179 Speaker 2: What do you need to keep the doors open? That's it. 418 00:23:02,570 --> 00:23:05,540 Speaker 2: And you, but you got to know it. And, and 419 00:23:05,970 --> 00:23:09,859 Speaker 2: it's that, that first and foremost, that's the most important 420 00:23:09,920 --> 00:23:10,460 Speaker 2: thing is know what. 421 00:23:10,400 --> 00:23:14,780 Speaker 1: You're talking about. And that business plan that you, that 422 00:23:14,820 --> 00:23:17,139 Speaker 1: they tend to forget. Cause I'm going to keep coming 423 00:23:17,160 --> 00:23:20,500 Speaker 1: back to that, Greg. My big takeaway is that business plan, 424 00:23:20,540 --> 00:23:23,399 Speaker 1: because I kid you not, I opened my comedy club 425 00:23:23,480 --> 00:23:26,939 Speaker 1: in 1992. I did not have a business plan. I 426 00:23:27,700 --> 00:23:30,619 Speaker 1: counted people who came through that door and, I knew 427 00:23:30,660 --> 00:23:32,200 Speaker 1: how to, you know, I had my budget, you know, 428 00:23:32,290 --> 00:23:36,970 Speaker 1: fly a comedian in, charge $ 10, advertisement for the radio stations, 429 00:23:37,450 --> 00:23:40,250 Speaker 1: but who I was going to have working that weekend. 430 00:23:40,670 --> 00:23:42,929 Speaker 1: But that's not a business plan because I was just 431 00:23:43,310 --> 00:23:46,840 Speaker 1: doing weekend to weekend. I wasn't projecting 90 days. I 432 00:23:46,859 --> 00:23:50,439 Speaker 1: wasn't projecting a year, let alone five years. I was 433 00:23:50,480 --> 00:23:54,399 Speaker 1: just going day to day, basically. And that's not a 434 00:23:54,440 --> 00:23:56,980 Speaker 1: business plan. And that's what you're talking about, correct? 435 00:23:57,040 --> 00:24:00,310 Speaker 2: No. That's exactly right. Yeah, I'm a former business owner, too. 436 00:24:00,330 --> 00:24:04,939 Speaker 2: Right out of college, I opened restaurants. And yeah, we 437 00:24:04,980 --> 00:24:07,020 Speaker 2: didn't do it with a business plan. And I really 438 00:24:07,060 --> 00:24:10,020 Speaker 2: wish I had because I spent probably a year undoing 439 00:24:10,119 --> 00:24:13,530 Speaker 2: things that I had done, you know, that I wouldn't 440 00:24:13,550 --> 00:24:17,109 Speaker 2: have done had I really thought it out ahead of time. Yeah. 441 00:24:17,570 --> 00:24:19,669 Speaker 1: I want to ask you about the SBA, you know, 442 00:24:20,230 --> 00:24:23,570 Speaker 1: a small business administration. And in my reading, it says 443 00:24:23,850 --> 00:24:28,070 Speaker 1: the SBA does not lend money. Instead, it provides guarantees 444 00:24:28,130 --> 00:24:31,170 Speaker 1: so lenders are more inclined to lend money to small 445 00:24:31,270 --> 00:24:33,320 Speaker 1: business owners. Please explain that to me. 446 00:24:34,119 --> 00:24:36,380 Speaker 2: Yeah, that's what a lot of people don't realize. The 447 00:24:36,480 --> 00:24:39,860 Speaker 2: SBA does not lend out money. What the SBA does 448 00:24:39,880 --> 00:24:43,520 Speaker 2: is they provide guarantees to lenders. So if I were 449 00:24:44,040 --> 00:24:47,070 Speaker 2: to do a small business loan, let's pick a round 450 00:24:47,119 --> 00:24:49,190 Speaker 2: number like $ 100, 000, they would give me as a lender 451 00:24:49,230 --> 00:24:58,149 Speaker 2: a guarantee that let's say it's a higher amount, like 500,000. 452 00:24:58,150 --> 00:25:00,770 Speaker 2: On 100,000, they would give me a guarantee of 85%. 453 00:25:00,770 --> 00:25:04,729 Speaker 2: On a half million or a million, they would give 454 00:25:04,750 --> 00:25:07,969 Speaker 2: me a guarantee of 75%. So what that does for 455 00:25:07,990 --> 00:25:11,070 Speaker 2: me as a lender, I know that I've got the 456 00:25:11,170 --> 00:25:14,090 Speaker 2: SBA behind me for 75% of the money I'm gonna 457 00:25:14,150 --> 00:25:17,350 Speaker 2: lend out. I'm only on the hook now for 25. 458 00:25:17,350 --> 00:25:21,650 Speaker 2: That lowers my risk to the point where I might 459 00:25:21,690 --> 00:25:24,970 Speaker 2: take a chance on somebody who's starting a business. who's, 460 00:25:25,090 --> 00:25:30,490 Speaker 2: you know, maybe doesn't, you know, SBA loans are usually 461 00:25:30,670 --> 00:25:35,280 Speaker 2: lacking one component that a bank likes to see. And 462 00:25:35,320 --> 00:25:37,340 Speaker 2: it can be a number of different things. Maybe there's 463 00:25:37,720 --> 00:25:41,200 Speaker 2: a collateral shortfall. Maybe they're new, you know, in town. 464 00:25:41,260 --> 00:25:44,290 Speaker 2: Maybe it's, most banks don't even want to talk about 465 00:25:44,330 --> 00:25:50,369 Speaker 2: startup businesses. And so that, that's a big one. So it's, 466 00:25:52,600 --> 00:25:55,460 Speaker 2: The SBA will allow us, it gives us just that 467 00:25:55,560 --> 00:25:57,680 Speaker 2: comfort level to be able to take that leap. 468 00:25:58,140 --> 00:26:01,280 Speaker 1: Okay, let me just ask you this, Craig. Okay, SBA, 469 00:26:01,520 --> 00:26:03,739 Speaker 1: because I always hear them talking about loans, especially when 470 00:26:03,790 --> 00:26:05,750 Speaker 1: COVID happened. They were talking about these different types of 471 00:26:05,790 --> 00:26:09,210 Speaker 1: loans and these interest rates tied to the loans. Is 472 00:26:09,230 --> 00:26:10,750 Speaker 1: that different than what we're talking about now? 473 00:26:10,790 --> 00:26:17,070 Speaker 2: Yeah, completely different. The PPP loan programs are over. All 474 00:26:17,109 --> 00:26:19,940 Speaker 2: that money has been allotted and everything else. And as 475 00:26:19,960 --> 00:26:21,800 Speaker 2: a matter of fact, that's one thing that's really changed 476 00:26:21,880 --> 00:26:24,000 Speaker 2: things quite a bit is we get a lot of 477 00:26:24,040 --> 00:26:27,000 Speaker 2: people that come on our website thinking it's free money. 478 00:26:27,780 --> 00:26:30,020 Speaker 2: And they come on there and then we'll give them 479 00:26:30,040 --> 00:26:32,830 Speaker 2: a call and say, this is a loan. They're like, oh, 480 00:26:32,869 --> 00:26:35,950 Speaker 2: I have to pay it back? Yeah. 481 00:26:36,609 --> 00:26:39,090 Speaker 1: Did you hear that, my listeners? You have to pay 482 00:26:39,130 --> 00:26:40,949 Speaker 1: this back. Why would they have that? Why would they 483 00:26:40,970 --> 00:26:42,610 Speaker 1: think that? 484 00:26:42,650 --> 00:26:46,419 Speaker 2: Because the PPP loans were forgiven, most of them. You 485 00:26:46,460 --> 00:26:50,020 Speaker 2: could apply to have those forgiven. And so people just thought, oh, yeah, 486 00:26:50,080 --> 00:26:53,740 Speaker 2: that's still going on. It's not. No, the programs we're 487 00:26:53,780 --> 00:26:58,070 Speaker 2: talking about primarily are the 7A program and the 504 program. 488 00:26:58,109 --> 00:27:04,889 Speaker 2: Those are specifically for small businesses, owner-occupied businesses. So if 489 00:27:04,930 --> 00:27:09,050 Speaker 2: you're looking to build a residential neighborhood, this is not 490 00:27:09,070 --> 00:27:12,060 Speaker 2: for you. If you're going to buy a building for 491 00:27:12,100 --> 00:27:15,619 Speaker 2: your plumbing company or whatever, this is where you want 492 00:27:15,640 --> 00:27:15,800 Speaker 2: to go. 493 00:27:16,600 --> 00:27:19,159 Speaker 1: Right, right, right. You know, the thing about it is 494 00:27:19,200 --> 00:27:21,440 Speaker 1: that we're not talking about PPP. 495 00:27:21,460 --> 00:27:21,640 Speaker 2: Right. 496 00:27:23,119 --> 00:27:27,250 Speaker 1: SBA, you're saying that they do not lend money. 497 00:27:28,310 --> 00:27:31,230 Speaker 2: In this sense. PPP they did, and for disasters they 498 00:27:31,270 --> 00:27:32,210 Speaker 2: lend out some money. 499 00:27:32,369 --> 00:27:32,609 Speaker 1: Right. 500 00:27:32,630 --> 00:27:34,690 Speaker 2: But these two programs, they do not lend money. 501 00:27:35,590 --> 00:27:38,240 Speaker 1: So what does SBA do? You're saying that they are back? 502 00:27:38,260 --> 00:27:39,300 Speaker 2: They provide a guarantee. 503 00:27:39,820 --> 00:27:43,220 Speaker 1: Okay, that's what I'm confused. Okay, so you go to SBA, 504 00:27:43,760 --> 00:27:46,080 Speaker 1: and what's that conversation that you're going to have with 505 00:27:46,119 --> 00:27:49,980 Speaker 1: them so they can go to you and get the money. 506 00:27:50,380 --> 00:27:50,580 Speaker 3: Okay. 507 00:27:51,119 --> 00:27:56,800 Speaker 2: The borrower will never talk to SBA. They'll come to us. Okay. 508 00:27:57,460 --> 00:28:00,940 Speaker 2: The borrower doesn't ever interact with SBA. The SBA deals 509 00:28:01,070 --> 00:28:04,010 Speaker 2: strictly with the banks. Okay. And if you contact the SBA, 510 00:28:04,590 --> 00:28:06,050 Speaker 2: all they'll do is give you a list of banks 511 00:28:06,290 --> 00:28:08,530 Speaker 2: that do SBA loans because you have to be an 512 00:28:08,550 --> 00:28:09,970 Speaker 2: approved lender with SBA. 513 00:28:10,150 --> 00:28:12,050 Speaker 1: Okay. 514 00:28:12,090 --> 00:28:15,790 Speaker 2: So you come to us. We deal with the SBA and- 515 00:28:16,410 --> 00:28:20,419 Speaker 2: Arkansas Capital is what's called a preferred lender. So we 516 00:28:20,460 --> 00:28:22,540 Speaker 2: don't even go through SBA underwriting. Now, a lot of 517 00:28:22,600 --> 00:28:25,620 Speaker 2: banks have to go through SBA underwriting, and that adds 518 00:28:25,740 --> 00:28:29,200 Speaker 2: time and a lot of other things to the process. 519 00:28:29,619 --> 00:28:31,679 Speaker 2: But we don't even have to do that. SBA trusts us. 520 00:28:31,720 --> 00:28:34,920 Speaker 2: They know we've been around. So we do our own underwriting. 521 00:28:35,640 --> 00:28:39,969 Speaker 2: And when we close the loan, there's certain documentation that 522 00:28:40,010 --> 00:28:43,710 Speaker 2: we send to SBA, and they provide us with a guarantee. 523 00:28:44,210 --> 00:28:47,140 Speaker 2: So if you didn't pay your loan back and you 524 00:28:47,220 --> 00:28:52,100 Speaker 2: still owed me after we liquidate everything and everything's all 525 00:28:52,120 --> 00:28:57,120 Speaker 2: done and there's still, say, $ 100, 000 that's still owed. The 526 00:28:57,240 --> 00:29:01,700 Speaker 2: SBA would pay us $ 75, 000 of that. We would be 527 00:29:01,800 --> 00:29:05,240 Speaker 2: out $ 25, 000. And then the SBA would go and collect 528 00:29:05,320 --> 00:29:08,460 Speaker 2: on that $ 100, 000. It would be up to them from 529 00:29:08,520 --> 00:29:11,940 Speaker 2: that point on. And they would give it to Treasury. 530 00:29:11,980 --> 00:29:14,670 Speaker 2: And that's what I was talking about earlier. And Treasury 531 00:29:14,690 --> 00:29:16,250 Speaker 2: will follow you around for the rest of your life. 532 00:29:17,810 --> 00:29:20,510 Speaker 2: It's really important that you want this loan. 533 00:29:22,800 --> 00:29:24,900 Speaker 1: You dropped a nugget on me with the business plan. 534 00:29:25,220 --> 00:29:28,940 Speaker 1: Even though I know that's important to hear come out 535 00:29:29,000 --> 00:29:31,640 Speaker 1: of your mouth and this is what you do, financial lending. 536 00:29:31,660 --> 00:29:33,930 Speaker 1: Because I had a conversation with a client of mine 537 00:29:33,950 --> 00:29:37,770 Speaker 1: today talking about getting a line of credit. And I 538 00:29:37,870 --> 00:29:39,950 Speaker 1: talked about a business plan, but I didn't say the words. 539 00:29:40,390 --> 00:29:44,200 Speaker 1: business plan. And I think that that has to become 540 00:29:44,220 --> 00:29:47,320 Speaker 1: a normal part of my vernacular so they can understand 541 00:29:47,360 --> 00:29:50,360 Speaker 1: the role that when you start planning. Because I always 542 00:29:50,380 --> 00:29:52,780 Speaker 1: tell people, you know, I always have at least six 543 00:29:52,820 --> 00:29:55,180 Speaker 1: months of income in your bank just in case something 544 00:29:55,580 --> 00:29:59,290 Speaker 1: goes wrong. Certain terms you say. But until you say 545 00:29:59,310 --> 00:30:02,630 Speaker 1: the right turn, the right buzzwords, it doesn't win. And 546 00:30:02,950 --> 00:30:06,070 Speaker 1: more importantly, winning with what you're trying to do. Again, 547 00:30:06,110 --> 00:30:07,890 Speaker 1: thank you, Craig, for coming to my show, Money Making 548 00:30:07,930 --> 00:30:11,980 Speaker 1: Conversation Masterclass. Great interview, man. Really, really great interview. And 549 00:30:12,020 --> 00:30:14,040 Speaker 1: we'll be talking again. If we can, like, you know, 550 00:30:14,400 --> 00:30:15,580 Speaker 1: twice a year just talk to you. 551 00:30:15,600 --> 00:30:16,420 Speaker 2: Oh, I'd love that. 552 00:30:16,760 --> 00:30:20,140 Speaker 1: I think that it's important. Things happen seasonal, you know. 553 00:30:20,160 --> 00:30:22,780 Speaker 1: And what we're talking about now is different from what 554 00:30:22,800 --> 00:30:25,530 Speaker 1: we were talking about in the spring because tax season. 555 00:30:25,550 --> 00:30:25,640 Speaker 2: Yep. 556 00:30:26,360 --> 00:30:29,100 Speaker 1: Employment types and all those things. So again, thank you 557 00:30:29,120 --> 00:30:30,660 Speaker 1: for coming on Money Making Conversations, Craig. 558 00:30:30,680 --> 00:30:31,060 Speaker 2: Thank you. 559 00:30:31,560 --> 00:30:34,700 Speaker 1: This has been another edition of Money Making Conversations Masterclass 560 00:30:34,860 --> 00:30:37,960 Speaker 1: hosted by me, Rashawn McDonald. Thank you to our guests 561 00:30:38,030 --> 00:30:41,469 Speaker 1: on the show today and thank you, our listening audience. Now, 562 00:30:41,510 --> 00:30:43,390 Speaker 1: if you want to listen to any episode or want 563 00:30:43,410 --> 00:30:47,650 Speaker 1: to be a guest on the show, visit MoneyMakingConversations.com. Our 564 00:30:47,690 --> 00:30:51,260 Speaker 1: social media handle is Money Making Conversations. Join us next 565 00:30:51,300 --> 00:30:54,540 Speaker 1: week and remember to always lead with your gifts. Keep winning.