#311 - Let’s Talk About Money: FinTech, Cashflow, & Funding Your Amazon Business

#311 - Let’s Talk About Money: FinTech, Cashflow, & Funding Your Amazon Business Speaker 1: Welcome to episode 311 of the AM-PM Podcast. I just have one quick question for you. Do you like money? Do you need money right now for your e-com business? Maybe to buy some inventory, to get ready for the fourth quarter or for some other promotion or to expand into other marketplaces? Well, today's episode with Alexandra Ramirez from SellersFunding is gonna be all about money. You're gonna learn a lot of stuff that you need to know when it comes to financing your business. Enjoy. Unknown Speaker: Welcome to the AM-PM Podcast. Welcome to the AM-PM Podcast, where we explore opportunities in e-commerce. We dream big and we discover what's working right now. Plus, this is the podcast where money never sleeps. Working around the clock in the AM and the PM. Are you ready for today's episode? I said, are you ready? Let's do this. Let's do this. Here's your host, Kevin King. Speaker 1: Ale Ramirez, how are you doing? It's so great to have you here on the AM-PM Podcast. Welcome. Speaker 2: Thank you, thank you. It's great to be here and very happy to speak to you again. We were just together at BDSS, so good to see your face again. Speaker 1: I know it seems weird to be talking to you this way. I'm talking to you on a podcast, usually we're hanging out at a bar or hanging out at a party or something like that. Speaker 2: Somewhere in the world, right? Speaker 1: Somewhere in the world at some event because in case those of you that don't know, she works for SellersFunding, which is one of the biggest financial, how would you describe, one of the biggest financial. Speaker 2: Financial technology, I would say. FinTech. Speaker 1: One of the biggest FinTech companies in the space that specializes in helping e-commerce sellers of all kinds, but even more niched down into the Amazon stuff. So what is your exact role? What is your title there? What is your role? Speaker 2: So I actually am transitioning as of this week from Director of Sales to Director of Business Development. So I'm going to be working more with our partnerships team, partnerships within the industry, other service providers, and then our sales team will be handling our sellers and actually getting them funded as quick as we can. Speaker 1: So how did you, do you have a background in finance or how did you end up in this position, in this job? Or were you doing e-commerce before? Or did you just answer an ad on LinkedIn or how did you get into seller funding? Speaker 2: I was actually at a FinTech company for about six years. It wasn't in the funding space, it was in the lease to own space. Still similar in the people that we were serving, but very different offerings. So I loved every minute of it there. It really jumpstarted my career in the financial world. The pandemic hit and one of our biggest clients was Sears. So we were already having some trouble with the biggest client that we had, you know, them doing their bankruptcy and everything. And unfortunately, it was part of a very large layoff right in the beginning of the pandemic. And SellersFunding interviewed me probably four weeks after I got laid off and six weeks later I had a job with them. So it was a really quick start to the e-com world. I was already starting to work with some e-commerce companies in my last company. We were trying to move out of the brick and mortar side and move into e-commerce. So kind of dipped my toes but didn't really work as much with e-commerce until I got to SellersFunding and it's been two years of an incredible learning experience. Speaker 1: I know this is a big problem. A lot of sellers, they come to me and they're like, how much money do I need to start my business? And I say, oh, it just depends. Well, I got $3,000. Can I start? Yeah, you could start with $3,000, but you're not going to be able to do much. You're going to have to niche down. And if you just need to make a little extra beer money for the weekend, $3,000 might make you that business. And then there's other people like, well, I got $20,000, or I got $50,000, or I got $100,000. I'm like, you have a better chance at actually getting a good head start and building a brand. And then you have people that always say, who here started with $1,000? And someone in the room that's doing like $10 million right now on Amazon raises their hand. Yeah, like, okay, you might have started with $1,000 on your credit card, but I'm telling you two weeks or a month later, your uncle was giving you some money or you're doing something else. There's some I call BS on on that that growing from 1000 to 10,000 never taken a dime. Speaker 2: It's not scalable. Speaker 1: It doesn't happen. There's more to the story. And it sounds good that someone started with a thousand bucks and grew it to a $10 million business, but there's no way. I'm not going to say it's never going to happen. Someone may have just gotten lucky and their supplier said, I'll back you on everything and you don't have to pay a dime or something crazy like that. But it's extremely rare. You've got to go out and you get money. And cash flow kills most business, not just Amazon or e-commerce businesses, but It's what's the death of most businesses, especially when it comes to e-com. I mean, if you're successful in this, you're robbing Peter to pay Paul. I mean, there's a lot of people that are doing $10 million on Amazon. They don't have two nickels to rub together because they're constantly, they make their money when they sell the business. Or if they ever get a chance to come up for air. And so you're always looking for money. And before there was a sellers funding, there was a company, I think it was Onilio or something like that. There's a fellow that's that started it. He's a good guy. He started this company. It was a strange name back in like 2016. And he was like, I'm gonna He was a seller and he saw this problem and he's like, I'm going to start this little company. And he got some venture capital, like a few million bucks behind him, set up this website. People would go to apply on this website that were Amazon sellers. They would, they would tie into the Amazon account, do some little checking, but it wasn't as thorough as it should be. And they would go up to like 50 grand or a hundred grand. I think he ended up doing about 30 loans or so. And I think half of them defaulted and cause they didn't do their homework up front. Uh, and it ended up closing that thing down. But that was one of the first. Before that, I remember in 2015, I was having to like rob Peter to pay Paul. I was like maxing credit cards. I was going to my friends saying, hey, would you let me use your credit card and I'll pay you a little fee. I was using people like on deck and blue vine and all these other like place anybody that would give me money. I was stacking loans because I was my products were selling well. I started with a couple hundred grand to start this business five brands. So I wasn't starting cheap and I had a business partner that was putting in some money and I put in a bunch of mine, but we still we were growing so quick that we needed money and The banks just laughed at you. They're like, Amazon, I don't get this. And then I ended up having to go down a route where I got, I call them mafia loans. They're almost like payday advance loans. They're called Merchant Cash Advance or MCA. And there's a whole group of people, mostly in New York and a few in Florida because of the laws of Florida and New York are friendly to these guys, that will come out and they couch it as a loan, but it's not a loan. It's technically not a loan. They will give you the money in 24 hours. So I needed at one point, I think I may have told this story to you. You might have heard it before, but I was selling Apple charging docks and this is Christmas 2015 and I developed this Apple charging dock from scratch. I custom made this thing. I had the molds made. It's like $30,000 in molds. It was a really cool product. I was selling it for $89. It would charge like three different devices at once, hide all the cables. It was nice. It's called Basecamp. And I was selling like 15, $20,000 worth of these a day in December and I was like, I'm not gonna run out. And my factors like we can have the guys go around the clock. We can put these on an airplane. We can get some more of these to you in two weeks, but we need a hundred and a hundred and sixty grand. I'm like, I don't have a hundred and sixty grand and I had nowhere to get that, but a cash advance. So someone, some loan broker told me, Hey, go to this MCA company. They'll give you, you know, they'll give you the 120 grand. They're going to charge you a ridiculous interest rate. You're going to have to pay this back in like six months. We're going to take daily withdrawals out of your bank account for like $1,500 a day or whatever it is for the next six months, starting tomorrow, the day after you get the money. I had to sign a default letter. I had to go and get a default judgment signed and notarized and FedEx it to them before they would wire the money so that way they could take it. If I defaulted, they'd have to sue me. They just take it to the special court in White Plains, New York that was very friendly to these guys. This has all been outlawed now. And they would just turn that over to them and instantly get a judgment, could freeze your Chase bank account, your Wells, any bank account that was in New York. It was extreme. But that was the only choice I had. And I had to stack some of these, like two or three or four of these on top of each other because I just couldn't get the money. There was no sellers funding at that time. And now the beauty is, you know, there was Amazon lending back then, but it was hard to get and it was small. And yeah, they had the data of your business, but they didn't really look into it that much. And then here comes like 2018, 2019 before you started, here comes seller funding. And I remember one of their guys came to a little meetup here in Austin. I was at, we had a little marketing group here in Austin, that 10 or 15 people went to Amazon. It's just general internet marketing type of stuff. We get together and someone came out, I think from New York, actually, instead of Florida at that time. Speaker 2: Yep, our headquarters used to be in New York, our CEO and all of our executives were actually up there and they've all moved down to Florida since. Speaker 1: Yeah, he came and just to me and I'm like, dude, you got you're onto something here. This is desperately needed someone that understands this business and can help these people out. And so that's where sellers funding has come in. And I think it's made a huge difference for a lot of people. As you guys have, I think I saw some number of some crazy number of accounts, at least have applied or gone through you guys like it's in the tens of thousands, right? Speaker 2: Yeah, it's over, I think 75,000 over registrants that are actually in our system using at least one of our products. So not necessarily taking a loan, but we have multiple products in our dashboard. So they're either using our wallet to make payments to our suppliers to receive money, they're applying to a loan just to see how much they can potentially actually go through with. We have also a data analytics tool. So there's just a world of financial tools on our dashboard, not just lending. And, you know, the lending part of it is just, it's a whole world in itself as well, because it's to your to your point with Amazon lending, you know, even nowadays, a lot of people say, Oh, well, I have Amazon lending at this rate, and they still don't go through with it, because it's not the terms that they need. It's not the length of time, or it's not the flexibility. And that's one of the biggest things with sellers funding is that we're able to be very flexible with our sellers by offering either interest only periods or grace periods or offering percentage up front for our revenue advanced product. And we don't take a percentage of sales over time. It's just the fee take is taken up front and that's it. So You know exactly how much you're going to pay and that one allows you to have a grace period. We go to 24 months rather than the 12 month option and you can pay off at any time. So within those are just a few of the ways that we can be very flexible with our sellers. That's one of the biggest things that when we ask people like, why did you go with us versus a competitor versus the Amazon loan that you do have available to you? These are the main reasons that they say is the flexibility, the ease, And the quickness because they could get the money pretty much immediately when they needed it to be able to pay $160, for example, to a supplier to make sure they have everything they need for, say, Black Friday or for another Prime Day. Speaker 1: What she said there, don't just dismiss that you can pay off at any time. That's important. You're like, yeah, of course I can. I can pay off at any time. But you got to understand, most people that are doing lending in this environment, they stack the interest at the front. So, you know, if you go to BlueVine and you get $20,000 from BlueVine and you're going to pay that over six months, the first month's payment, you know, if you divide that out, let's call it, you know, just doing rough math, $3,500 a month, that first month's payment, $2,500 of that's interest and $1,000 is towards a note, just by example. You know, that may not be the exact figures, but and then the next month, it's like the same thing. And then in month three, it becomes, you know, it flips. And so you're actually you could pay it off early but you're really still paying a tremendous rate of interest versus sellers funding doesn't do that. Sellers funding is it's it's you can pay it off early and actually it's like paying off your house or something early it actually saves you. That's correct, right? Speaker 2: Yep, as long as you pay it off after 90 days, so our regular working capital or credit limit that has an actual APR, as long as you pay it off after the first 90 days, you actually save on fees because whatever is accrued up to that particular day is what you'll pay. So we're not going to charge you interest of 12 months if you're paying it off at month 5, for example. And there's no prepayment penalty for paying it off as long as it's after the 90-day mark. So that's something that also most of our competitors do not offer. And another way that that helps is it grows your relationship with us too. So let's say you paid off at 12 months instead of 24, and you were making payments all on time and things like that, we can, you know, continue growing your line. You don't have to pay early for that to occur, of course, but you know that we can continue to grow your line even before you pay off. Speaker 1: And one of the things I like to is I've personally have used sellers fund as you've helped me out on one of my accounts. And we had a company in 2020 during the pandemic that we started and we came we needed we put in a lot of well into the millions of dollars of our own. But we came into a time where like the investors were like, you know, I'm tapped out right now. I let's get it from somewhere else. And so we came to sellers funding and you guys were very generous in what you gave us. We asked for a certain amount. You're like, no, I think you might need a little bit more. We'll give you this. And then that business, we had all kinds of problems with Amazon. I'm just, it was cranking, like just doing crazy numbers and then just all kinds of problems with the algorithm and stuff. And so we ended up coming back to you and saying, hey, you know, this original deal, I forget what we had, a six month maybe or eight month or something. We need to rework this. You guys, this paying this much every two weeks or whatever it was, it's too much for us. And so you're like, no problem. And y'all just shifted it and worked with us. You know, a bank or somebody else, most people wouldn't have done that. This is the deal, stick by the deal. If you default, we're coming after you. You guys are like, no, we'll work with you. And then we had to come back to you one more time when we actually closed that company down. And, you know, there is in most cases, there's a personal guarantee that usually, you know, small businesses or even in corporations, usually at this level, there's oftentimes a personal guarantee by someone. And so when we closed this business down, I was a personal guarantee because my partners were not in the US. And so you guys work with me again, like, hey, I need to make some changes here and the way this is done, because I'm going to be paying this myself. And you're like, no problem. And you work with me. And that's unheard of a lot of in the FinTech business. And you work with you're dealing with humans here, not with just some algorithm or machine like you might be with Amazon. Speaker 2: Yep. And one of the really important things to mention, very similar to your experience is that, you know, in that case, I was your account manager, and we have an entire team of account managers and sales staff that are just unbelievable. They each have a dedicated WhatsApp for their clients. So our clients actually reach out to them via phone, email or WhatsApp at all times. And You know, they can let them know we're having issues with a shipment or my Amazon store just got shut down. It should be reinstated within 48 hours or something of that nature. So we're consistently communicating with our clients and they can let us know if there's going to be an issue or an error so we can, you know, communicate with our team and see what we can do at that point within reason, of course. But just that communication is the huge part because you can let a person know rather than a call center going through Multiple people until you get to the right person, you just reach out to your person and say, this is what's going on, what can we do? Or this is what's going on, I need more money, you know, it can be any reason that you want to reach out to your account manager. So it's that personalized touch that, you know, if you even go on our Trustpilot reviews, the amount of reviews that mention an actual account manager and Our reviews are actually not sent by our sales team. That's something that our operations team sends when they're sending you the money and just ask, you know, how was your experience? We genuinely want to know how was your experience with us so we can improve. And when you look through those reviews, you see just name after name after name, like my account manager was there every step of the way, they handheld me. And that, you know, is the pride portion of it, that they're not dealing with thousands of phone numbers and back and forth. It's just that personalized touch is unbelievable. Speaker 1: So a lot of people actually come to me and they say, yeah, I've heard of SellersFunding. And I say, well, have you reached out to them? You're trying to get some money for your inventory. And they're like, no. Their rates are too high. I'm just going to try to get an SBA loan or I'm going to try to find my rich uncle, see if I can find his phone number and see what he's got or something like that. And so what are some misconceptions that people might have when it comes to like a seller's funding? Is it loan shark loaning or is it just crazy interest rates? Why should someone actually take the time to look into you guys? Speaker 2: So one of the first things is that it takes five minutes to apply and there is zero commitment whatsoever. So when you go through our dashboard, it just asks for very basic information. It's your personal information, your business information, and then a connectivity to whatever marketplace, because we have API, direct API connection with Amazon, Shopify, eBay, and pretty much all the major marketplaces. It takes five minutes and it can take us between one to three days to send you an offer. If it's something around, we're thinking let's say $100,000 or less, we can send you that pretty much within hours of you applying. And it's just there for you to see, for you to observe, for you to play with on the dashboard. And when I say play with is because you have all the power, all the flexibility. We have sliders on there that allows you to choose what the length of time you'd like to use it for, if you'd like an interest only period, and you get to see how that your schedule will change, what the payments are gonna look like. So whenever you apply five minutes noncommittal, that's all it takes. If you're looking for a larger amount, you actually get to be on a call not only with a salesperson, but you get to be on a call with a salesperson and a credit and underwriting team. So you get to sit there with your actual financials. And walk the underwriting team through your financials and why you would, you know, think you need, let's say a million dollars. And this is what I would like to utilize it in and as you can see in the financials and you can go through it and it usually results in a much better rate and a much higher amount because they get to see also the side of the business behind the numbers because the numbers don't always tell the full story. So that's part of, again, the very Highly customizable and flexible things that we can offer. It's not a machine spinning out a cookie cutter offer. We have actual underwriters looking at every aspect of your business, at your cash flow, and we don't want to put anybody in a chokehold with our offer. We want to be able to grow with them. So we want to be able to extend an amount that we know will help them grow. And that we can grow with them so that we can, a few months down the line, give them a higher amount so they can continue reinvesting. It's not a loan shark to try to just give them as much money as we can, get what we can and then hope for the best, right? That's really not our model and it's not what we're achieving to be. So that's really the main thing that I always say. And another thing is sometimes people do have SBA loans that are 30 years at a very, very low percentage. But they still need more. They need a shorter term and they need something that's flexible and they need something that's for now for appeal, for inventory, things of that nature. We can be in addition too. So just because you have something else doesn't mean that you can't work with SellersFunding. So those are just all the things that we're going to be looking at. And again, you know, we can get on a call and make it very, very customizable to your business. Speaker 1: A lot of people don't realize just because you have a lot of money doesn't mean you don't need to take a loan. I mean, some people always look at the things like, why don't I just give equity? Why would I pay all this interest and take a million dollar loan and pay, I don't know, 10% interest to say, pay $100,000 in interest. Why not just give equity to somebody that's going to put in a million bucks and give them... How would you argue that loans oftentimes are actually better than taking on partners or giving away equity? Speaker 2: So, I think there's benefits to both. We obviously work mainly with debt. So, we do non-dilutive capital. Equity has less risk and profitability can be sometimes better or if you're not very profitable, then that's the way to go, to go with equity. However, with debt, you have more control. So, you can choose Who you want to work with when you want to work with them. You don't have to share profits with anyone. You don't have to worry about, you know, potential percentages to be taking out and it can be tax deductible. So there's definitely benefits to both. But I think depending on where your business is now, If you know you need money, I mean it's specifically for inventory or growing your business or let's say advertising and PPC or marketing, that is the way to go because there's a lot of tax benefits and other benefits as well to it. And most of our competitors actually force you to use it for inventory and at SellersFunding we don't force you to use it for anything in particular. It can be for anything that has to do with the growth of the business. Speaker 1: So you're not actually paying, when I get a loan from you, you're not actually paying it to the supplier. I mean, you can if we use that aspect of your business, but you're just like, once you're approved here for a hundred grand, let's say I get approved, it's the next day or two days later, whatever, it's wired or ACH'd into my account. And then if I choose to use that to go buy a Lamborghini, so be it, I'm still on the hook. But other places, they're like, no, okay, we'll give you the money, but we're going to pay your factory directly and give us all their contact. But y'all don't do that, right? Speaker 2: Correct. We do have programs that are for wholesalers or for somebody that's on Vendor Central on Amazon that is invoice factoring so that you can get paid quicker. And we've just recently started, we've done a few clients where we've done PO financing. However, our main thing is really just Credit limits where we will send you into your business bank account the amount that we've offered you that you've accepted and then you go ahead and use what you need. So you use it for your PPC, your marketing, your maybe a new product that you're going to launch under the same entity that we've underwritten. So it doesn't even have to be for the product that you already have on there. It can be for the launch of a new product. So really the sky's the limit whenever you actually take a loan for us. Speaker 1: So let's say I have a dog treat and I'm doing really well on Amazon and Walmart selling this dog treat. And I've got Chewy.com that just came to me and said, hey, we would like to buy a bunch of your dog treats, but we need 90 day terms. And my factory says I got to pay 50% up front and 50% on shipment or something like that. I can't afford to cash flow this 90 day term. I've already got a couple other loans out, maybe some other places. Could I come to you and because Chewy is a big company that's owned by PetSmart or whatever it is, could I come to you and factor that and so factor that whole PO and so just get a specific loan just for that because and basically for people that don't know what factoring is maybe we can explain that as well but is that a possibility with SellersFunding? Speaker 2: Yeah, so right now we only do that for US-based businesses and selling in USD, so that's something that we're hoping to be able to expand. But we have been able to do that for a few sellers and it's working magnificently because a lot of these 90-day or 120-day terms, sometimes it's just not Feasible for the seller so we can basically front that money and then collect it over time. So it's something that really has been very helpful and eye-opening for our sellers to say we can even get a loan and invoice factoring. And in addition to that, like one of our most recent case studies is we had somebody that had to get a payment out to Sam's Club. And they just did not have the amount of money. They wouldn't have lost the deal with Sam's and we were able to help them get that deal. And their item is actually in Sam's Clubs right now for over the summer. So it was very, very cool to see it, you know, actually happen in real person when you see the product in the picture on Sam's Club shelves. Speaker 1: And you're factoring it's a little different than common invoice factoring is if I have a PO from Chewy, that's payable in 90 days, I basically assign those rights over to the factoring company and then they collect from Chewy. But in your case, it doesn't work that way. It's you would just loan the value of that PO for that. And I would be paying that back over time over those 90 days, or I would have to pay a small amounts during the 90 days, or I could wait till I get paid from them to pay you plus your fee or how would that work? Speaker 2: So there's a few different ways that we can approach it. Again, it goes into our flexibility. We would want to make sure that we have all the information for the person that's going to be factoring and your business as well. So we need to ensure that everything is on the same page. We would have those invoices to know how much we had to pay out. And then we would structure it with different terms. So it's going to depend also if you have a loan with us, and you do invoice factoring, that's something that we can even work in tandem and we can make it even a better offer. So all the terms of invoice factoring are Highly customizable because each type of business is very different and depending on what type of factory they're working with. But that's one of the things that we would actually, again, get on the phone with our underwriters and they would explain how if we were to do two items versus or two of our products versus one of our products, how we could structure each one. Speaker 1: And so a lot of people probably don't realize some of the biggest aggregators in this space have actually used sellers funding to finance themselves and some of their inventory. Is that correct? Speaker 2: Yeah, we have worked with some aggregators, some big name aggregators in the space that, you know, we've been able to fund them for the purchase of other businesses. So that's something that we've, we're very proud to work with, you know, every type of service provider and seller in the space that we can. Speaker 1: And what is the range of a loan? What's the range? Like is it from a thousand dollars to a million or is it just it's wide open just depends on your financials or what's the general range? Speaker 2: So I would say our starting range is about twenty five thousand dollars or pounds because we can lend in pounds as well and we go all the way up to five million dollars. We've had a couple exceptions here and there where we can go a little bit higher but our current range is between twenty five thousand and five million pounds or dollars. And it's not limited into only U.S. businesses. So we can work with U.S.-based businesses, Canadian-based businesses and U.K. businesses. So those are the three countries that right now it doesn't matter where you live in the world as long as your business is in one of those three countries. Speaker 1: So I can be a German that has a business that I incorporated as LLC in Wyoming and get a sellers funding loan, but I'm living in Germany. Speaker 2: Absolutely. One of the most important things to note is that we don't do loans for just starting out businesses. We do have to have at least six months of business history. On any marketplace, so whether it's Amazon, Shopify or eBay, we do require six months for a lending. Speaker 1: That's six months of selling history, so it's not six months from when I turned on the account, it's six months of like regular sales. So from the first day you launched your product and started making, even if it's $10 a day or whatever and built up, it's from that point forward six months, correct? Speaker 2: Yeah, we do require those six months of sales and then for the most recent three months, you have to be selling at least $20,000 in net sales for us to just at least... Speaker 1: Net or gross? Speaker 2: Net. Net sales. Speaker 1: So after Amazon, what is defined as net? After Amazon fees? What's being deposited to your account by Amazon? Speaker 2: The actual amount transferred, correct. Speaker 1: Okay, so the actual deposits need to be at least $20,000 per month. Speaker 2: Now, this is for the loan only. We also have the cash flow solution. So the daily advance that allows us to advance you every single day based on sales from yesterday. So we offer that for Amazon and Walmart exclusively. And basically, Amazon, we all know holds funds for multiple reasons, and sometimes just unexplainable reasons. So if you're, let's say expanding into another currency, you know, you're doing really well in the US want to expand into the UK and the UK sales still aren't kind of like, You know, picking up and you need extra cash flow, the daily advance can be a phenomenal solution. We only require three months of sales history there of about $5,000 in net sales. And we can automatically start that for you and basically advance you between 70, 90% of yesterday's sales. So every single day, you'll know that you're going to have money deposited into what we call our digital wallet. So it's like a digital way to receive different types of currencies for free. Speaker 1: So at what point do I have to start like pricking myself in blood and sticking it on the paper and sign over my firstborn child and everything? What amount does that start kicking in? Speaker 2: So to actually move forward with as you mean or just like when... Speaker 1: At $100,000? At $500,000? When does it start getting a little bit more complicated? Speaker 2: So, I would say anything under $100,000 is extremely quick because we have everything we need in the system without any additional documentation other than proof of address and proof of ID, very basic information of the business. Anything over around $500,000 and above, just because the nature of the amount, we do require a little more information. But it's still not complicated. So it still can take just a few days for an offer as long as you have everything in place. And when I say everything in place is having financials is extremely important and not just for sellers funding, but as an entrepreneur, everybody should have their financials. And if it's not you handling them, you know, outsource it. That's OK. We know that, you know, you not all entrepreneurs can be phenomenal at every part of the business. So we have a lot of people that outsource it and As long as you can submit financials for the previous year and for whatever you have up to this year, that's all we're going to need. So we have almost everyone that we work with typically has their financials completed and ready. We do on occasion come across some sellers that don't have it until right when they need to submit it, but that's one of the most essential things and we can get an offer within a few days. Speaker 1: What about that? Is there a high default rate in this or is your algorithm so good that it just weeds out? But you're always going to have somebody that just gets in. Gets their pants in a wad, you know, maybe it's not their fault, you know, it's supply chain issue or Amazon issue or they just they had showed some good numbers, but they're really not that good at the numbers or bit off more than they can chew. So is this default rates pretty low or you just work with people to avoid that? Or have you had to go out and sue anybody to try to get their inventory or anything like that? Speaker 2: Yeah, we actually have a default rate, I want to say it's about two and a half percent or less. And I think it's a mix of everything. We have an unbelievable proprietary algorithm, which is still fact checked, basically, with our underwriters, because again, we don't just let that send a proposal, we have a lot of extra hands in it, because sometimes you're also selling on Something that we don't have API connection with and we're looking at financials or at your business bank statements and things of that nature. It's also a mix of that, the personal touch that we get to understand and even meet the sellers in some of these businesses and sit down and say, all right, explain to me. What exactly are you looking for? How much? And let me see how I can help you. But we also don't want to overextend you. So having that conversation and understanding that we're not here to just like throw out money and hope for the best. Sometimes it's just really all the sellers need, because they're like, I need this amount, I need this amount, but they're just not eligible, their cash flow will not support it. So we want to be able to help them as much as we can. But we also don't want to, again, put them in a chokehold and have them bite more, more they can chew. Speaker 1: I mean, and lending is, it can, depending on the rate, I mean, what's, I know it's so many variables about length of time and how much, but just as a, off the cuff, is 10% a fair number? Just assume if I'm just, before I contact you, I'm doing some math, I'm like, okay, my product cost me $5, and then with landing cost, it's $8, I'm selling it for 20, Amazon fees are four bucks, My A cost is 10%, so I have about a, I don't know, a $3 profit margin. I'm just making these up. If I go and I borrow $100,000 and I gotta pay, you know, to buy this inventory that's gonna, and I gotta pay back, let's say, a 10% interest rate, that's gonna cost me another 10 grand and this is, I don't know, these are, it's another dollar a unit, so now my profit's down to a dollar or $2 a unit. If I'm just running some rough math like that before I actually go through the, What should I expect a loan to maybe be in the ballpark of cost to me? Speaker 2: So for our APR product, it starts at about 12% and can go all the way up to 16, 17%. I would say our average right now is about 15 to 16% of APR. However, remembering that we offer up to six months of interest only. So let's say you're gearing up for a quarter for you need to make a humongous payout payment to the inventory. You don't have that inventory yet. We all know supply chain and logistics, how long things are taking. So we don't want you to take a loan and automatically tomorrow is your first payment. We know a lot of competitors that do that, or maybe next week is going to be your first payment. However, you're taking this loan to be able to add to your inventory, right? So what we've done and this is came up literally from events and talking to sellers is that if we could basically extend that time when they have to actually start making large sums of payments, it would be extremely beneficial because then by then they get the merchandise they're selling and they have the money to pay it back. So we offer between one to six months of interest only periods. So you're only paying that interest. And it makes payments unbelievably manageable. They're very, very small, and you don't have to use all six months. You get to choose. That's part of the flexible options. And then again, you can pay off at any time with no prepayment penalty, and that'll also save you on some interest. So you take it for 24 months at six months interest only, and you decided at 18 months that you wanted to pay off, you can go ahead and do so. Speaker 1: So I could like, just so I can walk people through that are listening, a hypothetical example. If I took a $100,000 loan from SellersFunding to pay for my inventory, or whatever I need to pay for, let's say it's for inventory, I could do a six month only interest payments. My rate may vary, but let's just assume it's a 15% APR. Which means if I kept that loan out for a year, it's roughly, you know, it's with compounding and stuff, it's a little bit different, but it's roughly $15,000. And it's that's a flat interest rate, but it will be around around that roughly $15,000 in interest for the year. So those first six months, I'm going to be paying basically around 1200 bucks a month in interest. Something give or take, something around like $15,000 divided by 12, because I took out a 12-month loan, is somewhere around $1,200, if I'm doing the math in my head right. So I'm paying for those first six months, I'm paying $1,200 every month, or $600 every two weeks, or however it's set up. And so I'm paying six times, I'm paying $7,200. And then hopefully in that time, I've gotten my inventory, and it's only taken three months to get my inventory, hopefully. Maybe there's some delays. But then, and hopefully I've sold through it, if I do my math right, I've sold through it by the end of the six months. So then I just decide, you know, after I make that last interest only payment, you know what, I'm just gonna pay this whole thing off. I'm gonna pay off the whole 100 grand. So the 7200 is gone, that was interest. But now I'm just gonna pay off the main principle, which is somewhere around 100 grand, because I already got paid from Amazon. And so my interest rate really then was not 15%. Because I was able to pay this off sooner, let's say I did in six months, my interest rate was more like 7.2%. So if you think about this in cash flow and do your cash flow correctly, don't be scared by a high interest rate if you have other ways to do this. I guess is what I'm saying. You got to think about the whole big picture, not just look at some number and go, that's too high. My SBA loan is 2%. So there's no way I'm going to do that or something like that. So am I correct in that thought process? Speaker 2: Yeah. And again, those numbers, of course, are, you know, rough numbers, but it's a good representation of understanding that you do have the different options and the different ways to be able to do the same thing. So you're still investing the same amount of money and then just using it in different ways. So as long as it's after three months, there's no repayment penalty and you'll pay less as you describe. And then we have also a revenue advance. So for those seasonal sellers and just For a lot of type of sellers, but I didn't know seasonal comes to mind, they don't like to usually have variable amounts to pay. So with an APR, of course, the amount will be variable. But with revenue advance, we can offer a percentage upfront. So it's just like an upfront fee. And that could be like a fee as little as five or 6% that we just take upfront before we deposit the money. And then you're going to have the exact same payments every two weeks. So you don't have to worry about variable cost or us taking a percentage of your sales over time because we don't do that part either. It's whatever we took up front, that was it. So in that one, you actually already know how much you're paying in a fee and you can schedule accordingly or like the next 12 months or 24 months, you know exactly how much you'll be paying. Speaker 1: So just before we wrap up, Ali, what are some things that you see, some big glaring things that sellers need to pay attention to when it comes to cash flow or to getting money for inventory or to growing their business? If they would just do these three things, their life would be so much easier. Speaker 2: I think having projections is one of the biggest mistakes I see people not having. Even if they're rough numbers and you want to go back every three months and readjust what your projections are going to look like, you need to have a plan. Not only for investing money, but overall, like how the how the moving parts that you currently have, how you think they're going to behave, and not having those projections has been very, very hard on some of the sellers, because they asked for a certain amount, they don't really know why. And that's when we see a lot of these defaults. It's I don't know what happened to it. You know, I don't know where it went. So I think understanding what your projected value and what your projected everything really revenue is going to be is essential. The other thing that is super important is also Having your financials together, which we mentioned, so in addition to having those future projections, knowing what the past has behaved as and not waiting until the moment you run out of inventory. That has to be by far the biggest mistake. That's usually the worst part for not only the startups, but pretty much every business is running out of capital. Right at the wrong time. So you don't want to wait until the absolute moment where you ran out of inventory and say, I need more inventory, but I don't have the money. How do I do now? With us, how we mentioned earlier, if you apply, you get an offer. It's there for you. You get to know what the rate is, how much you got. Let's say you didn't use it for a month or two. You can always go back into the system. You can reach out to your account manager and say, hey, the past two months have been unbelievable. Can you see if you can increase my line because I want to make a draw this week? But it's already there and that can take just a matter of hours rather than waiting until the absolute last minute and then you're basically like turning your wheels over and over again. So biggest mistake we always see is somebody coming to us in a moment of panic. Speaker 1: So it's always easier to get money when you really don't need it right then than when you actually need it. Speaker 2: Absolutely. When you're in a better position, you know, cash flow wise or performance wise, you're going to get a better rate, you're going to get a better offer and everything all around is going to be better. Rather when you're coming and your business is not doing phenomenal, your cash flow is just not there, profitability isn't there, it's going to be very hard to get a rate that you might be envisioning in your mind. Speaker 1: Now SellersFunding is actually an endorsed partner from Helium 10. They're in the partner directory and everything. So if you want to check them out, go into the Helium 10 partner directory and you can actually see that SellersFunding has been vetted by Helium 10 and everything is good to go. Well, hey, I appreciate you taking the time today to explain all this. It's a it's a complicated subject for a lot of people that they don't understand and they don't understand how much this is actually needed as you scale and as you grow. I mean, there's lots of options out there. But I think sellers funding is one of the best as, as you've hopefully learned in this and someone that I hope you would consider if that need arises in your business, because they can really, really help you grow in times when you might not have any other options or might be difficult. Speaker 2: Yeah. And if anybody has any questions, you know, I'd be happy to answer or set up a meeting just to walk you through it and, you know, introduce you to anybody on our sales team. So I'm sure Kevin, you can share that later, but it's Alexandra at SellersFunding.com. A L E X A N D R A at SellersFunding.com. Speaker 1: Awesome. Thanks so much for coming on today. Speaker 2: Awesome. Thank you so much, Kevin. It has been awesome. Speaker 1: Well, I hope you have a better understanding now of what it takes to actually get to funding, to grow your business, to get that inventory you need or to get prepared for the fourth quarter or that big summer that's coming up next year. I am a big proponent of using outside money and outside financing when it makes sense to grow your business. And I think sellers funding is one of the companies you should consider and take a look at when that need arises in your business. And I hope this has given you a much better understanding of that. Now, just before we go, I want to leave you with our golden nugget for this week has to do with money, you know, to turn $100 into $110. It's real work. But to turn $100 million into $110 million is basically inevitable. Remember, wealth comes from capital, not from labor. So once again, to turn $100 into $110 is work. But to turn $100 million into $110 million, it's pretty much inevitable. Wealth comes from capital, not labor. See you again next week. Take care.