#433 – The Money Game: How to Secure Financing Without Sinking Your Amazon Business

#433 - The Money Game: How to Secure Financing Without Sinking Your Amazon Business with Russell Walraven Kevin King: Welcome to episode 433 of the AM-PM Podcast. You know one of my favorite sayings is money never sleeps and that's what we're talking about today, money. I've got Russell Walraven from 8Fig on the show. We're going to talk about everything financing, getting money for your business, some the pros and cons of taking actually lending or advances for your business and everything in between. Enjoy this episode with Russell. 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. Kevin King: Welcome to the AM PM Podcast, Russell Walraven. How are you doing, man? Russell Walraven: I'm doing great. How are you, Kevin? Kevin King: I'm well, as you can probably tell in my voice and you can see me here, I'm fighting a little bit of a cold, but you know, money never sleeps, right? Russell Walraven: That's right. That's right. Well, if it's any consolation, you don't look like it. You look great, man. Kevin King: I appreciate it. Russell Walraven: Yeah. Kevin King: You know, it takes a lot to actually get me down. I think I've missed One day of work or two days where I had to just lay in bed and it'll probably last 30 years. And I went during grade school and high school. I think it's seven years in a row I got a little certificate for perfect attendance. I'm not one of these guys that just lets a little congestion or something take me down. Russell Walraven: I'm the same way. It drives me crazy with my kids. They're feeling a little bad and they want to go and lay on the couch or something. I'm like, dudes, you got to figure this out. You're not always going to feel good. You got to get through it. Kevin King: Exactly. Like I said, money never sleeps. You got to keep going. I think so many people are just wimps. They're just pussy around, you know. They just don't get it, you know. But when you're an entrepreneur, you gotta hustle. Russell Walraven: You do. You do. Always on your toes, always getting things done. Kevin King: Now, I know your specialty is you're working with 8Fig and 8Fig's specialty is money, right? Russell Walraven: That's right. That's right. Well, historically, we've traditionally been only a funding company and we're now still primarily a funding company. We provide working capital to e-commerce sellers, selling on Shopify, Amazon, Walmart, wherever you have it. Up to $4 or $5 million, right? So we can provide quite a bit of funding. But we recently launched some SaaS apps, right? So we're trying to really round out our products to help sellers grow and to help them achieve success that they'd like to achieve. Kevin King: So how long has 8Fig been around? When did they start? Russell Walraven: 8Fig's been around since about 2020. You know, right in the height of the pandemic, we're a company, we're based in Israel. Our founders were supply chain experts. So they did a lot of A lot of other startups, a lot of other technologies around supply chain. And then they realized that in that supply chain, people need money, people need funding, whether they need it for inventory, whether they need it for shipping or marketing or whatever it might be. So they've developed a product that's a little bit different than a lot of the other products out there. That's kind of just in time funding based on those different areas of the supply chain. There's no limitation to how you can use the funds, but most of our customers we see are using it for those supply chain needs. Kevin King: I remember when I first started doing FBA, 2015, I think it was, there was no option for money. I mean, I think Amazon lending was fairly new at the time, but I didn't qualify because I hadn't been selling for a year or whatever the requirement was back then. I started off with about $200,000 between my money and I had a silent investor and I launched five brands. And we grew these things and they were just busting at the seams and I needed more money. And I didn't have the resources to dump much more in and neither did my private investor. So we were out there scraping the barrel trying to find money. And I was having to go at that time to these predatory lenders like On Deck and Blue Vine and some of those guys are charging like crazy freaking rates. Cabbage was another one. And I'm having to go to, I call them mafia loans, go to the Cash Advance guys, MCA guys, Merchant Cash Advance guys that we're charging about 40% interest, but it's really more like pawn shop rates, more like 120% interest because they give you 80 grand. You fill out some forms. If it didn't go over $100,000, you didn't have to provide financials. You give them access to your bank account. They look at, say, yeah, these got regular deposits. They'd say, okay, we'll give you whatever the number was, say 80 grand. Here's a document to sign. Sign this document. It's basically a default judgment. Go get that notarized, FedEx it back to it, and then we'll send you the money. And so they'd send the money the next day. 24 hours, 48 hours later, you'd have 80 grand. But they had a default judgment in their hand that was notarized so that if you missed a payment, they just take that down to a courthouse in White Plains, New York. Because most of these guys are out of New York because the law is there. It's changed and they would just follow that judgment and then go put liens on your bank account and everything else they could do. And out of that 80,000 though, you get it two days later, there'd be a $2,500 origination charge, a $750 set up ACH account charge. There'd be all this that adds up to about 5,000 bucks and then you're making daily payments. It's five days a week. Holidays count too. So if they couldn't hit your account on Labor Day, they're gonna double up on Tuesday after Labor Day. It was just, it was crazy. But I had at one point seven of those stacked. At one point I had 16 different loans. I run my Amazon business up until about 2017 because I just couldn't cash flow it. I was trying to keep it growing. It was booming, doing seven figures on its way to eight. I never missed a payment, but at one point I was paying out, I don't know, eight, $9,000 a day. And payments between all these different things, and it got crazy. So I wish people like 8Fig were around back then, and some of the other options that are out there now, because it just makes life so much easier for sellers. Russell Walraven: Yeah, and I guess, first of all, to respond to that, I'll have to apologize, because I started in kind of the fintech lending space of Cabbage, right, in the early 2010s. Kevin King: Oh, you're the guy. Russell Walraven: You're the guy. So I'll have to take that, you know, brunt from you. But what I will say is even Cabbage and the OnDucks and the Blue Vines and those people at that point in time and to some degree still today, they didn't understand e-commerce, right? They were funding an e-commerce business like they're funding a restaurant or a mom-and-pop shop or whatever else they were funding through their MCA. So they were looking at them the same way. So they were doing essentially checking account funding. They were saying, okay, as you mentioned, the deposits look good, the withdrawals, they're in the black, they're not in the red. Kevin King: That's right. Russell Walraven: That's how they were funding those businesses. And then along came some other folks. 8Fig primarily came along and said, look, we've been in this e-commerce supply chain. We know how this works. So we want to create a product that doesn't only help these sellers grow, but it does something in a way that makes sense for that business, right? It's going to be much more flexible. It's going to let somebody get our product, let somebody go in once they take a funding product and they can change their remittances, change their payments to the structure that they need while they're in that product, right? A product that is always going to be, you know, the same in terms of it's this much money every day, or it's this percentage of your sales every day. If you say, look, I'm going to do a lot of business over the next two, three weeks, let me go in and pay a little bit more. So I pay that down faster and pay a lower cost of capital. Or if they say, you know what, the holidays are coming up. I'm going to take a little bit of a break. My products may not sell that much. They can go in and they can decrease that, that, that remittance. So what I think 8Fig does, We really understand the e-commerce businesses and we want to support them in a way that helps them grow. Kevin King: How does the funding work on 8Fig? There's all these different funding. Some people take a piece, some people it's a fixed amount, fixed payment, some it's a line of credit. If I come to you and I say, Russell, I need a hundred grand. You go through your due diligence and approve me and do whatever you need to do to make sure I'm a fit. But you say, okay, we'll give you up to a hundred grand. Do I then have a hundred grand line of credit that I can pull from or are you wiring a hundred grand straight into my account right away and I'm starting to pay interest back on that? Is the clock starts ticking the next morning or how does that work? Russell Walraven: Yeah, so it's not a line of credit and it's not a traditional loan. It's not a lump sum loan where we're going to disperse it all up front necessarily. And I say necessarily because what's going to happen is we're going to create a plan for you. And based on what you say is your inventory needs from a PO standpoint, when you're gonna need money for marketing that inventory, when it gets there, the shipping or the fulfillment of that inventory, what you're gonna need for that and when you're gonna need that, we'll create a plan that bases that on, okay, so out of that 100 grand, you need 70 grand for inventory, right? So we're gonna give you that upfront. We're gonna have a plan for the disbursements of that payment. And then you say, okay, well, that's gonna get here in two months. You don't want to pay for the marketing cost, right? You're not marketing that inventory yet. So in a couple of months or it could be in the next month, whenever you need it, we're going to give you the $20,000 for marketing that you said you need, right? And it becomes two cycles in the same plan. And then ultimately, as you need to fulfill that, maybe the last $10,000 is for fulfillment. When you need that funding, we'll provide that for you and you pay that back. Kevin King: You have almost like separate little micro loans within a master loan. Russell Walraven: Correct. And I have to say this from a legal standpoint, it's not a loan. We can't say it's a loan. It's funding. We're technically an MCA product. We're buying future receivables. We don't do it in the way that the traditional MCA products work. Kevin King: So I'm not having to do a default judgment in advance, huh? Russell Walraven: That's correct. You don't have to do any of that stuff in advance. It's just we're not a regulated lender. We're not a bank, so we just can't technically call it a loan. So I just want to make sure. Kevin King: Yeah, you're doing it just like the MCA guys do because they're technically not a loan either because Those will go in your credit report. I know this because I ended up purposely defaulting. In 2017, I had a huge wedding that was getting out of hand down in Columbia. I'm since divorced, but it was a good five-year run. And I was juggling all this stuff and I was like, this is just ridiculous. When I look at it on paper, it made sense in the beginning, but I was just, the amount of interest and money I'm paying, I'm like, and it's so predatory. And so I had a, I called up, I found an attorney in New York that do all these laws because 95% of the people were based in New York and some in Florida because of the rules, the state rules. They've since cracked down on a lot of this stuff. Yellow Throne was one of the big MCA companies that was started by One of the guys at that movie Boiler Room or whatever, that scam movie, one of the guys in that was actually, or one of the, that that was based on was actually a guy at Sardar Yellowstone. That's one of the guys I had. So this attorney said, oh, here's what you do. This is not gonna affect your credit at all because these are technically not loans. They're against your future receivables. It's kind of like an IOU in a way. And so they're not gonna affect you. So here's what you do. You just close your bank account. They're gonna freak out. When they're trying to hit these daily withdrawals, go open a bank and a credit union that's like 100 miles away in some little poduck town because what they're going to do is they're going to do a sweep of like every bank within a 50-mile radius of your bank and any bank that has, don't open it in any national bank, a bank that has national branches. So no Chase, no Wells Fargo, no Bank of America, nothing like that because they can just walk into New York and grab it. Go open an account there and move all your stuff. I have a credit card company that will not put your name on the MID. I'm the Merchant I.D. out of Canada, so they can't come after that. And just sit back and get ready to get threatened. And the mafia's coming after you. I'm like, oh. So that's what I did. I closed it down. Two days later, they're freaking out, making all kinds of threats like, oh, there's a $5,000 default fee and this and that and attorney's fees. I ended up basically going through all 16 of them. I paid 14 of them back. Some of them I negotiated. I re-upped and re-upped and I'm like, you've already made all your principal back and more. There's no way I'm going to pay you what you're saying. And then two of them just disappeared. They just never came out. But nothing ever showed up on my credit. Nothing ever showed up anywhere. And one of them got, for about two, three years, was super aggressive. Called me and said, I'm not gonna go dig through your trash. They were doing background checks and making threats and like, oh, they're calling my parents. You know, all kinds of stuff. But they've since gone away. So, yeah, those days, I do not wish on anyone. I'm glad that there's better options now. And don't forget, if you haven't signed up yet, BillionDollarSellers.com is my newsletter. BillionDollarSellers.com, every Monday and Thursday, actionable tactical strategies for Amazon and e-commerce sellers, totally free. The payback period is how long? Russell Walraven: The payback period, if you look at it as an overall growth plan, right, an overall plan, it's going to be anywhere between 6 and 12 months, right? So if you have, you know, 3 or 4 cycles within that, each cycle is going to be around 3 to 4 months on average. And the seller has the flexibility to determine some of that, right? If they wanna pay back more, it's shorter. If they wanna pay back less, it's longer. But I would say for the complete plan, the $100,000 plan that we talked about before, as we're delivering funds as they're needed, that plan's gonna end up being anywhere between six and 12 months, depending on how quickly they wanna pay that back. Kevin King: So if I've got 100 grand that you've approved me for, and I got 70 of it, like in your example, that just got spent on inventory, I got 30 left, I want to launch another product or I need some more. I'm about to apply for another $100,000 loan or do I have to pay down some of that 70 and once I've paid 30 of it back, now I have 30 accessible again to do something else? Does it stay fixed? Russell Walraven: There's no hard and fast rules, right? You can come back to us at any point in time and request additional cycles and additional funds. Now, if you were originally approved for 100 and that's kind of the max that you could have gotten, it might take you a little bit of time to pay some of that off before we will give you an additional amount of funds. But depending on where you are, depending on your business, the growth, if you've taken that $100,000 and your business has taken off, of course, we're going to look at that. We're probably going to provide you some more funds. But I know it's a terrible answer. Nobody wants to hear this answer, but it really does just depend on really the situation. But we do build in flexibility to offer more funds as sellers need it. But it is on the basis It is based on that particular business. We don't put a limit on the inventory. We do file UCCs. One of the things that we can do is... Kevin King: For people that don't know what UCCs are, it's a universal commercial code and you file those with the local government like here in Texas. You file that with the state. It basically shows a priority of who's owed money. Like in my case earlier, when I said I had seven different MCA lenders, each one of those filed MCA basically positions themselves in line. If I go bankrupt or something happens, it's like who was first, who was second, who was third, who was fourth, and so it's who gets priority. I just want to explain that for the audience that may not know what that meant. Russell Walraven: No, no. That was good. Thank you, and I appreciate you doing that. The other thing we can do is we work with the marketplaces. We work with Amazon. We work with Shopify. We're starting to work with PayPal. If someone stops paying us, we can then freeze their store until they pay us back, right? And when I say freeze the store, it's freezing the disbursements to them, right? If they're selling, then those disbursements can then be sent to us as opposed to the store and those types of things. There's also some- You have to be a judge for that though, right? Kevin King: You could put a lien on it Amazon couldn't send you that money unless there's actual judgment. Russell Walraven: Correct. Correct. But the stick in that scenario is, look, Amazon's going to freeze their store. They might not be able to do the business. They might not be able to get listed, those types of things. Unknown Speaker: Yeah. Kevin King: So, like SellerSpy, they took a massive hit. They were loaning money to aggregators. And they took a massive freaking hit and they've almost kind of disappeared. I mean, they're still around, but they're not their show what they used to be. Russell Walraven: They did take a hit with some of those aggregators. They did also win an Amazon partnership, right? So they're embedded in Amazon's platform and they're still there. As well as Uncapped. Uncapped recently joined that platform as well. But Amazon's tough. I mean, Amazon's capping their rates, which is great for the sellers, right? I mean, they want to keep it in line and not be predatory, as you talked about before. But they have a lot of requirements. I mean, Amazon takes a lot of that money. Amazon's looking for a piece of that, right? They want a percentage of the revenue share. They want an upfront cost to be in that program. So it's tough. And when they take those take those hits like like with some of those with some of those aggregators, it just makes it tough. And then I don't know if you saw the short, very short time ago, Sten HSBC is pulling out of Sten. So Sten is no longer funding. And that's very recent news, but that's another e-commerce lender that's now going away because they were in default of their financing partner. Kevin King: What's the default? About 5% to 10% probably default? Russell Walraven: I don't know what exactly their agreement was with HSBC, but I'm sure it was somewhere around 5% to 10%. Kevin King: Yeah, that's what it is. It's around that on credit cards, I think, right now in the general lending market, just consumer market. I think it's like 70% of all, are uncollectible, but I think it's a higher rate that are behind in default. I think it's closer to 20% or something like that. Of US credit card people or at least a payment behind. But you cover that. I mean, depending on your interest rates, it's a risk profile. You basically end up covering that. But a lot of people, they say, why would I go to 8Fig to get a loan and pay these? I don't know what your exact rates are. I'm sure they vary depending on the situations. But to some people, anything over 5%, it's like a crazy amount. So let's just say it's over 5%. And they're like, why would I pay this crazy amount in interest I have all that stress to take a loan. I'll just go get my rich uncle or I'll go get someone to invest in a company and give me the money. Can you explain the difference in those? I think there's a psychology switch there where people don't quite understand the difference in those two types of funding. Where someone that takes equity, even if they're a silent partner and have no stock vote, no voting rights, they just stay out of your way. It's not another chef in the kitchen. If you sell that company for, let's say, a million bucks two years from now, and they own 20% because they gave you 50 grand or 100 grand, that right there, that's a good return for them. If they own 20% on 100 grand, they got 200 grand. And depending on, you know, they might have got their original 100 back, so they might have got 300, depending on how you structure that, versus if I go and take a loan at 100, even if I'm paying 20% interest on that for the same two years, and I just slow pay that whole thing, that's only 40 grand that I just gave up instead of potentially as much as 300 grand. And I put 260 more in my pocket. A lot of people don't think about the long-term effects of equity versus loans, even though the loan amounts might be a little higher than what you think they might should be on the interest rates. Can you explain some of that? Russell Walraven: Yeah, no, that's right. And outside of just the cost piece of it, right? So somebody puts in $100, you give them back $300, right? If you calculate the APR on that, it's going to be outrageous, right? There's the money piece, right? There's the how much it costs you piece. But then there's also the control piece, right? So even if somebody gives you money and they buy equity in the company, say it's 5, 10, 20 percent, they get a voice, right? It might not be a big voice, but they feel that they have that voice. So any decision you make may be second guessed. Anything you do differently, Somebody's going to think, you know what, you should have done that differently, right? So there's pressure and there's stress in that area. So owning the business yourself kind of alleviates some of that stress and you don't have to worry about other people's thoughts, other people's opinions. Because in your example, right, you became an e-commerce expert. You became an Amazon expert. Maybe this person that you borrowed money from didn't believe in you and they saw the potential in making some money, but they're not an e-commerce expert. They don't have all the information you have. They don't have all the experience you have. They might have good ideas, but again, they might not. It's going to be a situation where you don't only split the business, you're splitting decision-making. That's one. From the lending versus equity piece, until you pay out, until you buy out that equity investor, they're with you, right? They're with you for the long haul. Once you sell that business, you have to pay them out if you haven't before. With a lender like 8Fig, Once you're complete with that plan, once you've completed with that funding, unless you want to come back and do more, you're done, right? You've done what you need to do. You've got the money you needed to grow. And now you move on and maybe you come back. Hopefully you come back and need more money to grow some more. But if you don't, you know what? We did our job, helping you get from point A to point B where you wanted to get. And now that business remains all yours. No one else is in your ear about that. No one else is expecting a payout from that. You grew from A to B. We did our job helping you get there. Now you get to decide how to get from B to C. Kevin King: What if I already have an Amazon lending loan and say one of these other loans from somewhere, will you stack? Will you be third in line on UCC or do you guys prefer to be first in line? Or you give them money and they gotta wipe out the other one so there's just you? Or how do you guys work on that in regards? Russell Walraven: Yeah, so obviously any lender is going to prefer to be number one, right? They wanna be number one in line if anything were to happen. We don't disqualify someone if they have other lending products, if they have other funding products. We look at what is your ability to pay. Based on Amazon, for example, here's how much you sell, here's how much your payouts are from Amazon, here are your expenses, here's what you have left. Do you have the ability to pay not only Amazon and lender A or lender B, do you also have the ability to pay 8Fig? And not put yourself in a precarious situation where it's going to affect the business. So I know a lot of people don't believe it. A lot of people think, oh, they're just lenders. They're just, you know, they're just greedy. They just want their money. They look. Yes, we want to lend money that we're going to get back. We do this to make money. We're not a nonprofit, but we are invested in that company because let's say this company takes money from us and they don't pay us back. We're the ones that are impacted, right? We have financing institutions as well. We don't have just like a big stack of money sitting in our office that we lend out, right? We borrow money from other financial institutions to be able to lend it to e-commerce. Kevin King: Wait a minute. You told me to come see you for lunch. I was hoping to get a big stack of money off your desk. Russell Walraven: That's me personally. Kevin King: That's not what you told me earlier. Russell Walraven: That's me personally. Kevin King: Lunch is canceled. Lunch is canceled. Russell Walraven: Personally, I have a big stack of money. And the company, we don't have a room for them either. So really, you know, we are very interested, invested in the health of that business because if that company, if something goes wrong, we're impacting as well. Kevin King: Do I have to be a U.S. citizen to work with 8Fig or do I just have to have a U.S.-based entity? Russell Walraven: You have to have a U.S.-based entity, a U.S.-based bank account, and you have to sell on a U.S. platform. There are some areas of Canada where we can work. So if you are a Canadian entity, we can work everywhere except Quebec. So you have to be doing business in USD or CAD and then you have to have those other things that I mentioned. But you do not have to be a US citizen. You don't even have to be based in the US. You just have to have the US entity, the US bank account or Canadian and be working in CAD or USD. Kevin King: And how long does it take? What's the application process like? I mean, what do you need? Do you need bank financial statements? Or if it's under a certain amount, it's just like, we just need to tie into your Amazon account or Walmart or whatever it may be and just take a look and 24 hours, 48 hours later, we got an underwriting decision for you? Or how does the process work? Russell Walraven: Yeah, so the way the process works is someone comes in, they fill out a short form, giving us personal information, then they connect their store, right? Whether it be Amazon, whether it be Shopify, whether it be any of these other stores, they connect their store. Within about 24 hours, you're going to get an offer. It's going to say, you know, you have a plan has been created for you of this amount. Would you like to accept that offer? You'll also be contacted by one of our sales reps. We are automated. We're not fully automated, but we're mostly automated. But we do still feel that that personal touch is important, right? We want to explain the offer. Once you accept that offer, you'll then do some other things. You'll connect your bank account through Plaid. Plaid's not 100% inclusive of all banks, so if you're a bank that does not – it's not provided through Plaid. Kevin King: So my country bank 100 miles outside. Russell Walraven: Right. Your sketchy mafia bank is not going to work. That's just not going to work. Damn it. So once you connect your Plaid account, we then get a better view of your overall financial situation, right? We then will ask some due diligence questions. It can be based on what we see in your bank account. It can be a few due diligence questions. It can be a lot of due diligence questions. And then based on how long it takes the seller to answer that is gonna be how long it takes for it to be underwritten. If they come back within a day, it could take maybe another day. So it can be super quick or it can be a little bit extended. But I would say on average, we're gonna give you an offer within 24 hours. We can fund within, you know, Five business days. Kevin King: So if it's over, typically if it's over $100,000, there's a lot more paperwork needed. I mean, that's when you need P&Ls and balance sheets and tax returns and a lot of, typically, right? Russell Walraven: Yeah, we don't always ask for all those informations. We typically do as much as we can through the bank accounts. If we see other accounts within your primary bank account, we may ask you to connect those as well so that we get a fuller picture. But you're right. The larger the My plan is the more due diligence we're going to do, just because it's more risky, right? I mean, not because you're a risky seller or you're a risky credit profile, but it's riskier for us to send out a big lump sum of money than it is a smaller lump sum of money. Kevin King: What's the smallest you'll underwrite? Russell Walraven: We'll underwrite as low as $50,000. Kevin King: So 50,000, so what kind of sales volume do I need to be doing to qualify for 50,000? How long do I need to be selling? I want your normal amount and then where do I need to be to qualify for a $50,000, the smallest loan? Russell Walraven: Yeah, so $50,000, if you're selling for six months consecutive, we'll probably look at it. We would prefer 12, but six we'll look at, right? You need to be selling in a 12-month period. If you've been selling less than that, we'll extrapolate the data. So, over 12 months, it needs to be $100,000 in sales. Kevin King: Total sales per month? Russell Walraven: Total. Total sales. Kevin King: Okay. Russell Walraven: In the most recent three months, you need to be selling at least $12,000 per month in sales. Kevin King: To get a $50,000? To get around $50,000. Yeah. Russell Walraven: Sorry, I said loan advance. It's not a loan. Thank you for correcting me. Kevin King: So, you said you go up to $4 or $5 million. Have you actually done that? Russell Walraven: We have. I mean, it's rare, right? We don't do four or five million dollar advances, you know, every week or, you know, every month. But for example, I saw one yesterday, a plan that went out was just under two million, right? So it is typical for us to send out plans that are a million dollars plus. We are working with some pretty large sellers, but we work with smaller sellers too. Obviously, we do more smaller deals just because there are more of those sellers, but we do larger deals as well. Kevin King: What do you do to prevent? I mean, some lenders out there, they pay the factory directly or they pay the supplier directly just so that they are forcing that discipline on you to not go and use it to go buy a new Ferrari. I'm the founder and CEO of 8Fig. What are some of It's just whatever happens, happens and you cross your fingers. Russell Walraven: Yeah, so I think it's somewhere in between, right? We don't pay suppliers directly. We don't pay POs directly to whomever, invoices directly. But we do try to do it in a way that we line it up based on what they say they need, what we've seen their inventory needs are. And I think a lot of these other tools that we're building are going to help us with that. So for example, the forecasting tool. If someone comes and they apply for a lending product or a funding product, as soon as they connect their store, those tools are running in the background. They have access to those free tools, right? So we can see what their forecasted sales are. And so they come in and they say, you know, they're forecasted to do $100,000 in inventory. And they come in and say, I need $100,000 in inventory. We can say, you know what? That looks right. That looks about right. This customer is about right. Now, if they then say, you know what? I don't want to sell that much. I'm going to say I'm going to do $100,000. We can't really do much about that. Right. But we try to try to be as accurate as we can. And we think by giving them the ability to do say what they're using that money for and then giving them money based on that, we're protecting ourselves a little bit by doing it that way. Now, can we 100% protect ourselves? No. Are we in the contract to say you have to use this amount of money for this specific thing? We do not. But we try to educate people just as you just mentioned. If you're not using this for a revenue generating reason, it may be harder for you to pay this off. Right. So we try to do it through education. We try to do it through data. And then we try to do it through relationship building. And that's why kind of we have those those those sales reps that are that are along with the seller. Completely through the way. Kevin King: What do you do when Amazon shuts down their best seller? That 80-20 rule that 80% of their revenue is from 20% of their SKUs and for whatever reason Amazon just decides this is a pesticide or they decide whatever and they're fighting that for three or four weeks and it's just crushing them on cash flow. I had this problem happen. I had a loan with SellerSpy back in 2020. I had a company that we started up. We put in 330 grand. And then a couple other guys put in over a million, but we ended up going to Seller's Fi to get some more money. We needed it like two months into the business. And Seller's Fi algorithm said, no, get lost, you don't meet the requirements. And then I knew someone over there and they put it through and they said, all right, we'll give you 150 grand. And then the owner said, no, this is Kevin, give him 300. He's not gonna screw us, he's good for it. So they ended up giving us 300, but we had that problem with we're selling PPE. And we had an issue come up to where we were paying We're paying $16,000 every two weeks or something like that to pay this thing back because we did a short term and it affected our cash flow. But they work with us. They can turn back around and say, okay, don't worry, we'll re-engineer this. We paid the whole thing back and there's no problem and everybody was happy. But do you work with people like that or is it like these MCA guys in the past who are like, we don't care, just pay me anyway? Russell Walraven: Yeah, no, no, that's a great question, a good point. So we absolutely work with sellers in that situation and we take it a step farther, right? So in the tool itself, in the platform itself, you can log in there and you can make those changes yourself. You can say, okay, here's how much of a payment I can make in the weekly payment, the bi-weekly payment, whatever plan you're on. You can reduce your payment. And those in those instances and say, here's how much I can pay over the next two weeks, over the next four weeks, whatever that is. And you can make that request directly into the into the into the platform. We then work with that seller to make sure that they they can still do that, that they're they're on the right track. And then once. Once they get out of that, you know, bad situation or that rocky time, they can then go back in and they can increase it again and say, now I want to pay more interest on it because that's great. Kevin King: That's kicking down the road a little bit. So it's going to be a little bit more interest. But it helps me in the current situation. Russell Walraven: I do want to make that point clear that if someone goes in and says, I'm going to pay less and it's going to take longer to pay that off and you're keeping that money longer, the cost of capital is going to go up. Just like if you come back and say, you know what? I'm doing great right now. I want to get done with this right now so I can do something else. You can increase your payment amount and the cost of capital goes down. So we are happy. Kevin King: Like cabbage or somebody that front-loaded it. When you were with cabbage, they front-loaded where you get a six-month payout, the first two months are like 90% of the interest. Russell Walraven: That's correct. Kevin King: They know that whatever their stats say that most people, if they're going to be able to pay it off, they're going to pay it off in month three. So they front-loaded all the interest in those first two months and there's no break other than a little small amount. Russell Walraven: That's correct. But we're not that way. I think cabbage is really the only ones that that. Another thing that you mentioned earlier that I haven't gotten to address is origination fees. We do not charge origination fees. I know there are some people that do, some other lenders that do, but we're a financing company that does not charge origination fees, so factor that in when you're doing business with some of these companies. Kevin King: You've got a lot of experience in this space from Cabbage to 8Fig and in between. If you're advising somebody that's looking to get money for their physical products business, and of course you want them to come to 8Fig, but if you're just giving them general advice, if you didn't work for 8Fig, What would you say some of the big things that they should look out for? What are some of the red flags that when they start talking to different lenders that they should be like, I don't know, this doesn't sound like something that would make sense for me? Russell Walraven: The first thing I would say is not necessarily a red flag, but it's just a piece of advice I would give a seller is have a relationship with a financing company and a lender beforehand. Do your due diligence before you need the money, right? Don't get into a situation where it's like, I need the money today. I got to go find somebody that'll give me the money today. Do a little bit of research. Have a relationship with a financing company before you think you need it. I think that's going to be super beneficial to sellers when they do need that money. Kevin King: Someone like you, I should go ahead and apply. Someone listening, I don't need money right now. Who knows, six months from now, a year from now, I might. Should I go ahead and apply with 8Fig and you run me through the system, say, oh, you qualify for 100 grand or whatever, and I say, that's nice, I'm gonna put that on hold for right now, but you've already established a base relationship and everything, is that something that would be a wise thing to do? Russell Walraven: I think that's one way to do it, and the reason I say that is because there's no impact to your credit score to apply. You can come in, you can apply, you can connect your store or stores, and you'll get a plan that's You know, here's what here's so that you could actually go. Kevin King: Well, maybe I couldn't watch other products. I know I can get this. Russell Walraven: That's right. As of today, that's what you're qualified for. Right. And then and most people don't disconnect their store. Right. We don't do anything to that store other than and visualize the data. We view the data. We don't change the data. We don't update the data. We don't do anything with it other than understand how your business is performing. And as you grow, Today, you came in, you might be qualified for $100,000. In six months, if you've grown a lot, then we could go back to you and say, you know what, now you're qualified for $250,000. It would make that process a little bit simpler for you. Some of the red flags I would look for, I would look out for people that We are asking for information that maybe is not financially related. Some people just want to get a lot of information, whether it may be a social media information or some of this other types of information. I would look out for that because chances are they might be looking to do something different with the data. Maybe it's sell the data, maybe it's do something else. So anyone that's not strictly focused on your financial data for your business, I would say that's one red flag. Another red flag I would say is people that are just willing to stack on top of stack on top of stack and giving loans and loans and loans. They're not really looking out for your best interest, right? If they're giving you money, without any regard for if you can afford to pay that back, that's going to be a red flag, right? If someone comes to you and says, you know what, you've already got three of these loans, it's probably not the best for you to take another one right now, then I think that may be a red flag. But I also think that goes back to, you know, build that relationship with someone that you trust, right? Whether it's 8Fig or someone else, I think 8Fig is a great choice, but build a relationship with someone you trust and build a relationship with someone that is going to be there for you, right? So like Cabbage, for example, when I was at Cabbage, And I don't know that it changed at all through their life cycle. A salesperson never worked with a seller. It was all completely automated. So it was just, you know, there was no relationship. There was no one looking out for that seller. It was the information that was in there was what the outcome was. Whereas you mentioned you had a relationship with a financing company and it helps you get money when maybe the When maybe the algorithm said no, right? So I think that was all relationship based and I think that's the biggest thing I would say is build a relationship with somebody you trust and then I think it would be beneficial for both parties. Kevin King: You're talking about these the one of red flags of the additional information when I got some of these mafia loans I remember Everest was one of the companies and they actually sent somebody out to my house to actually take Yeah, like my garage and my inventory and and everything I was like What the heck? I was like, all right, whatever. I need the 80 grand. And to this day, it's been, I think 2016 was the last time I took a loan and I still get calls eight years, nine years later. Hey, we have your a hundred grand ready. Thanks for applying. And they're just selling my information left and right. So these boardrooms are just blowing up my phone all the time, sending me emails and stuff. I'm still on databases. Russell Walraven: While you're doing the research, make sure that the company that you're working with is e-commerce focused, right? Because as you know better than probably anybody, Kevin, these e-commerce businesses, they're different than the traditional brick and mortar businesses. There's different information. There's different data. There's more data available, right? So make sure that the organization you're working with It's focused on e-commerce and it's focused on some of the channels that maybe you sell. Kevin King: I remember when I went, back in the day, I went into the bank to try to get a loan at Chase and they just looked at me like, e-commerce, that's not a business. Correct. No, we don't, we're into real businesses. You're working in your, in your underwear in your house. You're asking for a hundred grand. Uh, what? No, I don't think so. Russell Walraven: Right. Right. Kevin King: Yeah. Yeah. It's, and it helps that, like you said, the owners come from the supply chain and come from e-commerce. They understand that whole, the cash flow cycle. Russell Walraven: Correct. Kevin King: The cash flow cycle that it takes to actually do this. So what do you see happening with the new president coming in, do you think? Interest rates are going to slide down. You think prices are going to go up. You're going to see more people needing money because of these tariffs that may get implemented and cost of goods are going to go up. There's going to be additional needs for capital. What are you guys projecting or what's your best guess on what's going to happen? Russell Walraven: There's a lot of posturing right now around tariffs and around prices and around interest rates and those type of things. I think going into the election, I think everybody was thinking if one thing happened, interest rates would stay the same or go down. If one thing happened, interest rates will go up. And I think everybody, at least everybody where I'm from, expected interest rates to stop and prices to fall once the election results that happened have happened. Now with all the posturing around tariffs and those types of things, I think everybody's just kind of in a wait-and-see mode, right? What's really going to happen? Are the tariffs going to be imposed? Are they not going to be imposed? What's really going to happen? What's posturing versus what's going to be actual policy? I tend to think there will be some tariffs. I think e-commerce businesses are going to have to be ready for that in whatever way that is. I don't think there's going to be a need for more money in terms of lending. Until prices start coming down just a little bit, because what we've seen at 8Fig and I think what the market has shown is that there was a little bit of a softening in the market because of the election and people not knowing. I think it's going to be a little bit slower recovery from that softening in the financial industry just because there's still a little bit of an unknown. So I think there's going to be opportunities for funding. I think it's going to be the due diligence that's being done now because of companies like Sten having problems, because of companies having a lot of defaults is not going to get any easier. I think financing companies are going to do some pretty tough due diligence for the next period of time, but I do think second quarter of next year, I think there might be a little bit of easing of some of that difficulty. Kevin King: There's still a lot more new players coming into this lending or advance system for e-commerce all the time. I hear every few months there's a new one that pops up but I haven't heard about it. So I guess a lot of people are still seeing a massive opportunity in the space just like there's tons of people doing refunds for sellers and grabbing a piece of that pie. It seems like more and more lending options of various degrees are coming out. Russell Walraven: Yeah, and I think the pandemic was kind of a big I'm a big driver of that just because e-commerce with the boom in e-commerce with the pandemic was huge. I think the trajectory of e-commerce was up and to the right. But then when the pandemic hit, I think that hockey stick kind of took effect. And I think it's going to continue to do that. And with all these new and bigger e-commerce sellers, there are going to be people that want to provide funding to them. So I think you're going to continue to see that. But I also think the ones that Get into trouble are going to get into trouble pretty quickly, and I think that's going to be something to watch too. Kevin King: Awesome. Russell, this has been very fun, very insightful. If people need some cash and want to consider 8Fig. What's the best way to do that? Russell Walraven: Yeah, the website is www.8Fig.co. You can type in .com. It'll take you there too, but the website is 8Fig.co. You can reach out to me on LinkedIn, Russell Walraven. You'll see the bald head. You'll know it's me. And I can connect you to the right people. But we're gonna be out and about more this year, right? Like this past year, we didn't do a number of events. We didn't do a lot of awareness building things. We're gonna do that a little bit more in 2025. So if you happen to run into us there, introduce yourself and let us know you heard us on Kevin's show. And we really appreciate you letting us be on the show and I appreciate it. I listen to your show and I always enjoy it. So it's fun for me to be on. Kevin King: Well, I'm glad to have you on. Glad we could talk a little shop here. I've got a little bit of experience in this, so it makes it even funner. Russell Walraven: That's right. Well, stay off those Mafia loans. Kevin King: Yeah. I haven't had one, so I'm done with those guys. I don't have to worry about waking up with a horse's head in my bed. Russell Walraven: That's right. I'm glad of that. Kevin King: Appreciate it, man. Thanks. Russell Walraven: All right. Thanks. Kevin King: I hope you make lots of money and have some good ideas about what you might be able to do now going forward to grow your Amazon business and some of the options available to get the cash you need to buy that inventory, to do those ads, to really scale your business up. We'll see you again next week with another awesome episode of the AM-PM Podcast. Until then, remember, life is to be spent, not saved. Life is to be spent, not saved. See you again next week.