The Home Service Expert Podcast - How to Leverage SBA Loans to Grow Your Early-Stage Business

Episode Date: July 2, 2021

Joshua Kim is the founder and CEO of 7a Accelerator, a company that provides consultations, resources, and concierge-style assistance for business owners on capital solutions and securing the right SBA lender. By leveraging $2.5M+ in SBA 7(a) financing, he purchased his first businesses at 19 and 20 years old. A transactional entrepreneur, he is an expert in M&A and government-guaranteed financial instruments. In this episode, we talked about entrepreneurship, management, leadership, finance...

objectively speaking, you're not going to be able to get a better rate or term than an SBA loan. But a lot of times people, they don't know about it. So they get stuck in an inferior working capital solution. They're paying crazy double-digit interest rates on a short term. It's just screwing them over with the fees. So that's a little bit about what we do. But I think that SBA loans would be 20 times the volume of what they are now, even though they are a $30 billion a year loan program right now with the lenders that do participate. I think it would be in the hundreds of billions of dollars if people understood where to go. So that's a lot about what I do is I help break myths for people. I help educate people about what the best options are for them.

Welcome to the Home Service Expert, where each week, Tommy chats with world-class entrepreneurs and experts in various fields, like marketing, sales, hiring, and leadership, to find out what's really behind their success in business. Now, your host, the home service millionaire, Tommy Mello. Welcome back to Home Service Expert. My name is Tommy Mello, and today, I have a guest coming to us from Virginia, but he actually lives in San Juan, Puerto Rico. Joshua Kim, how are you today? Doing all right. Josh is an expert in entrepreneurship, management, leadership,

finance. He's the owner and CEO founder of 7A Accelerator. He also is the managing director at Mount Britain Capital Advisors. Done a lot of cool things, Stealth Mode, FinTech Startup, Kalia Healthcare, Shure, GmbH. Josh is a transactional entrepreneur with expertise in M&A and government guaranteed financial instruments. He purchased his first business at 19 and 20 years old, leveraging $2.5 million in SBA 7A financing to facilitate acquisitions. He's the founder and CEO of 7A Accelerator, a company that provides consulting resources and concierge style assistance for business owners on capital

solutions and securing the right SBA loan. And Josh, me and you met several months ago, and basically there's a lot of free money to be used out there. And I thought it was important for me to get this message out to businesses. First of all, why don't you just go ahead and really appreciate you coming on today. Why don't you explain to the listeners out there who you are and how you got started and what you've been up to? Yeah. So again, thanks for having me on.

I know we had to reschedule and juggle around a bit, but we're able to finally get connected here. A lot of what I focus on with all my businesses are all in one way, shape, or form tied back to SBA loans. And my premise with all the businesses is that they're overall just a tremendously underutilized resource by most business owners, just simply because they haven't heard of them, they don't understand them, or they don't know where to go to actually get the financing, right? So what my businesses do now, I mean, we mainly just,

we consult with business owners, we have to evaluate what their situation is, what kind of capital they need, then really just making sure they get paired into the best kind of financing solution because objectively speaking, you're not going to be able to get a better rate or term than an SBA loan.

But a lot of times people, they don't know about it. So they get stuck in an inferior working capital solution. They're paying crazy double-digit interest rates on a short term. It's just screwing them over with the fees. So that's a little bit about what we do. But I think that SBA loans would be 20 times the volume of what they are now, even though they are a $30 billion a year loan program right now with the lenders that do participate. I think it would be in the hundreds of billions of dollars if people understood where to go. So that's a lot about what I do is I help break myths for people. I help educate people about what the best options are for them. And then primarily with 7A Accelerator, my fintech business, we do a bit of pairing up,

marrying up a business owner with the best capital solution for them. Yeah. I was just reading something recently that said, right now you should be borrowing as much money as possible to hedge against inflation. I'm looking at these treasury, the treasury in any large company is starting to get diversified, whether that's putting the money into oil, real estate. We talked a little bit about whatever it might be. I do think there's something to be said because the burn rate right now, the dollar is going to be approaching 20 to 24%, meaning that if I keep my money in the bank with inflation, I'm losing, after a year, I might lose 20% of the value of that dollar, the purchasing power. What are your thoughts on that? I know this is not necessarily...

We're going to just have a broad conversation about it. Yeah. I mean, as a whole, 20%, that might be steep, but just any premise in borrowing a ton of money. There's other reasons why now is a great time to borrow money. Especially with SBA loans, if you're looking at refinancing a commercial real estate property, if you're looking at refinancing debt for your business, now is really the best time to go do it with an SBA loan. Because I can get into a little bit later, but some of the incentives I have available right now include waiving all the fees. So it's really no cost to anybody to refinance into an SBA loan like there normally would be with the 3.5% guarantee fee that normally dissuades people.

It's usually the only point of dissuasion for people to go into it. But also the rates are low, you can get it locked in. And like you said, as the dollar inflates, your loan term is still the same finite dollar amount of what you're paying back on a monthly, quarterly, annual basis. So as time goes on, you're paying it back with cheaper dollars. So if you're paying back 100 grand a year, well, 100 grand next year in today's dollars might only be 80 grand, you know, if it actually does go down 20%, right? So yeah, I mean, I think now's a great time to borrow money and borrow it and pull out as much as you can and lock it in for as long as you can, because if you pay it back over time, I mean, all these people that are getting out, you know,

pulling out these 30-year EIDL loans, by the time 15, 20 years go by on their repayment schedule for it, every dollar that they borrowed today, I mean, it's probably only going to cost them, what, like 60, 70 cents to pay that same dollar back over time with inflation and everything calculated in. So yeah, I mean, possibly more minutiae than people care to know, but yeah, I agree. You know, I think that a lot of people are nervous right now. You look at the housing market, you look at, but actually Maricopa County is the number one market in North America right now for equity going up. It's massive. I just talked to a private equity company last week and it's right now, everything's hot. You know, we've got a little bit of a labor

shortage. We've got a little bit of a labor shortage. We've got a little bit of a supply chain issue in every industry. I mean, I'm sure you've heard about it with wood prices, new builds, everything going on. Right now, if you can buy a house for cheaper than it costs to make it, you're lucky. You've worked with a lot of people on these loans. What is the overall, what are you hearing out there? I mean, the general consensus, especially with a lot of the industries that we've been working in is, you know, the economy is a coiled spring right now. A lot of what happened with COVID, it was just accelerated the demise of shitty business models that had no business existing in the first place by making it harder for them to raise capital to sustain

an unsustainable business model. So, you know, it's, I equate it to burning out a fort, you know, doing a controlled burn on a forest, right? Burn out all the shitty trees and the forest comes back healthier. And that's a lot of that, especially with the businesses that we've been helping get capital right now. I mean, I'm working with a lot of very innovative, very interesting businesses and raising capital, working with a bunch of dental practices. I've got some guys that they've got a very interesting mobile dentistry franchise model. I'm working with some very cool manufacturing businesses. I'm even working with a business. They found a way... They're a flour mill. They have this really cool gluten-free flour. They found a way to take regular flour and turn it

gluten-free. So just all kinds of different business models. And they're dying for capital and growth because they're like, look, hey, as the American consumer comes back, bolstered by all the stimulus money and really all these savings that most people have been able to accrue by not traveling, not going out to eat, frivolously spending because of COVID, they want to go out there and do stuff. And so my general consensus is that the economy is like a cold spring right now. And there's a lot of businesses that are going to take off and do very well in the next three to five years, just because there's this abundance of capital out there. And we're going to bounce back from this COVID lunacy and come back even stronger. Yeah, I hope so. I think you're right.

I think what we found out during COVID was a lot of business, whether it be the hotel, hospitality, travel, restaurant, bar, movie theaters, they got hit. They got hit hard. It's unfortunate, but we were deemed in the home service space, a lot of us were deemed essential. And that's why we became a good melting pot for investors to come into private equity, lots of investment firms, even venture capitalists. It's all around us right now. I mean, I get calls every day, emails all the time. What I really want to jump into is your finance expertise. Let's jump into some of the stuff you've learned over time. Number one is, what are some of the beliefs and misconceptions

that are prevalent today about financing? Yeah. So I think the biggest thing, especially with SBA financing, because that's really where my core expertise is. I do dabble a little bit in USDA financing, some other stuff, but really anything you can tie back to a government guaranteed business loan, it's 90% of the time going to be tied back to the SBA. But the biggest misconception, the biggest myth I like breaking for people is that not all banks are created equal. And I've had situations where dentists clearing $1, $2 million a year, perfect 800 FICO scores, good retirement account

balances, cash in the bank balances on the personal side. They go to the bank and say, hey, I want an SBA loan. I want to go buy a building for my fourth practice location or whatever. And they get declined because they don't want to put down 40% on an SBA loan where they only need to put down 10%. The bank won't approve them for putting down 10%, even though that's exactly what the guidelines say. And so as I dig into those situations with guys like that, I'm like, oh, well, your only mistake was you went to Chase, you went to Wells Fargo, you went to a Bank of America, you went to a large bank that doesn't do well at executing on these small business loans. And frankly, the biggest reason that bigger banks suck at it is they don't care. I mean, even if you're a dentist making $3 million a year, you're still a small fish to chase.

Why are they going to bother with you? So when it comes down to really getting the right financing solutions for a small business, you have to go to a lender. You have to go to a financial institution that actually is catered to your sort of financing request, right? So if you've got a, let's say you've got a home service business, let's link this back to kind of the realm of our audience. So let's say you've got a, you know, a service business. Let's link this back to the realm of our audience. So let's see if you've got a service business, maybe an electrical contractor, a plumber, you do roofing, maybe you do garage doors too, like Tommy does. And you go to Chase and you get the client. I mean, it's not a problem with the SBA loan product as a whole. It's not a problem with

the SBA and any of their programs. It's a problem with that lending institution just sucks doing those types of loans. So you got to go out and find a lender that will specialize in your, you know, in your industry. And that's, that's a lot of what my businesses are tied to. I mean, we basically help facilitate that just because I have a ton of warm

relationships and, you know, our, our FinTech backend is getting plugged into a lot of lenders, but that's really the biggest myth. I like breaking for people. It's not all banks are created equal. And once you understand that,

you know, you're not going to take a note, getting a no that hard from a lender. A lot of people, they get really discouraged when they get told by no from a bank. And it's like, look, if you went to American express and you asked them for a mortgage and they turned you down because they don't really do mortgages, would you feel sad? Would you feel upset? Like there's no reason to, it's just, you're going to the wrong people. Right. Yeah, no, you're absolutely right. And you know, I, I've talked to a lot of people and I do recommend that if you're a healthy company right now and you feel like you could take on more trucks and make your training

facility nicer and grow right now, you should be doing everything you can to borrow at these low interest rates. I'm going to endorse people. Don't ever come back to me if you blow the money on the wrong stuff. But if you're going to put it into growth, which is working on getting in front of more customers and making sure your employees are trained properly and got the right trucks and tools to do the job, I think there's never been a better time to get an SBA loan. Yeah. And for some of the reasons I was alluding to earlier, right now is the best time above and beyond just the interest rates. Some of the COVID-related incentives that they put in place, most people haven't heard about just simply because the PPP, the EIDL loan programs are

getting most of the press. But if you go get a regular 7A or 504 loan right now, they're going to pay the first three months of loan for you, waive all the guarantee fees. And on the 7A side, instead of a 75% guarantee, your loan is guaranteed at a 90% guarantee. So that means that the banks are more likely to give you the loan, even if it's a loan they would have otherwise felt on the fence about because their downside risk is 10%, not 25%. And I have a mathematical breakdown for somebody. Right now, if you borrow, let's say you borrow $500,000 on a 7A loan, between the guarantee fee waiver and the free payments, you're going to be saving about 40 grand, which is pretty significant. So you pair that in with historically low rates that you can, you know, get locked in on your loan. You know, now, like you said, it really is the best time to go borrow.

If you go put it in growth, I mean, don't, don't go take it and bet it on red in Vegas. So I'm working on, you know, I just recently down the road here, literally right down the street from my shop, I found two acres of property. And I'm talking to my bank and they're like, they're going to make me put down 25% of what they think the finished cost will be. I'm just curious. And then there's something called, it's not aging. After six months to a year, I can pull out whatever the appraised value is. I can pull out 80% of that.

Would an SBA, and you're pretty familiar with my finances, would the SBA go for something like that for another shot for A1's growth? Yeah. I mean, you're talking about, so you'd be looking at buying the land and building some warehouses on it or something. Yeah. That's a perfect SBA 7A or 504 product. A lot of times people, they go to SBA financing because their conventional lenders want some crazy dollar amount down. And to give you more color, this dentist I was alluding to earlier where the bank wanted 30% down, it was actually a rent replacement. He already had an office he was leasing. He was just going to pick up, shop, move over, move that practice location down the street.

And his mortgage was actually going to be less than his lease. And they still wanted 30% down. He's like, this is ridiculous. In your case, if you're talking about a construction build-out, I know a lot of lenders would want minimum 25%, 30% for a build-out construction product on a piece of property like that. If you go 504, you go 7A, you can probably get it done with 10% to 15% down. Depending on the specifics of the deal and the lender you work with but a lot of situations like that are exactly where people go to sbas that they're attracted to the the you know the lower down payment requirements relative to getting a piece of conventional financing got it so when it comes

to seven or not the 504 7a when it comes to anBA loan. Talk to me a little bit about what the SBA was built to do and what kind of business... I can't just go start a plumbing company tomorrow, or can I? And get a nice big million-dollar loan. Explain to me exactly the prerequisites and what the SBA is. Yeah. So you can definitely use an SBA loan to start up a new business. Are they going to give you a million dollars to start a plumbing business? Probably not. Would they give you a million dollars as a dentist to go buy a building, build it out and turn it into a practice? Yeah. A lot of it depends on the nuances of each industry, how much the bank likes each industry. I have some lenders that really like home service businesses, especially ones that are focused on

commercial residential, especially right now. I mean, I'm sure you guys know this, but anything tied to a house right now is ridiculous. I mean, I have a friend of mine, he's got a very large wholesale cabinetry business. I mean, they can't keep stock on the shelves. Everything's flying off. And so a lot of lenders understand the macros of the economy right now with housing prices going up like crazy, people doing a ton of home improvements. So you could definitely use it to start up, maybe not a million dollars,

depending on what your personal financial condition was and all that. But yeah, you could use it for an existing business. Existing businesses are always easier, obviously, because there's historical revenue, there's existing clients, there's existing customers, staff, systems in place and stuff. So it's a lot easier for them to lend based on historical cash flow. But yeah, you could use it for either. And the SBA was formed when and why?

Can you kind of go through that? Yeah. So it was actually formed right after World War II, kind of as a really more of a rebranding, relabeling of a couple of other government agencies that were focused on small businesses. But it came together as the SBA after World War II because the government recognized, hey, World War II was like,

it was a huge thing for the economy. But what happened was you had this huge concentration of all the contracts, all the business going to these larger companies. And the government said, this really isn't productive for helping small businesses. We've got to find some ways to put resources out there to help them. So some of the stuff they did is contract set-asides. I'm sure guys in the contracting

space are familiar with that. Bidding government contracts for anything construction-related or whatnot. They have certain dollar targets, percentage dollar targets that they have to set aside to minority-owned, women-owned, veteran-owned businesses. That was one of the things they did. But they also put these loan programs in place. And their thought process behind it was, look, if we guarantee a significant percentage of loans below a certain dollar amount through these programs that the SBA administers, it's going to incentivize lenders to put more money in the hands of small business owners, which in turn will obviously create more jobs. Small businesses are where most of the jobs in the country are created and help. So that's just one of the things to keep in mind. I get a lot of things people ask, okay, what's the catch? I mean, these loans sound too good to be true. It's like, okay,

well, they've been around for 50 plus years and it's $30 billion a year. It's not that there's any catch to it. It's just most people haven't heard about it. They don't know which lenders to go to, to take advantage of them. Right. So when it comes to applying to an SBA loan, there could be a lot of, like any loan, there's paperwork. What do we need to have prepared when they come to you? Obviously, financials. They do a background check on the owner. What other stuff do they do when it comes to an SBA? Yeah. So it's actually not too arduous. I had a friend of mine who's actually going to go to private equity to buy his dad out of their business. They're in the medical sector. And I said, he got some really unfavorable terms from the group he was talking

to and he backed out of it. And I said, no, you should look at an SBA loan. And he was actually really surprised. He just bought a $2 million house in Henderson, Nevada. And he was like, hey, the paperwork requirements they had for this were actually way less than what I needed for my mortgage. And a lot of people, one of the other big myths that I hear from people is, oh, SBA loans, they have a ton of paperwork requirements. They're very arduous. They take a long time to close. If you work with a competent lender, and again, this kind of goes back to the first thing I mentioned, not all banks are created equal. If you work with a competent lender, they're really going to streamline the process. But when it comes down to actual paperwork requirements,

they're asking you for your business financial, tax returns, profit and loss statements, balance sheets, all the basic stuff any lender is going to want when giving you a loan, much less an SBA loan. And there's only two SBA forms you have to sign. One of them is a personal financial statement, which you're going to probably have to fill out anyway for the bank. And the other form is just called a borrower information sheet. So your social security number, criminal background history, where you live, credit, all that stuff. So when it comes to paperwork requirements, it's really not that bad. If you sit down, you got your account and most of your information is handy, you can hammer out most of the paperwork in a day. Why do you think some people are afraid of SBA financing?

I think it just comes down to most business owners are focused on running their business, not necessarily learning all the nuanced finance options out there. So I don't even know if it'd be correct to characterize it as they're afraid of it. It's just, they don't have time to. I think I'm just really more what it comes down to. And, you know, yeah, some people are afraid of what they don't understand, but really I think it just comes down

to most people don't have the time to go figure it all out. So they just never bother. I agree with that. So if someone were to get with you, what's the process look like? They don't have to be a local bank, do they? I mean, what are some of the requirements? No. So it's fairly interesting you bring that up. So normally, let's say, Tommy, you wanted to buy an apartment complex, a quadplex or an eightplex

in your neck of the woods there. I mean, you would probably have the most luck going to a local bank because they would understand the area, they'd understand the residents. They'd understand the town. They'd probably give you a more aggressive offer than a big bank, right? An SBA, it's a little bit nuanced and it's a little bit weird because sometimes the best SBA lenders from an execution and pricing standpoint, i.e. the ones that give you the best rate and the ones that can actually close in the deals, they're lenders that you've probably never really heard about. A lot of them just operate nationwide. They don't really have a ton of branches. And really, their whole bread and butter is just doing these SBA loans. I could go into the technical nuances

of how the business model works for the bank, but it's a very profitable business model if you have a good back office and you've got good sales guys for it. And so a lot of times for people who are looking for a lender, the best lender is not going to be a lender in their backyard. It's going to be a lender out of a state that they've never heard of that doesn't really have branches that really just does SBA volume. And those are a lot of the ones that I have relationships with. There's even some lenders that are not even banks. There's a lot of non-bank lenders. You have CDCs and CDFIs, which are SBA-sponsored nonprofit entities that also do other sorts of loan products. Sometimes those are the best fit, depending on what kind of finance you need a business owner might have. So someone has come to us on the 7A Accelerator side. I mean, we've built out a pretty

good model where we'll have a consult call. We'll understand what the client's goals are. And then if it's a fit, we'll move forward. We'll give them a deliverable list of all the financing documents we'll need to pull together. That gets ported into my backend FinTech system, which is really the main business that I'm building right now. And once we have that in there, we take a look at it, we figure out what the strengths and the weaknesses are of the deal. And then we make the referral out to one of the lenders in our network. And once we have some warm feedback from a couple of them on who wants to bite on the deal, then it's a simple function of getting the borrower introduced to the lender.

They answer any whatever questions I might have. Lender will get the financing proposals. And then once we get two or three of them, we'll sit down with the borrower and say, look, here's the options you have. Here's the strengths of these ones. Here's the weaknesses of these offers, which one you want to go with. And then we'll go commit to one lender. And then we'll go take it through and get it funded. That's usually how our stuff works. But every process is

slightly different for every business owner. Obviously, there's unique strengths and weaknesses of each deal. And that's really where we're there to help navigate because most business owners don't have the time to go find 20, 30 of these top SBA lenders across the country, much less know what questions to ask and or have the time to go figure it out. So that's really where we come in and can be of value is really short-cutting and saving a lot of time in that process, which is why we call that an accelerator. Is there anything a business owner can do to improve the chances of succeeding to getting the SBA loan? Clean books and records, good personal credit. Those would be the top two main things I would say. A lot of times I see people, they try to run... Now, I get it. I do it too. I run certain

expenses through my businesses to decrease my tax liability at the end of the year. I've changed a lot of how I have my stuff structured just actually on this point. But if you go to the bank and say, hey, look, my tax return says I made only $2,000 last year on $1.5 million of gross revenue, but really my net income was this. They can work with you. They can understand like, okay, you got to add your trips back from Cabo, your boat, your home insurance, all the miscellaneous personal things that ran through the business. But that takes time. And sometimes they might not even accept all those things. And so if you go back to them and say, hey, well, I had 200 grand of cash flow.

I can borrow X. They might come back and say, well, based on our calculations, you only had 130 of cashflow and we're only going to give you this. So that's a lot of times a big issue that I run into working with borrowers. They don't really have distinct books. A lot of times my recommendation for people is just go look, go incorporate an S corporation in whatever state you run your business as a management company and bill your main business $7,000 to $10,000 a month. And then you can run all your personal expenses through that. That way, when you go to borrow money, it's a very easy process to explain what the actual cash flow of your business is. The other one obviously is make sure you've got

good personal credit. If you don't have good personal credit, I actually just recently bought into a credit repair franchise. It's actually something we are offering as a cross-sell to clients who are a good fit for SBA, who just need a little bit of credit cleanup. And we can get a lot of stuff dropped off in 60 to 90 days. You'd be surprised at how much you can get done with a good credit repair agency within 60 to 90 days. And we're actually helping with that too. But provided you've got good cashflow on the business and decent personal credit, there's really no reason why you can't get an SBA loan. Hey, I hope you're enjoying this conversation. I just want to let you know that Josh Kim has a

special offer for you today. So stick in with us to the end and I'll reveal how you can take advantage of it. But if you're in a rush, just go to homeserviceexpert.com forward slash podcast forward slash Joshua dash Kim and check out this exclusive offer we put together for our listeners. Okay, now let's get back and continue with our chat with Josh. I actually, it's interestingly enough, I did some credit.

My buddy Jim has some credit cleanup. I think I might've had him on the podcast a year and a half ago, but he was able to get all my hard inquiries. I had like 40 hard inquiries because every time we go rent a new facility in a new market, I'm in 17 States. It's a hard inquiry. And that really, we got it all. Oh, I know it kills you. I mean, I had the same issue. I mean, when I had my healthcare businesses, I mean, I bought three of them. So it's like,

anytime I bought a business, right. That's a hard inquiry by all the banks that I sent the deal to. I would send it to like three of them. So, okay, cool. That's nine hard inquiries across the three businesses I purchased. And to. I've sent it to like three of them. So, okay, cool. That's nine hard inquiries across the three businesses I purchased. And then anytime I actually took over one of the business bank accounts, right? I mean, that's another inquiry for whatever reason. Banks check your credit when you get signed over to an existing bank account.

You know, lease a car for an employee, open up a business credit card. I mean, I just had, I think at one point I had like 25 hard inquiries in the span of like 18 months. And my credit was still somehow above 700 with it. But yeah, credit repair cleanup, just to get all that stuff dropped off is sometimes really nice. That's interesting.

So one of the things you'd probably do is say, look, let's look at your personal credit. Let's apply for this in 90 days to get you the max of what you want. So can you share some of your client success stories? Yeah. So we actually just had one the other day. We've got one just funded last week. A guy he's had a, not directly related to the home service space, but we have a client. He just got funded for, I think it was $150,000. He had a podcast production agency, actually of all things that I've known for a while. I just reconnected with him. He kind

of was telling me about his growth and he, you know, he manages Robert Kiyosaki's backend podcast, the backend as far as production and stuff, a bunch of other high-name guys. But he wanted some capital to expand, hire some folks to go do sales, business development. We got him funded A to Z in 30 days. It could have actually probably been done in 21 days, but there were some delays getting tax returns together and stuff. We have another client. I think it was just on Friday. He just got his final approval. He's got an all-state agency and we're refinancing at about a million dollars worth of working capital.

All-state's in-house finance company lends money to their agents and brokers to help build their businesses, but they're charging them way higher than what they could get on an SBA loan. We're going to be saving about $25,000, $30,000 a year just on the interest savings alone by refinancing into an SBA loan. I've got a couple of other dentists that we've been working with recently, building refinances, a bunch of other miscellaneous things, partner buyouts. But yeah, those are just a couple examples.

We're definitely looking at doing more in the home service space, which is why I'm here talking with you. I think there's a big opportunity for anyone who's got a home service business right now to go borrow capital, grow their sales and marketing, get more vans. Like we talked about earlier, now's the time to borrow money. What if I wanted to borrow money for a franchise with another guy? Because my personal finances are pretty good, a high amount. Do you think the SBA would even work with me on something like that?

There's ways around it. We can talk offline, but yeah, there's ways around it. So for what he's referring to anyone listening on the podcast, there's actually, the SBA has what they call a means test. So if you've got available means in excess of what the dollar amount is for your financing request, they will actually decline you because they're going to say, look, if you've got a million dollars in your personal bank account, you came to us for half a million dollars to open up an indoor trampoline park franchise, we're going to turn you down because you can just go to your own checking account and do it. Why should we have basically

government-guaranteed, government-subsidized money being provided to you to go do it if you could do it off your own checkbook? So there's ways to get around it. You basically just have to take the money and shuffle it back into your business and look poor on paper on the personal side, even though you own the business and you just move the money. There's ways around it that are legal and ethical. You just got to understand what the rules are. And that's where I help a lot of people. Yep. Yep. I got you. So you sound like, you know, a lot, obviously you do know a lot about capital and about, um, you understand the finance stuff. A couple of questions here. Number one, you keep going back to FinTech. What is FinTech exactly?

Yeah. So financial technologies. So what I have on the backend is I'm building out a whole technology-based ecosystem where... Here's the problem. If you go online, you look for an SBA loan right now. And this is what I identified. It's a combo of my businesses now. If you go to Lendio, Fundera, or one of these other companies, what is the typical process for an SBA loan with them? You give them a bunch of basic information. They take your information. They sell it to a bunch of banks.

And you just cross your fingers that some of the banks call you, right? You don't like that as the borrower because you got no freaking clue what's going on. The banks don't like it because they get lead lists of, for the most part, leads that are unqualified, leads that don't really fit in the SBA box and would just be better off going to get some unsecured lines of credit, some 0% credit cards to start a business or whatever. And so what we're doing on my side is we've built out a platform using some existing technology where we can really standardize a lot of the data points that banks look at to approve a deal. So if you came to me, I know we're working on an overlap deal right now, a partner buyout with your stuff. We're going to be able to take all the financial data,

drop it into our system there with a couple of pieces of software that will actually scan the tax return, scan the financial statements. We'll be able to digitize a lot of the data. So when a banker gets the file, he's going to be able to see, hey, here's the revenue, here's the bottom line,

here's this, here's that. And it's all done in one spot. And the benefit to the borrower is you only got to fill out the application forms one time. We have all the application forms digitized in our platform. And when we send the request out to multiple lenders, instead of the borrower having to go fill out application forms at 10 to 20 different banks to get an approval, they fill it out once, it's on our system.

And then we just basically shoot it out to all the lenders that we think it'd be a good fit for. So it's just about using basic software, basic technology to streamline financial services, which is really what we do. We're consulting with people, help them get loans to finance things. So finance, technology, fintech. Yep. Yep. That makes sense.

Fintech. And then I kind of put two and two together. I just... For the audience. Yeah. For the audience. And then also, there is a lot of money out there. Recently, I had a company come in here and they work with veterans and military spouses. Basically, there's a lot of money out there for grants too. Do you know anything about small businesses getting grants and getting other sources of money? I know that's not probably your forte, but I'm just curious. A lot of that's going to be best figured out with a CDFI.

There's a lot of companies out there. Well, not companies, but some of the SBA-sponsored nonprofits are called Community Development Financial Institutions. So they basically just specialize in helping small businesses in their community grow, get access to capital, figure out really whatever they need. CDFIs are usually going to be the better resource for those because a lot of those are more localized. They're local to the state and city and, you know, local level. So you're going to really have the best fit as a small business owner,

kind of going to your local SBA, your local CDFIs, or there's also CDCs, the Certified Development Corporations. And you reach out to them and just network with them, figure out what kind of resources are really good out there. Because, you know, like you said, there's so many grants, there's so many programs. And even if I tried cataloging them all, there'd be new ones and there'd be ones that expired by the time that we finished up the list, it just wouldn't be worth it. But yeah, I would recommend locally networking with CDFIs, CDCs, and probably your local SBA office to figure out what options

are out there for you. Especially if you're a minority, a vet, a women-owned business, or any combination of the above. There's always going to be some sort of incentive or program out there for, you know, either extremely subsidized money or just straight up free money with grants. That's a good point. So women, ethnicities or veterans, those are the three big ones that go out there and get plenty of money. I like that advice because, um, well, I don't qualify for any of those. Yeah. You're, you're, you're, you're a white male non-vet. So yeah, you're, you're out of luck, but you know, I have a mentor. He would, he would kind of poke fun at it. I mean, he's like, look, if you're a one eye, one leg minority, female veteran, I mean, there's, there's a gajillion

programs out there and they'll just fork over the money hand over fist, you know? So obviously facetiously, but that's just the reality. I mean, I think it's too, a lot of banks that I deal with, they will straight up tell me like, look, Josh, if you've got a loan under this dollar amount, we're probably not going to bother with it. Not because it's not a good deal, but it's not worth our time. It takes them the same amount of time to go underwrite a loan for $350,000 than it does $100,000. This is why I'll tell the audience, if you're going to the bank, ask for as much money as you can, because they're more likely to give you it.

If you don't ask for it, they're not going to give it to you, one. But two, you probably don't know how much money you really could use or need, so just go ask for more. But three, the more money they can fork over in the same transaction, the better, because that's what their job is. It's a sales role and it's based on dollar volume. But they've straight up said like, look, we will look at smaller loan requests if it's a minority, a vet or a women-owned business, because that's like the bank's directive. They really want to try to be able to help. And so it's really interesting. I've been working with a couple of business owners that fall in this section and they understand that. And it's funny because they say, oh yeah, you know, all my other female friends or whatnot, or, you know, complain about how hard, hard it is. And you know,

this other lady I was talking to, she just, she's like, I laugh because they don't understand that these banks, you know, these financial institutions, they have a director to give out as much money as they can to minority women and bed owned businesses. So if you fall in any one of those buckets, they're going to give you way more attention just because of that. I like your advice on taking as much money as possible because these loans, what are the interest rates? When are the payments due? So interest, years, and when do you start paying? I'm just curious to see what's out there. Yeah. So right now, obviously like with EIDL and PPP, those are separate disaster-related

programs. I think they push back EIDL. So if you get an EIDL loan right now, I don't think the repayment starts until 24 months after disbursement. So you don't have to pay the first month of that until two years later. Those are 30-year terms, 3.75%. Pull as much money as you can on those if you have a business and you're eligible. For 7A and 504, the main programs that I deal with, because those are the flagship programs. Those are going to be the ones that are going to be around after all these covet incentives kind of drop off you know 7a right now the maximum interest rate you're going to be looking at is about six percent we just got a quote back for a dentist at five percent depending on the size of your request the credit profile as a whole you're probably going to be in the five to five and a half percent

range most of the time that's a 10-year term. The incentives right now, like I said, they're not going to be charging the 3.5% guarantee fee, which is normally lumped into the loan. That's how the SBA doesn't lose a bunch of money every year. They just charge a small insurance premium on every loan they give out. And the SBA takes that fee and they use it to pay out the loans that go bad. But if you go borrow money with that right now, they're going to also pay the first three months loan for you. So you have three free months of payments and you just start making your payments after that and it's a a straight 10 year term. If you go 504 with a piece of real estate, whether it's a refinance, a building purchase, a build out construction, you're going to be looking at three and a half percent on a 25 year term. You can also use 7A

for real estate by the way, but generally the rate's a little bit higher. Prepayment is not as steep as going 504. So that's why sometimes people like going for a 7A loan for a building. I mean, if you plan on being in a building for a long time, my recommendation would just be go with 504. But yeah, 504, you'd be looking on average, 3.5% rate, 25-year term. And you can usually get a fixed interest rate for a good portion of the loan, maybe the first 7 to 10 years, and then it would just be adjustable after that. Oh, they don't do the fixed at the whole 25 year. No. And part of that has to do with this. So when you go get a 504 loan, the bank is actually giving a 50% first position mortgage. And then the SBA's CDC,

the nonprofit entity is doing a 40%. and the 40% piece is actually on a variable rate. So like there's a whole complicated backend hedge that they don't pay, you know, I don't get paid enough to know about. And, you know, frankly,

that's, that's not even, it's not even usually a concern of the bar. I mean, the differences you're talking are 10th of a point, you know, annually. So it's not a really big deal.

And then I'm just curious. So I know how, but for the audience, what is your incentive to be doing this stuff? How does it fit your end of it? Yeah. So I mean, my incentive, we just charge a flat consulting fee for every project. I mean, the bulk of the fee is structured as a success fee. So we don't really get paid until you get your financing approved and you get your request done. But I have the skill set and the relationships to do this at scale. At any given time, we're working with probably close to 100 borrowers.

We just charge a flat success fee to work with you. And it'll really just save you a bunch of time. Because you're a business owner, you're busy running your business, you need financing, you need help with it. And selfishly, I say this, but just for most business owners, you're best off working with someone who can actually help shortcut the process by finding the right lenders for you. And that's really kind of where we come in. There's a small fee you take as a success fee to get the money and you help them streamline it, get it faster, make better use of it.

Yep. So you're saying this whole thing, if someone had their ducks in a row, meaning they had their finances, they came to you with everything in hand. You think you can get something done within 30 days? Well, it depends. So when I say 30 days, one of the main loan products out there that a lot of people don't hear about under the SBA 7A, it's called the SBA 7A Small Loan Program.

So if you're requesting 350 or less, I have a handful of banks that specialize in doing this program. And those they can, yeah, like I said, they can fund in two to four weeks. a more typical timeline for anything over three 50, something you're just going standard seven a, you would be looking at probably, you know, I I'd say on average, it's closer to like 45, 60 days. But again, a lot of that depends on the borrower because the bank can turn around and get the approval done in seven to 10 days where most

of the delays happen are the borrower doesn't have their tax returns together, their lease documents, their insurance documents, whatever they need for the business as the closing checklist. And it takes some time to go find all that. If you have all your stuff together, you can close it a lot quicker. I've seen traditional 7A loans close in 30 days too, but more typically it's 45 to 60 days just because you've got a lot more moving pieces that most business owners just don't have readily available. Got it. And if someone wants to get a hold of you with questions or possibly to get the loan, what's the best way to do that?

Yeah. So they can reach out to me. My email is joshat7accelerator.com and that's just 7accelerator or you can go to the website. We've got a function there. If you want to go book a call with us, you can book it through there. But yeah, I'd love to help out some of your audience, home service entrepreneurs. I know I'm working with some other guys right now. I've got a guy, he's buying a flooring installation company. They do a lot of commercial, a lot of residential stuff.

They are busy to the brim. So I know there's a lot of opportunity for anyone in the home service business right now to go borrow money. It doesn't matter what kind of contracting or work you do. There's an opportunity to go pull some capital right now and might as well do it while they're paying you. The government's paying you to borrow money by paying the first couple months to loan for you. So to me, that's the biggest no-brainer to go borrow money you could possibly put out there. There's a misconception, and it's the Dave Ramsey's of the world, which I appreciate and I use him. I actually got the Dave Ramsey

program at my company. The thing is that I'd recommend with people is if you're good with money, a lot of the people out there are saying, I don't want to borrow money. I'm cash only. I only do cash. The problem is at these interest rates, the Fed should have raised interest rates dramatically. And they will, just like they did in the 70s, which was very unpopular, by the way, to raise them up to 14, 15% because it stops inflation. And there's going to be things that happen. So if you get locked in now right now the reason why raising interest rates is so unpopular is because they're in it for the short term right you know the allen green spendings of the world and that's years ago now but it's not popular to raise interest rates

because it does slow down the economy but it also stops inflation so this is a historical time. They've done research that in the last 5,000 years, 5,000 years, they've never seen anything like these interest rates to repay. They're so low. Yeah. I mean, in some countries it's negative. I mean, some countries right now in Europe and even some parts of Asia, if you go get just a residential mortgage, the rates are negative because the government is that incentivized to just go pump money out. I mean, it's kind of ridiculous, frankly. What are your thoughts on the inflation and some of these new things coming out about borrowing $6 trillion? I'm just curious to hear your thought process. I'll qualify this by saying I don't have a PhD in economics.

I just deal with small business loans. But the interesting thing about working with small business loans is that you get to very quickly understand the fundamentals of what drives the business. Money in, money out. A lot of what's out there right now in the venture capital world with all these companies that are never going to turn a profit, that have clearly said they've never turned a profit, just raising hundreds of millions, if not billions of dollars, just back to back to back to back. It's a byproduct of having so much capital out there that you've got all these people who've got no idea what to do with it. So like, ah, it sounds good enough. We'll just throw money at it. Right. And, you know, really,

they're only getting a value upside because it goes public. And then they sell to the greater fool, the retail investor who buys into the business model just because they like the company, not because there's any viable or feasible business model. I mean, there's companies where they've straight up said, like, hey, we take a loss in every unit we sell. How do you build a fundamental business around that? You don't, you can't. Well, software in general, the software in general usually goes public as an IPO or a SPAC before they're even profitable at a ridiculous multiple of revenue, not EBITDA, which is crazy. Well, I mean, that's the crazy thing to me, but it's like a lot of what I do with the

FinTech backend, it's like, we're cashflow positive because we're leveraging technology to basically broker out loans. So we have a different business model leveraging the same technology. I mean, the underlying software companies that I bought into and built my platforms off of. I mean, they didn't have a positive cash flow today, but they still had reasonable valuations. But it's just because the anticipated climb and market adoption of their tools and stuff and the future revenue model were what they are. But I mean, if it wasn't something that I had a direct hand in, I would never invest

in a business model like that. But it's crazy. So yeah, $6 trillion is getting pumped in the economy. I'm not old enough to, nor do I have a PhD to opine and all that. But I just think, like you said, like we were talking earlier, the more money you pump in the economy, the cheaper the dollar becomes. So borrow as much of it as you can right now, because over time, as you pay it back, those dollars are going to get further inflated and you're going to be paying back less really in today's dollar standpoint. So if I wanted to get an SBA loan to do acquisitions, is that something that the 504 to the 7A is used for? Yes, it would be perfect for that. I have a lot of lenders that

that's basically all they do. Their whole shop is built around doing business acquisitions and real estate acquisitions. So if you call them with, hey, I need working capital, they don't even call you back. They purely do business acquisitions. So I even have some lenders. I mean, I don't know what kind of size you'd be looking at or what in the audience you'd be looking at. A lot of people would get hung up on, oh, well, $5 million is the SBA cap. I found a deal where I need $6, $7 million.

There are lenders out there that will do a $5 million SBA loan and then stack on a million, maybe $2 million of conventional debt on top of it in an equal term and give you $7 million to go do acquisitions. It just depends on the right deal and the operator and all those specifics. But yeah, SBA is perfect for acquisitions. I really like the idea that some of these companies, you just basically send money in, money out. It's basically cash flow. It's when you're buying a company, you're buying their cash flow. And it's an easy way to scale, especially those companies that the audience that's listening. I think if you're thinking about like I'm in Phoenix to get into Tucson or if you're in Detroit, get into Lansing.

Or if you're in Orlando, possibly like a Tampa, somewhere in a neighboring, distant neighboring city, try to buy a company for three to five times right now, and then go, hopefully you're the platform that you can go add on to it. So very interesting. I love this kind of stuff because I want the listeners to be able to have the opportunity to at least know that it's out there and at least call you up and dig into it. So we've got your email address, 7accelerator. So josh. So Josh at seven accelerator.com, right? Yep. That's, that's the one. What are the three books that you recommend?

I always ask every single person. Oh, good one. Uh, think and grow rich, richest man in Babylon. And then your first hundred million, your first hundred million. Yeah. Last thing I do here, Josh, is I'm going to give you the opportunity to say whatever you'd like to say. Maybe it's something we didn't talk about, but one last final thought. One last piece of advice or encouragement to just go out and do it, but I'll give you the floor.

Yeah. One other piece of advice. Another thing I think a lot of small business owners overlook and don't invest, not necessarily money into, but time and resources is really tax planning and just really planning. What is your 5, 10, 25-year plan for your business? Are you building it to sell it? Are you running it to pass on to your kids? Are you running it just because you want to run it until you pass away? Regardless of what the answer is to that, you got to recognize that at some point, every single business will transition. It will either get sold to somebody else, it will crash burn and you have to close it. It'll get bequeathed to your family after you pass on. And a lot of people overlook correctly structuring a lot of that. And I'm not a tax expert either or

anything by any stretch of the imagination, but I think it's incredibly important that business owners really look into estate planning and tax stuff. And a lot of people are like, oh, well, I'm not going to sell my business for $100 million. Why should I look into that? It doesn't really matter. I mean, you can get a top, top tier tax planning, estate planning attorney to go draft your will and all this other stuff for $5,000 to $10,000. It doesn't cost that much, but it's an incredibly important investment because if anything were to happen to you, car crash, something fatal, something tragic, the cost of not having your affairs in order is going to result in a bunch

of headaches for your family and digging through court stuff. So obviously, I don't hope any bad things on anyone, but it's usually a good idea. It doesn't matter what stage you are in life at getting that stuff wrapped up, getting a living will and a trust set up for you. And really too, on the tax planning side, I say this somewhat self-servingly too, because it's a lot of... One of the platforms we're weaving into my business is we've got a technology solution that will scan a business's tax returns and will automatically identify out of 1200 different federal, state, local tax credits, how much the business is eligible for. And the average we've found is about 50 to 60 grand. But all those things we're finding for them, because we're bringing it to them,

most of these business owners would have never known. And so they don't know because they don't ask. And a lot of times their accountants are just bookkeepers. They're not really tax specialists that are looking at what sort of FICA tax reduction programs are out there, what tax incentives, credits, rebates are out there. And it's just money you're missing out on. Lots and lots and lots of money. Tax strategy. I agree with that wholeheartedly. And I just signed two weeks ago. I signed for my will. I did an irrevocable trust. I'm forming all these things right now, which is actually late. I'm 38.

I should have done it a long time ago. But there's ways to shelter money. And it's all legal. Yeah. And it's all legal. I mean, a lot of people say, oh, why would you need a shelter? What are you hiding? And it's like, look, that has nothing to do with hiding. I mean, I'm sure you've dealt with just assholes that come and try to nickel and dime, sue you for bullshit. And it's just because they know you've got the

money and they know that it's usually a more useful way of your time to just pay someone off. Hey, here's 25 grand, just go away. But a lot of what I've done is structured my stuff the same way because I don't want anyone to harass me. I've already dealt with enough assholes at my young age here that just they see, oh, well, hey, let's try to leech on, let's try to milk. It's just not worth it. But if you protect all your assets in a correct way, sometimes the barriers you just put in place are just enough to discourage people from screwing with you to begin with. So obviously, it depends on... Look, I mean, if you're making 100 grand a year, you know, just sole prop, whatever,

it probably is not as needed. But, you know, as you're scaling your business up, you get to the point where you're making 500K, a million, $2 million a year. You should really look into it. It doesn't really cost that much

to build some really bulletproof, you know, trust the state asset protection structures. Well, that's awesome. I'm really glad we got to do this podcast. I think you gave a lot of great advice. And I do think that the money that's out there, people need to take a really good look and take a consideration of what that's going to do for themselves and their family. As far as accelerating the growth. I talk to guys all the time that I coach and they're like, I just don't have the money to do that. I'm like, this is the time. Trust me, you need money to put into your website. You need to build your brand. You need to wrap your trucks. These things matter. You're not doing any pay-per-click. You're not doing any training. You're not building any training center.

You're not having the right recruiters. You need money. A lot of people, it's going to take them 10 years of sweat equity to get the money they need to actually be successful. This is a good way to do it. Yeah. And like we talked about earlier, it's cheaper to buy revenue than just create it. And so now is also a great time. You got a lot of people that are retiring, they're older. Maybe you know one of your competitors in town. He's 55, 60 years old now. And all he wants to do is just drink margaritas and go golfing in Florida. He would sell his business tomorrow. He just doesn't know what the process is for it or who to sell it to and doesn't want to go to one of those scummy brokers. And so if you went to him and said, hey, look, I can get an SBA loan to basically take over

your business. Hey, you just doubled your bottom line from 400K a year to 800K a year just by picking up his business. And you're paying the bank 100 grand a year on the note. You just added 300 grand net cashflow to your bottom line. There's a lot of cool things you can do. Just leveraging outside capital is the quickest way to scale up. I mean, if all you did with the business was sit on your internal cashflow and grow, it would take you 100 years to get where you need. No one would own a house either. I mean, think about it. Your best possession, a lot of people think is your house, but you got a 30 year fixed loan on it. Or some smart people have a 15 year.

I just don't understand. Like the government has never been better. So I think it's helicopter money. That's the term I like using for helicopter money. You know what? I think, I think you're going to find that a lot of the people out there are going to get ahold of you. So Josh, coming on. Great being here. And look, anyone in the audience, if you even have an iota of interest

in getting capital for your business, even if I can't directly help you, call me, call us, book a call. We'll listen to what you have to say. And the other thing to mention too, I think it'd be valuable as we wrap this up here is, even if it's not a fit for SBA, we've been plugged in with other small business financing and funding companies. I mean, if you've got good credit, but you don't want to go with SBA for whatever reason, maybe you only need 50 grand. We've got a bunch of other solutions and partners we can refer you to that can get you a 50, $60,000 unsecured line of credit with a 0% introductory offer. Yeah. There's a lot of ways to get money. SBA is just one of them. I think objectively it's the best, you know,

if you need a more than a hundred grand of permanent working capital for a business, I think SBA is the best way to go. But if you've got different needs or whatnot, you can still call us. We've got other people we can refer you out to that would be able to suit really any situation. Good credit, bad credit, a lot of money, little money, doesn't matter. I love it. Well, listen, I think this is great stuff. I really appreciate you jumping on today and hopefully the audience is listening and gives you a call. Yeah, sounds good. Thanks for having me on. Hey, I hope you enjoyed today's podcast with Josh Kim.

Listen, if you're looking for some cash injections with some ridiculously low interest rates, then Josh is your man. He can help you get an SBA loan for up to $10 million. Listen, Josh managed to raise $1.2 million to acquire his first company when he was only 19 years old. He knows what he's doing. I work with him. My business partners have worked with him. He's a great guy.

So if you're looking for some funding to grow your business to the next level, go to www.7accelerator.com forward slash A1 to book a call with Josh right now. The reason we have A1 on the back is he takes special care of my listeners. We worked on a special deal for you guys. So go to 7accelerator.com forward slash A1 and I you, this guy's going to take care of you.