Financing for Your Business and Deals

Mike: Hey it’s Mike Hambright from FlipNerd.com. Welcome back for another exciting expert show. For today’s show I have with me Erik Gantz. He is the founder of acebusinessfunding.com which is actually one of FlipNerd’s, this very shows, platinum sponsors. So a little bit of a special segment today.
Ace Business Funding has an incredible program for small businesses, including real estate investors and really any type of small business at all or they can help owners get access to a lot of credit lines that you can use to pay for inventory. You can actually even use it to buy houses and fund rehabs and marketing expenses, really anything that your business might need. It’s very flexible.
It’s pretty amazing to me because when I started in the business, credit was impossible to get. It was very hard to find capital and things have changed a lot lately because of companies like Ace Business Funding and because of Erik. And so this is not our typical interview style show. We’re going to talk to Erik a little bit and learn more about how Ace Business Funding can help listeners of FlipNerd.com and help our members. So Erik, welcome to the show.
Erik: Thanks so much for having us, having me I should say and I’m excited to kind of see if there’s a fit here for your listeners and if there’s some value that we can provide them by giving them access to this type of capital that we do.
Mike: Yeah, and I didn’t even say it in the intro, but I know we don’t have to go into this now, but I know sometimes the rates start as low as 0% right?
Erik: Yeah, so a lot of the credit lines that we target I’d say every credit line that we assist our clients in obtaining are going to be 0% for a minimum of 12 months.
Mike: Wow. That’s incredible.
Erik: Some of them are as high as two years and so we try to obviously get it as high as we can for as many months as possible. As you can imagine from the way it works with real estate flipping, to be able to leverage 0% funding and be able to flip multiple properties just adds to your bottom line.
Mike: Yeah, I know when I was starting, this was the first bigger business that I started as an investor and we’ve done quite a bit of volume but lots of people kind of discuss “Well can I get a small business loan?” I mean there are so many hurdles with that and so many challenges to get funding or historically there are. And maybe you could talk a little bit about the importance of having access to capital and multiple sources of capital as a small business.
Erik: Absolutely. To the point of small business loans and SBA loans and things like that, those are definitely very, very difficult for a start up company or say a real estate flipper to acquire. The SBA [Inaudible 00:02:30] loan to businesses that have been in business for a long time and it’s simply changing ownership. So if you want to buy the dry cleaner down the street that’s been in business for ten years, the SBA will run on that all day long.
Mike: Because there’s a proven track record right?
Erik: Exactly. They have books, they have debt coverage and everything’s documented. So they are very, very risk adverse and they want to loan on things that they know will essentially have very, very, very low failure rate. So that’s where our type of funding comes in to really help that particular niche and we’re able to help start-ups and real estate flippers and people that are seen by the SBA and banks in general as pretty speculative. And so it’s filling a very nice void as you can imagine.
Mike: Yeah, sure, sure. It’s interesting when thinking about your I mean can you share some experience on what some typical ways that real estate investors use Ace Business Funding and how they might use those lines.
Erik: Sure. So to your original question, the importance of having access to capital obviously, it’s a pretty no-brainer. I mean if you get a deal that comes along and you need money to close on it, otherwise someone else is going to jump on it, then being able to write a check and get that deal done is cash is king. So to be able to have that strategic reserve available at any given time, it’s huge. And so we see that people that have access to this type of funding when these really awesome deals come along, they’re able to take advantage of them and really be able to make some good money and some good profits and returns on that investment.
Mike: Sure, sure. I’m kind of sitting here thinking of different ways people might use it. And I know there are a lot of folks that run into a couple of situations. So I know that a lot of folks use traditional hard money. The reason that they often use hard money is because it’s easy and even though it’s a higher interest rate type product.
And even to the point to where they may have a local bank that they could use at half of the rate of a hard money lender. But they just ran up against the challenge of still needing to maybe have 20% down or they can’t move quite as fast. This seems like this would be an excellent product to be able to pay for that 20% down even or even more transactional funding where you need to close on something for a few days and then you’re going to cash it back out. Is that something that you see a lot of?
Erik: Oh yeah, we see that all the time. So to your point, the way the funds are utilized it goes from A to Z. So we have clients that will take 100,000 in funding at 0% and actually go buy a property outright. Then they’ll invest additional funds and flip. And maybe having it and then flipping it. And we have a lot of clients that do use it in conjunction with the hard money because as you know hard money is collateral based. So they’re going to want to see typically about a 70% LTV. So that 30% you’re going to have to come up with to close.
So we see that the down payment money to equity component being used with our funding for both hard money and traditional mortgages. And obviously if you’ve got a big rehab, it’s going to be they’re running you 50, 60, 70, 80,000 access to this type of money to make sure that you’re able to not run out of capital as you’re doing your rehab and thus extending your ability to get into market. So having access to the funds, the sky is the limit as far as how you want to utilize and apply it which is what makes it such a powerful tool for real estate investors.
Mike: Yeah, and tell us about the form that it’s in. I mean ultimately you have almost like checkbook access to these funds. Is that how it works?
Erik: Yeah, so there are lines of credit which you can use in two different ways. So you can have checkbook access where you can what we call liquidation, you can liquidate the lines, [inaudible 00:06:19] the money off, put it into a bank account and then write checks against that at 0%. As well as all the lines will also come with the ability to use as plastic too. So all lines of credit will have a Visa or MasterCard which you can use. So if you need to run to the store and buy some materials you don’t have to go to the bank, grab cash to do that. So it gives you the flexibility to use the money as you need it and as it’s most convenient.
Mike: Yeah, that’s awesome. I know, I can even imagine a lot of folks that even if you do use hard money or some other source where you get repair draws, there’s always the challenge of your contractors need to get paid much faster than you’re able to get your repair draws sometimes. So this could even be a great bridge or possibly even fund your rehab largely through these lines rather than fund that part through a hard money lender or some other type of lender.
Erik: Absolutely. And it’s great for cash flow float. Again anywhere in your business model where you can have an injection of capital, the funds are not limited by use at all. As long as you’re using it for legitimate business purposes, you’re good to go.
Mike: Yeah, that’s awesome. And of course as a real estate investing show, I think we also have a lot of listeners that are contractors that serve our real estate investors because on FlipNerd.com, we have a vendor directory of thousands of vendors in markets all over the country. So lots of general contractors, plumbers, electricians and stuff like that. So I think we have quite a few of those folks. So just to clarify, this can be used for real estate but it’s and I know you work with a lot of real estate investors, but this is not just a real estate investor product, right?
Erik: No absolutely. The real estate aspect actually came a little bit later in our life cycle. We first started out really targeting the franchise industry and found that there was an extreme need for funding for [Inaudible 00:08:07] start-ups. So since about 2008, we’ve been working with franchises such as Subway, 7-Eleven, Coldstone. You name the franchise, we’ve probably funded several units. And over the last few years, as the real estate market has really started to heat up again and people are kind of getting back into it, we were able to fashion the funding in a way that would work really well with real estate investors.
I have a mortgage background myself so from about 2003 to 2007, before Bear Stearns imploded, we were doing pretty well out here in Las Vegas. And then when that whole lending dynamic and the landscape changed forever, we kind of put it in our model to doing what we do now. And so we have a pretty unique perspective and understanding of how these funds can be applied and add the most value from a real estate investor standpoint.
But yes, we do help all businesses of all stripes and so for your contractors and your other service providers, this can help them with their materials, making payroll, buying equipment, any of those types of considerations.
Mike: That’s awesome. That’s awesome. So can you maybe take a few minutes and talk to us about who qualifies and the process, things like that. I know you’ve made it very easy which is one of the reasons why we wanted to work with you because our folks like easy. So just talk about the process a little bit and how that all how somebody would do that?
Erik: Sure, that’s a great question. So our program is pretty much 100% credit-based, meaning that our lenders don’t really, they’re not really too concerned with what industry you’re going into. If you’re flipping real estate, buying a franchise whatever that looks like. It’s really the underwriting methodology here is essentially based on the fact that if you have good credit as a business owner, that throughout your life, you’ve developed good financial habits. And the same financial habits are going to be brought to bear to run the company’s finances.
So based on your good credit, the bank will sort of leverage that and assume that your good credit is also going to be sort of transcript to your company. So that’s sort of in a nutshell how it works. So as long as someone’s got about a 680 and up, it’s kind of what we like to see, 680 and up, obviously the higher the better, but 680 is about where we like to start. And again, that’s not to say that we are not happy to look at other people that maybe have a lower than a 680.
There are a lot of different credit challenges that are easily remedied, there are some that are not so easily remedied. But we’re happy to look at everybody and if we can, help them at least give the some direction as to what things they can do to help fix their credit to become qualified ultimately.
And so we’ve been working on a new system that is the first in the industry, I think it’s the first on the planet that I’m aware of, where someone can actually go pull their free credit report, it’s a consumer based report that will give them access to all three bureau data that won’t result in any enquiries under credit. And if they go to the website behind me, I’m not sure if you can see it, but it’s acebusinessfunding.com, it’s a page that we’ve built specifically for people to come in and have the opportunity to sort of pre-qualify themselves.
So you’re not having to talk to anybody in our office, you’re not going to have anybody pressuring you or do anything like that. You can go on all by yourself, pull a free copy report, upload it to our system and our proprietary algorithm will actually, will take and parse that report and within a couple of seconds tell you exactly how much funding you qualify for. And the terms if you’re going to get that funding. So it’s pretty awesome. So people can kind of go on even if it’s just to just feed their interest, go on and check it out and see how much they qualify for. Whether or not this would be something they’d be interested in pursuing.
Mike: Yeah and just to clarify, this is a revolving credit line. I mean you have access to it, doesn’t mean you have to use it. It just means, some folks probably just have access to I know for example, I have access to some other lenders that I don’t tap into all that often but it’s there if I need it. So it’s not something that you necessarily have to use, right?
Erik: Yeah, that’s absolutely correct. So one of the benefits of our type of funding is because they are revolving lines of credit, you have access to the money when you need it and you only pay when there is interest, obviously in the beginning there will be no interest. But if you are in an interest bearing environment, you’re only paying and utilizing the funding that you’re actually using.
So unlike say, an installment loan or a mortgage or something else like that where you get that lump sum all at one time and you start paying interest on the entire amount whether or not you need it all, our lines are so if you have $100,000 in funding and you only need 20 of it, then you only access 20 and you’re only going to have to deal with 20. So the other 80 will be sitting there as a strategic reserve that you can tap whenever you need it.
Mike: Wow, okay. So again, tell people, they go to Ace Business Funding and they’re going to fill out, I guess a form to get started on the site, walk us through that process and how long each part would take?
Erik: Yeah, so it’s super easy. We affectionately call it our 60 second app because it’s really that quick just to get the initial pre-qualification. So we ask you a couple of questions, your name, your phone number, email address, things like that and then it will drop you into the last screen on the application process drops you into that credit poll site. So that takes about five minutes to do and then again it’s 100% free. It won’t result in any enquiries.
So there’s really nothing but upside for you just to go and check it out and see what we can do for you. You’ll get a copy of your credit report, your instructions on how to upload it to the site and have that proprietary algorithm sort of run over it to see exactly how much credit you qualify for and how much funding you qualify for.
Mike: Awesome. And tell us one more time, I know we gave some examples or you gave some examples, are there any restrictions on what people can and cannot use these funds for in their business?
Erik: No.
Mike: And there’s no process where you want to take money out and nobody’s asking you what you I mean we, of course people we want people to use to be good stewards of that money because they are on the hook for it obviously. But are there any restrictions on you know what they could and couldn’t use the money for?
Erik: Unfortunately there aren’t any restrictions. And I say unfortunately because we’ve seen some unfortunate uses of the money. So obviously when you have the access to the funding as the business owner, you can spend it freely. So long as it’s not being used for anything illicit, you can use that funding for whatever you want. In some cases, we’ve see some pretty dubious uses of the money, going on a vacation and claiming it as a company trip or buying a boat and saying that it’s you’re using it for marketing purposes.
So we would highly discourage the funds to be used in that way, not to try to mask personal expenses as legitimate business expense. But again, we can’t stop that once the funding has been granted. It’s completely up to the business owner to be smart with the money and use it in a very wise way.
Mike: Yes not too different than a credit card. You can go and rack up as much debt as you want. Of course, that is a fantastic tool if you use it wisely. And it could get people into trouble too so we don’t want any of that. But I think there are a lot of businesses that could benefit from having access to capital to grow their business and fund their own growth. So if you’re listening to this please use it wisely. But it sounds like a fantastic opportunity. Erik, is there anything that we haven’t covered yet that we might be missing?
Erik: No, I think we’ve run through everything pretty well. Again, if anybody’s got any additional questions or would like additional information on what we do, again, we help hundreds of people a month and we would love to help your viewers. Our organization is extremely low key. We have more businesses than we can really handle. So if you do want to engage us we promise its not going to be a high pressure salesman environment.
At this point we are just trying to help as many people get as much money into people’s hands that could actually use it, invest it wisely and just create wealth and that’s really kind of where I’m at today. I just want to help my fellow business owners at this point try to get to the next level because I was at that point once in my life. And we have access to some great financing tools and we just want the whole world to be able to take advantage of it.
Mike: That’s fantastic. I see so many ways that real estate investors can benefit from having capital even if they use it sparingly and for short term transactions and bridge lines and stuff like that. Again, anybody that’s interested, they just need to go to acebusinessesfunding.com, is that right?
Erik: Yeah, acebusinessfunding.com. It’s a simple one page landing page that they can go on and fill in their information and get that pre-approval process started and the one I think one of the ways that I may want to impart to close here is that even if you’re sitting there listening right now thinking, “Well I’ve got all my bases covered, I’ve got plenty of access to capital as it sits.” It can only take one deal for that capital to go away and then all of a sudden, you’re without capital and then another deal comes along and you’re scrambling to find out how you’re going to be able to finance that deal.
So having a strategic reserve, having that money sitting there that doesn’t cost you anything to have access to it because there’s no annual fees, there’s no residual costs of the money if it’s just sitting there idle, we’ve seen so many instances where people have called us back and said “Man, I’m so glad I had that 80,000 available because I just closed on this awesome deal.” And then alternatively, we’ll have people call in and saying “Man, I need to get that funding in place, I got this deal I need funds tomorrow.” Well, sorry man, we need at least 10 days to 14 days to get that funding in place. You should have come to us earlier.
So I would just ask that if you think that there could be deals on the horizon, things that maybe coming down the pipe that you want to jump on and have access to capital for, don’t delay. Come to acebusinessesfunding.com and see what we can do for you and we’d love to be able to give you that money that will empower you and be able to give you additional avenues to close deals.
Mike: Awesome. We’ll add a link, obviously it’s acebusinessfunding.com, we’ve said it a few times. We’ll add a link down below for those that are interested. Erik, thanks so much for joining us today, thank you for being a sponsor of the show. I think you have a great service for real estate investors. Real estate investors are to your point that you were just saying that a lot of real estate investors are real estate rich and cash poor and certainly it’s a roller coaster of having a ton of cash that you need to apply to all of a sudden its soaked up somewhere. So I think having access to it is a great thing. So we appreciate you and thanks for joining us today.
Erik: Thanks so much for having me. I really enjoyed it.
Mike: Awesome. Thanks Erik. Great to see you again and we’ll talk to you soon.
Erik: Okay, sounds good.
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