Dashboard: Getting Past the Fear

[Music] welcome to another 21 hats dashboard brought to you by our sponsor the great game of business I'm Lauren Feldman and today my guest is Amy casar who is founder and CEO of multifunding Amy is an all-around expert on small business finance who has been a guest here many times before welcome back Amy Lauren always a pleasure to be with you my friend always a pleasure to have you here uh Amy as we record this the debt seiling bill seems to be making its way through Congress which should it actually pass would remove one potential catastrophe from our plate um given your view both into the inner workings of businesses uh and the credit markets I'm curious where do you think that leaves us I mean kind of more of the same it was part of Imagine a scenario where they weren't going to sort this out and right it weren't going to be you know extreme sides of both parties were going to be mad although you never know you never know in this crazy world we're living in Lauren but I know all the things I think about and I worry about and I contemplate um whether I was right or wrong I just kind of always assumed this was going to get sorted the implications of it get not getting sorted I think are just way too severe for uh too many people involved I think that was the approach of most business owners I talked to it it just it was impossible to even contemplate so why contemplate it and and I think that would probably well it looks like that's going to be a good strategy uh the way things are headed right now but we're still in an in a challenging environment The Wall Street Journal last week ran a story suggesting that uh the credit markets are are tightening and banks have less Capital to lend their you know rates are obviously higher it's harder for businesses to borrow money uh that's the business you're in what are you say you know I read that article I think I was actually quoted in it and it's interesting we work predominantly not exclusively but predominantly in the SBA world and we haven't seen the tightening of credit that people are talking about at least in the sphere of the world we live in that doesn't mean that it's not harder to get a deal funded but it's harder to get a deal funded because it's tougher to get at a cash flow because rates are much higher and kind of what you have to remember on a global level is that the feds needed to slow the economy down and it's starting to work maybe it took them longer than they thought and they um by Design felt that to bring inflation under control they needed to slow things down a bit and create pain here and there and it's sad and but it's the reality of the situation we are seeing SC scenarios where people are running out of their Idol money that kept them going for a long time um and different solutions scenarios like that so things are getting tighter but I'm not sure just to pin It On The Backs is necessarily the right thing to do I'm curious I don't think I've ever asked you this before but do you have a sense what percentage of your customers who come to you looking for help getting financing want that financing because they're struggling or because they're looking to grow Lauren that the the cheese keeps moving and what you have to remember is that not too long ago the government put about $360 billion doar of idol money which is 30-year fixed money at 3.75% into the hands of entrepreneurs without proof of economic injury during during Co now legitimately there were some businesses there that were decimated in Co and needed it but there were plenty of businesses who got that money either it gave them a Lifeline they were struggling before covid or they were growing and they took it anyway so it's really hard to evaluate that kind of the state of small business Landing now because there was that large significant boost on balance sheet and it's I mean I was speaking to a friend the other day who got a half a million dollar Idol and his business might shut down soon and he wanted to know if he was on the hook for it I said you are didn't make him happy and he said wait on the hook for it even if his business shuts down yeah it's person that's personally guaranteed debt he's on he's on the hook for it and I but his business wasn't hurt by Co at all maybe it was helped by Co and so I kind of said to him come on like you got lucky with that load he said we needed it to survive I said that's not the root of what the idol load is all about so there's such there so many balance sheets are still saturated with capital that from our perspective it's really hard to really understand what it's not an ordinary economic cycle for lots of reasons including that interesting are there other metrics that you watch to determine you know where kind of the small business economy is headed do you do you what do you look at to assess where things are going we have a temperature what's going on with the people that are calling us for different reasons and so we definitely have a feel we think a feel for what's going on in the market we are extremely reluctant though to assume that our feel is represents the entire small business market for a couple reasons and predominantly small business is a super hard thing as we've talked about plenty of times to Define what that means right means something different to everybody there is won't make fun of them but I will a a a company called bis to credit that often that regularly reports the small business creditor profile and they it gets in the Press somehow all the time and they do it off of the people that come to their site to apply for credit and my my argument to that is well if I went to the Greyhound bus stop and asked a bunch of people about their experience for applying for S small business loans and then extrapolated that into data and called that a study it would probably be as valid as the other one so um I I'm always reluctant to make assumptions that our data set you know clearly we are seeing people with working capital challenges clearly we are seeing some people with um who've run out of their Idol money and they now trying to figure out what to do um then there are plenty of businesses that are still growing and thriving and doing great we have not seen much to our amazement a slow down in the acquisition Market still plenty of people and entrepreneurs buying businesses so it it's but that's what we're seeing all I'm trying to say is that you have to be careful to assume that what we see represents the overall market right um Al along those lines speaking entirely anecdotally I have had the sense in the business owners that I've spoken with that some of them were kind of holding back a little bit and wanted to see you know we've been hearing about a recession looming for a long time the the debt sealing thing it just contributed to an environment where they thought maybe this isn't the time to try to expand let's let's see what happens but Lauren we've been hearing about a recession for yeah I know I know for three years now and that's why again not to make fun of someone else but vistage puts ITR like the economics forecasting experts up on all their stages at their executive Summits and I ignore I don't read any any economic forecasts anymore I stop reading them why we tell me when in history governments not just us but governments literally printed trillions of dollars to keep people off of hunger lines and to keep people alive and to keep Banks solvent and all these things and maybe we overcorrected by 20% or 30% Almost Doesn't Matter overcorrecting was safer than underc correcting um but now I wouldn't want to be the Federal Reserve today trying to figure out what to do now the the economy is so artificial you know you would think but you are a business owner trying to figure out what to do I ignore it I just go about building my business because I I I figure if I get so focused on the noise and so worried about all the noise around me it you can quickly become eaten up with um sort of fear I'll never forget once some folks had a call with me to talk about their business expansion plans and it was the day after Russia invaded Ukraine or two days after the call was scheduled for and they canceled it it was a US business they canceled the call because of their fear of the implications of the invasion of Ukraine or you know AI is out and prevalent is that going to knock me out of business or all these things you've just got to keep your head down and keep moving and keep trying to figure out how to grow and what to do or because if you pay attention to all this stuff um uh you you are in my opinion you you'll just get lost in in the Quagmire you might not agree with me but that's how I see the no I I I absolutely agree with you I think it's worth asking the question sometimes because you just you can't just ignore everything and you know if the Eon if the economy is in fact going into recession someday maybe maybe that's a great opportunity to expand your business that that certainly happens maybe it's not but but you kind of to think about it and assess it and then that's why I ask about it to but Lauren to a point but at the same time if you get my your point is that you know every other day somewhere in my newsfeed I see an article that the stock market's about to crash or this or that or the other and you see all these different point of views and I I stopped reading it for a while because I'm like I just got to go about building my business fair enough all right next topic you recently testified before Congress about uh looming changes that the SBA wants to make uh you're uh as any readers of 21 hats know you're not a big fan of those changes what was the experience like testifying well testifying in front of Congress irrespective of the issues that are I'm passionate about and and important about was certainly an interesting experience first of all I had about 4 days notice to get ready and it's a hugee amount of work because you have to submit your oral testimony and supporting rest written testimony 48 hours before and so I would say there's there was a good 40 or 50 hours of working all that alongside a you know pretty crazy other things I have going on in my life but the um you get to the room and as you know I'm a pretty you've seen me in Action a pretty avid public speaker um and you're sort of sitting at this desk with a microphone staring up at these women and men who keep walking in and out they come in for their questions and they leave and this that and the other and just like and you're wondering like are these freaking people listening um and why am I doing all this so that's the cynical side of me um the other side of me was certainly was an amazing experence and I would do it again in a heartbeat um to have the opportunity to try to influence the debate of some of the policy about what's going in in Washington as you've written you you're opposed to the um SBA changes to the extent that they kind of bring some alternative lenders and fex into the SBA world and make them eligible to to give SBA Loans uh you've talked about why you're opposed to that c can you do you think anyone was listening do you have a sense what's going to happen I I don't have a sense what's going to happen I know there's an intense lobbing effort to try to slow down the train that's already left the station I know that de both Democrats and Republicans are concerned about it but Washington as we know is a funny place and things work with their own Rhythm and I'm certainly not an expert on the Dynamics of the of the Town it is fascinating though to me that I want to be clear I'm not opposed if this change was just we're going to add some fintex into the program and let some new lenders into the program and that was it I would say God bless have at it what I'm concerned about is you're letting new lenders non-regulated lenders into the program and at the same time to make it easier for them to lend expeditiously you are removing a good 60 to 70% of the guard rails that have supported the SBA program for decades and so it's literally like you're taking a great lending program that has supported hundreds of thousands or millions of businesses over the years and done it without taxpayer subsidy and literally turning it into a MTH science experiment just in case somebody doesn't know Amy it's without subsidy because the SBA doesn't actually in in most cases or almost all make its own lend its own money it's just guaranteeing the money right that's guaranteeing and people pay and borrowers pay a a guarantee fee when they get the loans and lenders also pay some fees and also the SBA has not cost the taxpayer money for decades and has been this great economic boost to the economy now if you make wholesale changes all at once and they are wholesale changes what you do is you risk the um ability to even understand what's going to happen or where defaults might come or where fraud might come or this or that or the other it's really pretty frightening to me that one lobby would somehow manage to get so much change through all at once the other thing that's upsetting to me is that the the um impetus for us which is a great goal is to get more access into the capital into the hands of underserved entrepreneurs and many are tying the PPP learning experiences with the fintex uh to do all this uh what I would say is that you've got to be careful first of all PPP lending is not SBA lending in any shape or form a and I found it ironic Lauren where some of the Congress people were drilling particularly Tony werson from Nel the association of government guarantee lenders about the stats on SBA lending to predatory lend to to underserve markets but they don't have any data to understand what's going in that market today because all the unregulated ftech lenders today are not required to report their loan volume and so if you say SBA under sered volume was x00 million or x million or whatever the number is and went up from this to that you can't see it or understand it in the bigger picture of the lending and the finance market and that was extremely frustrating to me that it didn't seem that the Congress people had an understanding of that all right last thing um I happen to have inside word that in your upcoming 21 hats columns over the next few weeks you're going to be talking about several entrepreneurs facing uh specific interesting challenges growing their businesses can you give us a little hint about where you're headed with that sure so a mentor of mine I was chatting with him last week he said something to me interesting is mentoring entrepreneurs or coaching them is often just about F not just about often about following their feelings and what I find is that in many cases entrepreneurs know what they need to do next to get their business to the next level they're just overcome with fear about taking that step and anxiety and it's it's a hard it's always a hard step to make to push to the next level and so what we're going to try to do is write a couple columns that dig into that theme talking about one entrepreneur who's got could double triple or quadruple their business if they had more staff and he knows what he's got to do is he's got to get out of doing the work and get more hands in and find more people like him which is easier set than done to grow his infrastructure and he's scared to do it another entrepreneur who knows in his heart that his bookkeeping and his accounting and his his all his financial mechanism NE mechanisms of his business are not running well and he needs to upgrade that yet he feels in intense loyalty to the woman who's been with him from the beginning who's doing that and he's having a tough time making that change and finally we will talk about another entrepreneur and and I'm not mentioning their Industries or names yet because I'm so finalizing with what they're comfortable with me saying and not saying who she's actually taken the next sleap to grow her business and trying to expand it more from a regional to a national platform and she's put people in place to do her current Regional business and she's out there trying to promote the world and build her brand nationally and so when you're in the thick of it she's scared and understandably so and dipping into her line of credit which is not the best way to finance what she's trying to do right now so we'll also talk about not just the fear of taking the next step but once you decide to go all in the fear of living through it until you get to the other side as well are you going to be able to offer a solution to that problem the the fear of taking the next step well I think that part of it and what we find is universally that most entrepreneurs um don't have um a really good handle on their financing and their ability to project or forecast their businesses so one of their recommendations is to take some time to try to really understand your business model and work with a fractional CFO or somebody to help understand what your business might look look like financially going forward and what the cash flow implications will be if you make that step and maybe if you need some fin financing help around it how to look at that so that we can see the broader picture and that is definitely some of the recommendations about what it do but I'll say it again I always say get yourself in a peer group so that you have PE who've been down that road or going through that road to support you through the process that sounds really interesting Amy really useful I know I'm looking forward to reading those columns as soon as you actually write them I think I have one in your inbox uh I didn't realize that I will take a look at that as soon as I have I I have the intro one in your inbox I'm going to read that as soon as we finish here sounds good Ami casar is founder and CEO of multifunding which helps businesses with their financing needs this episode was brought to you by the great game of business which helps businesses use an open book management system to help build healthier companies you can learn more atre game.com thanks for taking the time ammy always it's a pleasure my friend have a great week everyone [Music]