Dashboard: What Are You Seeing Out There?

[Music] welcome to another 21 hats dashboard brought to you by our sponsor the great game of business I'm Lauren felin 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 and who writes a column for 21h hats.com Welcome Back Amy Lauren always a pleasure to be with you my friend my pleasure Amy you you and I have been talking lately and I know you have a sense that the economy may be shifting uh a little bit I'm not asking you to be an economist or to make predictions but you do see inside a lot of businesses you see how they're doing and what they're trying to do uh especially in terms of trying to raise Capital uh so tell us what are you seeing out there yeah Lawrence so it is interesting again uh this is not impacting everybody but it seems to be we've got um more and more small business businesses or entrepreneurs the accumulative impact of a number of things um higher costs Co money rate running dry higher labor costs higher borrowing costs etc etc are starting to cash up and cause slowness um or slow in in many businesses not all but many and what impact is that having especially when it comes to uh Bank lending so look it it's interesting because I've always been hesitant for the last in general I'm hesitant to predict economies or what's going to happen to interest rates or this or that or the other because I've always sort of especially since covid started and we I don't think there's any playbook for uh all the economic dominoes of infusing trillions and trillions of dollars of cash into the economy and so for years everyone said oh this recession is coming this recession is coming and I didn't believe it because I felt that um there was so much Surplus cash in the system that it was hard that I thought it was going to take a long time for that to cycle through and I also thought that a lot of inflation was coming but we've sort of had this halo effect um since C Co I think yes Money's been more expensive and prices are higher but there was still so much Surplus cash in the system the question is is that starting to catch up kind of on a on a macro level and a few months ago I wrote a column in the um on 21 hat saying that we were starting to see some weirdness in small business lenders credit boxes or credit people tightening up been getting weird and that typically is an indicator of TR potentially troubling sides ahead in the economy we've seen that before and that started to give me pause over the last several weeks more and more of the phone calls we are getting our business owners um hitting cash flow walls hitting speed bumps or craters that they weren't expecting like things were going going going going and then suddenly crash I mean what do you mean by a cash flow wall you mean that they're running out of cash yeah well they they're having a wall is like I'm how I'm gonna make payroll next week they haven't worried about that for years and now they're wor oh that wall yeah I woring about that all of a sudden okay or um they are about half of the pl pnls we're seeing the numbers are flat or down on the top but the profit margin like the profit on the bottom is lower because of higher costs so it feels just intuitively that for some businesses things are starting to slow down so and this might even be an interesting survey for you to pop up on 21 hats but or maybe even tied to this thing but I put out on some of the message boards I'm involved in just asking entrepreneurs H how are you doing this year are you up and running and doing great or are things slow and tough and the answer didn't really is about half and half so I think there are plenty of businesses out there um that are starting to have a tough time do you have a way of tracking the demand for uh bank loans do you have a sense that businesses are are looking for I mean if you're worried about meeting payroll you're probably not looking to borrow money to expand um are you seeing that are you seeing Banks lending less money you know it's it's it's interesting Lauren because I I'm always hesitant to use our data as in like to to create surveys or whatever based on the data about who calls us and who we help try to help because I um I I'm not sure out our information is St statistically significant enough um but it it feels well for many years postco there was we used to do a lot of small like $350,000 or less working Capital Loans growth Capital Loans with the SBA and the economic injury disaster Loan program dried that up considerably the demand for that is starting to pick up again um largely because I think people are out of their PPP money and their idle money and that it is suddenly people need infusions what they don't realize there is that they have to go back to the government and um ask for a lean subordination which may or may not be easy to get because the idol there's a lean with the idle program on their on their company so I the data is hard to read and then on the flip side of that Co um many not all banks but many banks are tightening up and uh tighten tightening up the requirements to land I don't think I'm not trying to paint a Dooms Day scenario here it's also an election year which typically things slow down with the uncertainty of an election year and there certainly is a lot of uncertainty out there this year yep um but there's just a lot of noise out there right now I will not be surprised if we start to see interest rates coming down pretty soon because I think that um they're going to have to release that valve you said that uh you're seeing Banks tightening up uh are are you seeing clients that you're trying to help get a loan uh not get loans that you think they would have gotten uh in the recent past yeah in some cases now we're for forunate because we're Fighters and we don't give up all right so um we're always hunting out there for that lender who may who's still open to doing the deal but the um it's not I I think it's a fair statement to say look just purely from the cash flow perspective borrowing costs are higher so to pass cash flow today to get a loan is more difficult than it was 6 months ago um or a year ago and then comp that's just from the cost of the money but then if the business is not also performing as well that makes it also difficult there are plenty of companies out there that are still doing just fine and healthy but for every good story there's also a seems to be a story right now for a company that's having a bit of a tough time I mean obviously it's a very happy thing when a business that's doing well comes to you for help uh to get Capital to to try to expand and grow are are you seeing companies coming to you now because they're not doing well and they think alone will help them write it out um a lot and the answer in those situations is and i' I've written about this a lot we've talked about it a lot over the years Lauren is slow down and take a deep breath the instinct is that money will fix everything and while sometimes uh money is definitely important I'm not saying it's not um you also have to look overall at what's going on is there something that has to be resolved do you have to cut some expenses um can you stretch some payables um you you you you have to tighten up the controls around you and get some economic forecasts and projections in place and really get a good handle of what's going on this is where and where the predatory lenders love to jump in and and when people are emotional um offer them money quickly and that is usually the biggest mistake you can make fortunately there are some expedited SBA programs like bolt loans that you can in certain cases get up to $150,000 on the tenure amortization and get it in like 10 days and those can help but just money itself just looking at it like I'm going to get a loan now and everything is going to be okay is usually a bad idea whenever you're here Amy I I like to have you remind people that if you get turned down for an SBA loan at One bank that doesn't necessarily mean you can't get it at another I think you were implying that a moment ago uh that you know you keep looking how long do you keep looking how how many banks do you try well sometimes again if if you're if you feel like you need money there's always more than one way to skin a cat and sometimes you I always say like take a deep breath or a cold shower and now let's figure it out um how much money do you need should it be a term debt or a line of credit what are you trying to sove for um what's it going to accomplish for you and then once you've laid out a couple alternatives to get what you need um then sometimes you got to kiss a bunch of frogs to find your PRS now I don't know what the right answer is of how many banks and also the best lender for you may or may not be in your backyard so how long do you keep going Lauren I think that's a um I don't think there's one answer to that question I think there are a lot of it depends in there it depends on what you're trying to accomplish how how tight your situation is got it I would also remind every everybody that times of like change like when times have changed if we're living through one now and I think we are also create opportunities so yes you you you you have to live with the um you you have to live through it and live to fight another day and maybe adjust some strategy and cost but you also have to look at the change going on around you and ask yourself what opportunities might this create for your business because we will get through this um I'm not here painting a doomsday scenario I'm not here saying that I think the world is coming to the end to the contrary economies never move in straight lines and um rarely do companies ever move in straight lines also and so sometimes you just and if things are moving through a bit of a p pivot in the macro sense you also have to look and say does this create opportunities for you in your business as well maybe you have competitors who are having a tough time and this is a a good time to try grab them up and purchase them um there are all kinds of different scenarios but I haven't said this for a very long time I will be very surprised if we don't see interest rates start to drop shortly how is all of this uh affecting your business Amy you know presumably if banks are tightening up and fewer businesses are are looking for loans that has to have an impact on on multifunding I would think yeah we're you know we're um while our volume loan volume is up year to date our revenue is about flat and our expenses are up so uh we've been making some adjustments also proactively trying to get ahead of the curve I'm managing cash much more tightly than I was for last year um looking doing cash flow projections a week ahead two weeks ahead three weeks ahead four weeks ahead um and uh We've also um we we we're trying to get ahead of the curve not behind the curve um now also in our business it's interesting because um we have two sides we have a lot of fun when we help businesses that are thriving and doing great and trying to grow and expand that's the fun part but sometimes we're also there's also businesses also need help when they're struggling or their Banks they're in workout with their bank or things aren't going so great and they need a different type of line of credit or move to an asset-based line or thing like that so we're going to be fine but uh We've tightened up our hatches and are uh going to push through it but you know we've cut some things out of our budget um just as as we work through all this you said that in times of uncertainty there can be difficulties but there can also be opportunities are there any opportunities you're seeing out there for your business oh yeah I mean we are we are um we are looking at adding other product lines and services tied to this we are working with more and more people um when their loans are in the restruction groups of Banks and there are other opportunities to help them that's not as much fun as when you're helping someone buy a business or grow a business but we're we're we're doing more work on the other side of the co that we were doing last year or the year before um we're seeing some Main Street lending programs those loans come up to roost and people need to get them restructured and refinanced so um we're you know we're going to be fine but it it we have to Pivot also and I think there are many businesses out there that need to think about pivoting as well 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 build healthier companies you can learn more at Great game.com thanks for taking the time ammy Lauren always a pleasure thank you so much have a great week everybody [Music]