Joe Valeo, CEO of Small Business Loans, Shares His Company's Services | The Biz To Biz Podcast

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Hey everybody, welcome to B2B Vault, the Biz to Biz Podcast sponsored by Nationwide Payment Systems. And today, this is the first at B2B Vault, we actually have a— in the office, in the podcast studio, Joe Vallejo from smallbusinessloans.com. And I've known Joe for many years. We're just like reminiscing many years about all the stuff that we were— all the people that we know and the business and all that. And, uh, Nate, you know, so Joe's the president of smallbusinessloans.com, and we're partnered with them for our clients. And we've launched our new merchant toolbox, and the merchant toolbox has tools in there for business owners that maybe you do business with us now, or you want to do business with us, or you just need one of the services in the toolbox.

Toolbox.

One of the services in the toolbox is SmallBusinessLoans.com, where you can get all kinds of different loans. So Joe, tell us about SmallBusinessLoans.com.

Um, thank you, Allen. I'm happy, happy to be here, happy to share what we're doing at SmallBusinessLoans.com. SmallBusinessLoans.com is an organization or a site where small businesses could get access to not only business financing solutions but other business-related services. And it's owned by a consortium of lenders as well as it feeds a number of other lenders and other products. But it really was built for providing access to business solutions and business lending solutions for small business.

So like, what kind of loans can people get? Like, a lot of people know, like, if they're dealing with merchant processors, You know, the people are familiar with like the merchant cash advance, but it goes beyond that, right?

It does go beyond that. It's products from traditional lending solutions to business credit cards. And in between that, you have your term loans, you have cash flow lending, you have line of credit, you have SBAs. We have some nonprofit transactions as well. But it really—

what about like equipment loans?

It does have financing. We have equipment financing as well, and we also have POS financing. So any need a merchant has or a small business has to get financing, we have a connection and built a connection with those organizations.

Yes, you know, one of the reasons that we partnered with Small Business Loans is, you know, we're trying to create a an ecosystem for our clients. So now we have like really smooth onboarding where like you want to become a merchant, we can basically send you a link and you can go and basically onboard yourself by putting in a few pieces of information. And then if we need more information, we contact you to get the, you know, to get that information. And one of the things that we wanted to do is have a more automated process for people to get loans, because in the past it was like we had to gather up your merchant statements and your bank statements and lease and maybe a whole bunch of other documents. But now this is a really smooth process. You're going to go to our website, to the merchant toolbox, click loans, fill out a small form, then it takes you over to our partner page, and then you fill out your application, and then you get connected to lenders, and then you go fill out your application there, connect your bank account, and A little more.

There's, there's a little bit more that goes behind the scenes, right, uh, to that. But Allen, essentially you're correct. A small business will end up on your website, they click on the link, small business loan tile would pop up, and then you go through a journey. You're going to key in roughly 6 different types of data elements, and we're going to take that information, supplement it with other information that we do in the background. We will ultimately do a soft pull and we'll be able to create a more robust data packet that will allow Small Business Loans to basically route that transaction to the best lender or the best product that fits the needs of the particular small business. So there's a lot that goes on behind the scenes that we do to match that small business owner with the appropriate lender.

Because a lot of our clients, you know, we would hear from them, oh, where do you get money from? And they'd be like, oh, I go to Kabbage, I go to OnDeck. And, you know, when we started our partnership, this was the most important thing is so that there's a smooth onboarding process similar to what these other companies are doing. And I would say, like, you guys have accomplished that.

I would agree with you. We're a fintech. We're a little unique in that We are a fintech organization, but we're also owned by a consortium of lenders, and we're able to do a lot of different unique things for your merchants to be able to give them the money that they need. However, we also are linked into a number of other lenders based upon the, the business's credit profile, what they're looking for. We should be able to find them the loan solution that they need, as well as other business products. Either if they're early on in their journey, it's business formation. If they need legal advice, if they need payroll, if they need insurance, we have other ways in which we can provide business services. And for organizations like yourself and others, this is a great way to provide value adds to your customers, to give them more reasons to continue to do business with you.

Yeah, exactly. I mean, it's a, you know, it's important that, you know, to have businesses to have access to capital, because a lot of times business owners, they don't understand like, oh, how do I get a loan? Where do I get a loan from? And they just go to the internet and they don't know who they're dealing with. But this way, you know, if you're doing your credit card processing through Nationwide Payment Systems or you want to become a client or you maybe you just need a loan, you come to us and then you go through the process to get funding for your business because people need capital to grow your business. You know, one of the things that I always talk to businesses about is when they need capital, things people need to consider with their business. I'm sure that you'll agree. One is you need to really have, you know, have a business bank account. Super important. And you need to deposit all your money into your business bank account, and so that you have an accurate representation. Because if you're taking your cash and your hiding it or you're taking Zelle and PayPal and all this stuff and it's not going into your business account, then that's not an accurate representation of your business. So because you don't have the money in the business account—

Allen, you are 100% correct. One of the, the biggest things a small business could do is making sure that they are able— they are able to connect all their revenue sources into a single site. What most lenders look at, they look at a couple of things. They do pull credit. They will look at someone's propensity to pay.

Right.

But they also look at the cash flow of that particular business.

Yeah. They want to see like there's—

that you can pay.

No, that there's deposits going in often. Well, and then what the activity is coming out of the bank account.

Well, when you look at debt-to-income ratios and you look at payment-to-income ratios, all those things factor in. Not only how much money one would qualify for, but whether they would get it as well.

Right.

And so the ability through SmallBusinessLoans.com is to connect their bank accounts into the process. That provides our lenders a robust data set to be able to determine whether or not you qualify or not qualify, or how much you qualify for. So it is important to you— to what you say— is to make sure that that part of your business is in order.

Yeah, you don't want to commingle your funds. And, you know, I always tell people, like, bookkeeping, like, it's a pain in the butt. Yeah, to do QuickBooks. But, you know, you really want to have, you know, um, you really want to have your business in an organized— from a financial standpoint. We had a client one time that wanted to get a loan, right? So we were like, we're trying to help them, and then We found out like the bank didn't want to give them a loan that we sent, that, you know, the place we sent them, they want to give them a loan because the guy was trying to show them all this money that he had running through PayPal and he was using PayPal like a bank account. The end result is that like PayPal, Stripe, Square, and there's a few other of these fintech companies, while they'll hold on to your money, right, you can leave it there., right, on— you can just leave it there and then spend it out of that there. That's not considered a bank account.

No, no, I agree. It's, it's, it's— most lenders are going to look for what is connected to their main business checking account because what they're going to look at, what goes in, what goes out, and how much is remaining. And they're going to determine whether or not your ability to repay the loan based upon the payment and depending upon the product. Most products are cash flow centric, which means if I provide you X loan, you have this kind of payment, what is the likelihood you will have that money at the end of the month to make that payment? That will determine whether or not you're going to get the money. And most lending solutions, especially for small businesses, is unsecured. There is a personal guarantee that's in place, but you're not pledging your, your house, you're not pledging some of these other things. Now you can do that, but that's going back to a more traditional banking source.

Right.

And fintechs like us are plugging small businesses into organizations that will look at cash flow, look at credit, and determine whether or not your creditworthiness will get a loan.

So you mentioned like SBA. So, you know, SBA has been relatively like some cheap money. Not now, probably, but it was at one point in time. But let's say someone's purchasing like a franchise. Can you— and it does qualify for SBA, or you got— and, you know, be a new business. Are you guys able to finance like franchises like that?

Well, again, Small Business Loans does not do the actual lending itself.

No, but you said— connect, right?

We'll connect to SBA lenders and they will go through their due diligence and they do finance franchises. They do finance other things. And for SBA, it really is about your cash flow. It's also about your time in business. There's some, some startup monies there, but, but the approval process is a little bit, a lot more rigorous, right, than what you would see in the traditional cash flow lending solutions. There is more information that has to be provided. In some cases, it's a business plan. In other cases, it's tax returns. There's a lot more information that will need to be captured. Now, it's not captured by smallbusinessloans.com at the time of when you applied, but when you connect into the SBA, when we pass that information to them, that's when they'll start asking for that additional information.

Right. So what kind of, you know, we talk about, you know, how this, we were talking before how the credit card business has changed over the years and the iteration of equipment. Oh my goodness. How everything works and how everybody does things. And, you know, the topic always comes up about like embedded finance, you know. So one of the things that we're working on, which we can help people with, is, you know, companies who have like a SaaS product and then they sell it to other businesses. Right. So one of the things we're doing is, is we built out a thing. We have the merchant toolbox and then we have the ISV toolbox. And of course, small business loans is part of that. And we can give the opportunity for you if you have a a business, a software business where other businesses are using your software and they need a merchant account, you can also embed small business loans into that platform.

Embedded financing is the buzzword in the marketplace today, and I think it's, it's, it will be something that will continue to evolve. We're smack dab in the middle of that today. So when you look at smallbusinessloans.com, we plug into lending, we plug into SaaS, we plug into companies that you've outlined. And the beauty of an embedded financing— and let me explain what that really means. Embedded financing means to a small business, there's, there's already a relationship that you have. In this case, let's use payment processing for an example. If you embed in payment processing, the payment processor tends to have a bunch of payment-related information that will help supplement the credit approval process. That information coupled with the information that is produced when the customer or the small business applies with the additional information that we would pull, the beauty of an embedded solution means at any given point in time, you can click a button and see that you have an offer because that customer, if you have that data that can be fed in an embedded solution to us through to our lenders, the small business at any point in time will get access immediately to capital. That's really the number one thing that small businesses really need, is access to capital. And through partnerships like yours, Allen, and others, a customer will be able— of yours— will be able to go online, open their portal, click a button, and see if there's money there waiting for them. Because in behind the scenes, companies like SmallBusinessLoans.com has pulled information to be able to present an offer. Right away. And that's where the industry will be moving more towards, would be those types of solutions where it's at a touch of a fingertip. And let me just continue on that. Where the marketplace is going is today there's true fintech lending.

Right.

That's normally reserved to B2C stuff. Right. Where—

Yeah, like buy now, pay later.

But even consumer lending, just a personal loan, it's all all digital, right?

Completely digital.

In small business lending, there's a lot of storybook underwriting. So, there's a combination of digital, but in the background, somebody has to underwrite, right? Okay. Somebody has to look and review and do other things. The evolution of small business lending, and it's coming, it's coming quickly. Part of small business loans, one of the family of brands, as we like to call it, is a company that does express financing, which means you apply all digitally, you get an offer. There is no human intervention. It's if you populate the form with the necessary data requirements that we need, right? And all the other APIs that are pulled, an offer could be delivered straight away to that small business instantaneously, and they can click and move through without having to talk to a soul. That's the evolution of small business lending. And that's closer than we all think.

Yeah, it's happening. I mean, it's happening pretty much now. Very close to that. We're inches away.

It's close. Very close.

And, you know, businesses do need access to financing, you know, so a lot of times, like franchises, somehow, like when they're setting up their franchise, they get pre-approved for some kind of like SBA financing. So usually there has to be like a down payment that they're doing out of their own funds. Not as collateral, but no, no, they're putting a down payment to the franchise, and then maybe there's some equipment that they need to purchase, or they need some operating capital, and that's where the SBA loans come in for things like that.

Agreed, agreed, agreed. But there's also solutions that SBA— and I will tell you, an SBA is going to take some time. It's not instantaneous. It's— if this is something that's done quick, there's other solutions. There's, there's leasing, equipment leasing, equipment financing. There's cash flow lending. There's a host of other things quickly that you can get into to buy that piece of equipment and to get in and out of that piece of equipment.

One of the things like I talk to, like I talk to a lot of business owners about is instead of getting like a loan or instead of getting a merchant cash advance, maybe they need more of like a line of credit. And I think a lot of people overlook like having a line of credit and what that can really do for your business. Because that was important for me. I had a catering company and I was like, oh, how am I going to do all this stuff all the time? And I remember I got a merchant cash advance for my business and then I was like, oh, this was a bad whatever. I paid it off and then I needed to do something again. And then I went and talked to my banker. Of course, this is 25 years ago, so whatever. And then I ended up with a line of credit and the line of credit can really help you. Oh, I need to make this purchase, but I know I'm going to paid by the customer, right? But I need to, you know, maybe to get a better price on what I need to buy, I need to be able to pay for it up front, right?

Well, I would say this, Allen, that any product that we offer or you deliver to your small business, it really all boils back down to the payment and what you're using the money for. You have to be able to afford the payment. That's the number one thing.

Yes.

And whether that is a line of credit or a loan, it really boils down to that simple fact. Do you have enough cash flow to make that particular payment? When you look at line of credit, a line of credit is a great tool to be able to say, I have $25,000 line available and we have products and we have a number of customers who take, you know, $5,000, $6,000, $7,000 draws at a time, but they know they have this cash flow waiting for them when life happens, right? And in every small business journey, they don't wake up in the morning and all of a sudden say, I'm going to go out and get a loan. Something happened along the way which said, you know what, I need to facilitate and go talk to somebody to get a loan. What you're offering and what Small Business Loans Connected is give that instantaneous feedback of whether or not you qualify. Right. Okay. A line of credit is the buzzword out there and is a good product for those types of trends, but they tend to be smaller, smaller lines, but they tend to be one in which you get approved, you draw down, and you basically get, you get the product. Now, there are other products that also work., to help someone with immediate cash flow needs.

Yes, because the other good thing is it's like equipment, equipment financing. I think a lot of businesses get like confused, like, oh, I need to buy a new machine to do whatever it does, and those machines could be $10,000, $20,000, $30,000. Yes, right. And then, you know, they're frustrated because maybe some of those companies They don't take a credit card. Right. Right. And then, you know, what kind of, you know, where am I, where are they going to get the financing for that? Where are they going to get the financing for that product? Right.

And then, you know, now through your company and through it, right, through Small SBL, they are able to get that financing. Again, simple process. Name, address, company address, company name. What type of business is there, their annual gross sales that they do. We'll pull a credit, what their, what their credit is, and they'll be matched with a number of different offers. They click and they move forward through there, and instantaneously they may be qualified, or they'll be reached out by a number of different organizations to be able to help them get the money they need in the way they want it, how much they need it, and the payment they can afford.

Yeah, that's the most important thing. But I think a lot of businesses get frustrated with like, especially that, oh, I need to buy this thing and then where do I get access to that capital? And that's what we're enabling to help people to grow your business, to, you know, to get the access to capital that you need because people want to not only— some people get like freaked out like, oh, I'm just going to go online and apply for a mortgage or whatever it is dealing with money, we give you that. We, we give you, we give you like the best of both worlds. You're doing it all electronically. You're finding out that you can qualify. And then if you did need to reach out to somebody, you guys also have loan specialists, specialists that deal with—

we do have, we do have loan specialists that will reach out to the business applicant and, and talk to them about what their financing needs are and then figure out what the best payment would work in order for them to solve the problem that they're calling in the first place for, or they applied in the first place to solve. So again, it is, it is a seamless process, an easy process. It doesn't affect someone's credit up until the time that they say yes and they sign an actual agreement. Then there is credit that would be pulled. But up until that time, they could apply. There's no obligation. There's no cost to apply. It's a beautiful thing in order to see what you would qualify for. We have a lot of people that do do that, uh, because in good times or bad, people need money. Small businesses need money. It's either they're taking advantage of things or they got to solve a problem, right? Um, and, and we see a lot of that. We see a lot of that in our business.

No, I always tell business, you know, when you have a business and you have to figure out like how to get, you know, how to get money so that you can and do what you need to do. It's not always the easiest thing to do. And people will put it on their credit card and it's a lot. Now there's more ways to get access to capital. And I know younger, I always look at our business owners that come to us, we're on the older side, but I always say like, oh, people, different age groups.

I like to say seasoned.

We're seasoned. Okay. Someone told me that I was more seasoned. But one of the things is that younger people will just go to the internet and do their research, right? And they want to do everything online. And then people that are like 40, 45 and above, they still want that personal touch. They want to be able to talk to somebody on the phone or they want that combination of doing things. But I think this platform gives our clients, and future clients access to capital through a really good organization, then have multiple different financing options for their businesses. And it's exciting that we're launching this out and, you know, that we're also able to offer the embedded piece, you know, to our clients who have platforms so that they can embed this in their platform. So now their customers who are also customers of ours have access to capital as well.

Absolutely. It is. They would say 37%. I think the federal government did a study that said 37% of small businesses would work with that embedded or that organization if there was lending embedded into their, into their business. And so that's a pretty good percent. And that's really the direction that people are going down because it is— today, small businesses are looking for instant financing, instant opportunity to get to something. And when a problem exists, they want to feel good that they went to somebody that they trust. And typically, if you built a relationship where they have a product that you've already sold to them or that they're using in your organization, you've built the trust. And by embedding our solution within your solution, that trust kind of carries over. And now it's at the touch of a fingertip. When they need financing, they would go there and click through. So embedding Good financing is something that's really, really important. I'm glad that you're offering that to your clients.

Yeah, it's important. So if you're interested, if you need to get some capital for your business, uh, go to our website nationwidepaymentsystems.com, uh, click on Merchant Toolbox from the menu at the top. It's under one of the headings. Go down there, you can see all the services we offer. You need the loan, click loan, you fill out a form, then you get on the website, and then you can see what you qualify for as a loan. And then if you decide to move forward, make it easy for you to qualify and get capital. And we appreciate Joe coming on the podcast today. He's our first in-house guest.

Well, thank you for the invitation, and I appreciate it.

And, uh, it's always good to see you. Besides giving you a hard time.

Listen, I enjoy it. I enjoy it. It comes with the territory of our age, right? A lot of stories that we've had together.

So yeah, we've been through the wars. But you know, the business is changing. FinTech is taking over embedded finance, and this is the future. And you know, they say, you know, Congress is always complaining that businesses or small businesses don't have access to capital. And we're participating in helping businesses get access to information so they can get capital. With the help of smallbusinessloans.com.

Thank you, Allen. Thank you all, and thank you, Allen. Appreciate it.

All right, so thank you everybody for listening today to the B2B Vault podcast. Uh, follow us on Apple, Spotify, wherever you listen to podcasts. On Spotify, you can even watch video. You can catch us on YouTube. You can connect with us on LinkedIn, Facebook. We're everywhere. Peace out. Carpe diem. Thanks for listening.

Thank you.