How to Finance Anything – AKA How to Fund Your Business

The small business show episode 386 for Wednesday, June 29, 2022. Greetings folks and welcome to the Small Business show here at BusinessShow Co where we are small businessing with our business brains every single week. Sponsors for this episode include shopify.com SBS where you can go and get your 14 day trial and full access to Shopify's entire suite offeatures and itrustcapital.com where you can invest in crypto using your IRA. No monthly fees, more than 25 cryptocurrencies available, but doing it in your IRA that we'll talk more in depth about both of these things because it's pretty amazing what you're able to do with both of our sponsors here. So yeah, so that's what we got for now. Back here in Durham, New Hampshire I'm.

Dave Hamilton and back in Lafayette, California, I'm Shannon Jean. Both those sponsors give me little goosebumps.

I know, I like it. Yeah, it's good. I say back in Durham, New Hampshire earlier today I went and had lunch with actually small Business show listener Scott and talked about a new podcast that he is adding to his revenue stack. So yeah, it's interesting stuff.

I love the revenue stack concept and matter of fact that we, I think we should do a whole show on revenue stacks. I don't think we've done that in a while.

Oh, that's a good idea. I'm putting it in our, I'm putting it on our list. Man. That's a good idea. Yeah, it's good.

Today's show is going to be all about finance and stuff and you and I were just having a conversation about the, what's the ROI of college tuition? We both have kit. Well, I have one left in college, I think same one as well.

Yeah.

And you know, it's, it's very relative and I'm, I think we both agree we're very fortunate to, you know, help get our kids through school and not where they don't have to have any debt for the most part.

Maybe. And maybe I'm still trying to decide this, this is why the conversation came up. Yes.

Yeah, yeah, yeah, exactly. And the, I think the ROI is you, you, it, it has to be measured on multi levels and that, that's what I wanted to share on the show. It's like some businesses have multiple bottom lines.

Yeah.

And I think the roi, multiple bottom lines. And you know, I, I, I mentioned to you my son I think has gotten more out of just being on his own for the last Two years.

Sure.

Making decisions and all those kinds of. I'm not there to solve his problems anymore. And he's definitely a different person night and day. He's taken on a really tough summer job. Great potential, but all commission. And I don't. He never would have done that before, I don't think. And so I think that multiple bottom line really has to be considered, I guess.

Well, yes and no. Yes, in that I fully agree that the. I think of college in part as a halfway house. Right. And this is the part I ascribe to what you're talking about, where your kid has the opportunity. Our kids have their opportunities to be on their own, but still in a bubble. Right. You know, college isn't entirely on your own. You do have people there, especially if you're living in a dorm, to help guide you from doing the worst, from making the worst decisions. Right. And hopefully you start to learn to make better and better decisions and doing all those things. So. But. But your parents aren't there. And so I. That's why I call it this halfway house. And there is huge value in that. I totally agree. There's a bottom line there, but there is arguably very little difference in the value of the bottom line, the halfway house version of the bottom line. At a school that costs 20 grand a year versus a school that costs 80 grand a year. Right. And arguably there's very little difference in the actual education at a school that's 20 grand a year versus 80. There might be a measurable difference, but I don't think it's fair. 4x. Right.

But no, I don't think so.

But then there's the. The third bottom line. And I. And I want to talk more about the second one that I'm glossing over, the actual financial bottom line, but the, the third bottom line of what other benefits does a particular school bring you? Right. Connections, you know, into the workplace.

Connections. Yeah.

You know, or. Or just connections like that. You might get fraternal type of connections, whether or not your school has fraternities or if it does, whether or not you take advantage of them. But that. That idea that, you know, we went through a thing together, we went through college together, and it worked out. So. Yeah. You know, and we. There was shared crisis and all that stuff.

Of course.

Yeah. Yeah.

I think it's. And I would love to get some other, you know, input on this of small business owners that, you know.

But I don't want to end this topic, though. Okay, go ahead. Go ahead.

Yeah, well, what I'm Just saying, just, you know, send. Send us your comments and feedback atbusinessshow.co because I would just love to what you decided and how you're managing it. I've had these same discussions with both my kids about, well, what are you getting out of it? And you know, my daughter went to a significantly more expensive school than my son. But, but again, I think you have to cater it to the kid. But it is really important. I think one of the great things you're doing, Dave, is sitting down with your son in this case and really make having that explanation and that questioned hit means. Oh, is it?

I just. I lost you for a second. Shannon, Everything all right?

You're back. Yeah, yeah, yeah. Okay, so maybe that. Yeah, I hear a little strange noise on my end too, so maybe we'll see. Maybe. I got it. Who knows? I hit hit my microphone. But asking the question to your son, if you had to borrow this money, would you do it?

Well, and that's the key, right? That when I talk about that second bottom line, the financial bottom line, it's how do you capitalize this cost? Like if in, you know, with any of my business ventures and even with my like my house, like as through my life, you know, we talk about using our business brains all the time, right. That's what we do here is we apply this business brain thinking sometimes to our businesses, sometimes to our personal lives. Right. And I look at, okay, we're putting in, you know, we just put in a patio at the house and we spent, you know, a not small amount of money on doing this. We put a hot tub in and a fire pit and all this stuff. But it's like, okay, A, we're going to get some level of enjoyment out of it. That's why we did the patio now. But all because we have this five year plan, right? And maybe we sell the house in 10 years, maybe we sell it in two years, I don't know. But you know, we've given ourselves this five year plan. We've been in the house 17 years. There's a bunch of things that we need to do to, to, to make the house attractive to sell. Sure. Although if we were to sell it today, it probably doesn't need to be attractive at all. Although that's changing. But you know, so we made this list and then we prioritize the list by the things that we will enjoy while we're still here versus, you know, we have one bathroom, for example, that we never use. So if we do that bathroom, you know, a week before we put it on the market. That's great. We don't care. That's right. But the patio, you know, we did that, but we're still looking at like, okay, what's the investment, what's the return we're going to get on this, both in terms of, you know, actual price for the house, curb appeal, sellability, and then, you know, whatever, for whatever time we will live here with it. Enjoyment. Right. And so there's all these things and, and I, I can't help but apply my business brain to college education. And looking. There's a huge difference between paying $100,000 for a four year degree, you know, a 20 or $25,000 a year school, and, and 360,000 for a four year Degree, for an $80,000 a year school. And I just have, I have trouble. Or 320,000, I guess is what that math comes out to. I took the 90. Not the, not the, not the 80. But you know, like, that's a lot of money. And I don't see, I don't see how everything I look at with my business brain, whether I look at it, whether I'm paying cash or not, I look at how long would it take me to pay this off if I borrowed 100% of the money? Because I am borrowing that money, right? I'm borrowing it. If I'm paying cash, I'm borrowing it from myself and reducing the amount of cash that I have to spend on something else. And that is where it's like, okay, for 100k, looking at where salaries are and the opportunities that you might get when you graduate. Okay, 100k, great, makes sense. And then adding in, you know, there's the halfway house aspect, there's the, the, you know, the connections and all of that. Okay, well, okay, this school over here has better connections. Okay, is that worth an extra 320 or $220,000? No, no, that's not, it's, I can already tell you it's not like you're never going to pay that loan off whether you borrowed it from a bank or borrowed it from yourself. Because in theory, the money that you spend, you get back in the end. Right? And so like I can't do it. I can't figure it out. And that's the, I'd love someone to help shed light on this for me because I want to at least have the opportunity to see it differently. Feedbackus show co. Yeah, your business brain.

Looks at it one way, your parent brain may be looking at it another.

My parent brain wants to look at it another. But my business brain isn't letting it. That's really the, that's the thing.

It's a classic dilemma, man. It's very challenging. I've had this conversation with tons of parents last few years because our kids and you know, my kids went to private school their whole life, high school, private high school, you know, K through 8, all that stuff. And I say, wow, you know, when I sit down and think about all the, the investment, which I'm very happy we did.

That's it. It's an investment and there needs to be a return, an roi. A return on that investment. Yeah, yeah, yeah. You know what that sound is? That's the sound of another sale happening on Shopify, our sponsor and the all in one commerce platform to start, run and grow your business. Shopify is this platform which is designed for any one of us to sell anywhere, giving entrepreneurs, like all of us, the resources that once were reserved only for big businesses. And the great part is we get to customize them for our needs with great looking online stores that bring our ideas to life and tools to manage our day to day and drive sales. Making your idea real opens up endless possibilities and starts you on this journey. That is the beauty of entrepreneurship and this podcast. And in fact, a lot of businesses that Shannon and I have had started out really small and then we wound up using things like Shopify, finding the right partners and making it work. And Shopify is one of those right partners. And I love how Shopify makes it easy for anyone to successfully run their own business. And it's not just us. Shopify powers millions of entrepreneurs from first sale to full scale. Every 28 seconds that sound happens. You want to know why a new small business owner makes their first sale on Shopify and the next one can be you. Plus, with 24. 7 support, you're never alone. More than a store, Shopify grows with you. Go to shopify.comsbs all lowercase for a free 14 day trial. And get full access to Shopify's entire suite of features. Start selling on Shopify today. Go to shopify.com SBS right now. Shopify.com SBS and our thanks to Shopify for sponsoring this episode. Next up is iTrust Capital. Look, by now we've all heard about cryptocurrencies, right? You might already even be investing in them. But did you know that you can invest in cryptocurrencies through your retirement account? I wish I knew this years ago. That's right, because with iTrust Capital, you can buy and sell crypto from a crypto IRA and get all the same tax advantages as a traditional Iraq. ITrustCapital allows you to invest in over two dozen of the most popular cryptocurrencies. And unlike the stock market, you can buy and sell 24 hours a day. The iTrustCapital platform is easy to use and it only takes a few minutes to create your account. Setting up an IRA is free and iTrust has no account opening fees and no monthly fees. It's time to start taking control of your financial future. With iTrustCapital, you can get all the tax benefits of a retirement account while investing in crypto. Sign up today and receive $100 funding bonus when you open and fund an account. Visit itrustcapital.com to start investing today. That's itrustcapital.com taxes and conditions apply. Fees apply. Cryptocurrencies are a speculative investment with risk of loss. ITrust Capital Inc. Does not provide legal investment or tax advice. Consult with a qualified legal investment or tax professional. And Our thanks to iTrust Capital for sponsoring this episode. All right, so we talked about financing in both a general sense and a very specific sense for our personal lives earlier in this episode. Now let's talk a little bit about how to finance anything or really how to fund our businesses. Right? Because as we were saying earlier, you're, you're investing in order to get that investment paid off and then some. Right. So it takes money to make money. And this is going to happen all the way through your business at the beginning, in the middle. Maybe, maybe it's the thing that ends your business. I don't know, you know, but, but it's going to be a thing that keeps going all the way through. And I think it's an important topic to talk about, Shannon, so I do, too. Yeah, yeah, yeah.

I'm not a huge fan of the topic in general because I hate being in debt at all. And I hate, I don't want to say hate, but I don't like hanging out with bankers or people that control the money sometimes. But I've been very fortunate to have some great relationship managers at banks and stuff. And I want to talk about the difference between a relationship manager and who really makes the decisions here in a little bit. But, you know, the first thing is I can remember, you know, when we were, I have companies get going and they're kicking off cash and I just, I would just think, well, you know, why do we need to borrow any money or why or why do we need to have that kind of relationship, a lending relationship? And now I know why. Because sometimes you know, your cash flow or sometimes. Well, not sometimes, all the time. Things change, the economy changes and you know, going through a couple of downturns like we have will change a lot. And having and learning that asking for money when things are bad is, is the absolute worst time. So you know, it doesn't matter whether you're just getting started or you've been in business for a while. You need to have that, some business credit. Right. And getting it established, it really can help you in the future. And you know, when things go wrong, it also helps really to build credibility for your business. Right?

Yeah, it's not. Yeah, it's not just credit, it's credibility. Yeah, for sure.

Yeah, that's good. I like that. And it also helps you leverage up relationships. If you've, you know, meet somebody at a different bank or financial institution, you know, company down the road and they start asking questions, you can say, oh well you know, I've got a half a million or million dollar line of credit with X. Well that's a vote of confidence in your business, right?

Yeah.

And they're going to be much more likely to want to take that business perhaps offering you better terms and bring your relationship over to their business. But you know, so you're not starting out from scratch. So I think it's a very important thing to do. I wouldn't suggest you go out and borrow a bunch of money, but we're going to talk about different kinds of financial products here as we go along. But you need to have that relationship with a bank or somebody that you can count on in the future and they can add credibility to your business.

Yeah. And you can start, I would say, I hate to use the term should, but I think it is a good idea. And I have learned to start that relationship early. I mean, I remember when I went and got my first business banking account and I couldn't get out of the bank fast enough. Right. I didn't want them. Well, I was feeling imposter syndrome is probably the right way to describe it. I don't know that what I called it that at the time. I mean I was a brand new business owner. I literally was an imposter, you know, but you know, I didn't want them to catch on to the fact that my business wasn't quite a real business yet debt and might never be. And so I went in and I filled out as many forms as I could Ahead of time. There was no online at that point for banking. I had to do it in person and I had gotten my DBA and the things that I thought were necessary and it turned out I had enough. And obviously, as anybody who's gone to get a business banking account would tell you, as long as you aren't missing key paperwork, it's relatively easy. In the bank generally wants to give you that account. You know, it's. They're in the business of managing your money or at least holding on to your money. And so they want your money. And if you show up even with, I remember it was 20 bucks, I took a $20 bill out of my pocket and I gave it to him and that's what started the account. But, but I did not work, I was not working the relationship part of it during that I was just trying to get the account done and get out of there before anybody figured out that they shouldn't give me a bank account.

Yeah, and that's good, but that's a great way to start, you know, I.

Guess, I mean I should. And of course over the years I did develop a relationship with my banker. And your banker will almost certainly change as time progresses because people get new jobs and all of that stuff. And so you need to, you know, you need to maintain that relationship. And while it should be on your banker to do that, if they aren't doing it, it's up to you either to seek out your banker at your current bank or find a different bank where they are interested in engaging with the relationship with you. But either way, you need to make sure you have a good rapport these days. You should be able to email your business banker and have them reply within a couple of days. You know, certainly for non urgent stuff. But test out the waters. Ask a, ask a question, you know, what would it be like to get this or you know, if you already have a line of credit, what would the process be like to increase it? I don't know that we need to, but you know, just some litmus test to see how they reply to you because you want them to remember you so that the day, when the day comes that you need them, they don't feel like you're just showing up only when you need them.

Yeah, I literally like that concept of, you know, if you go in and you're just getting started opening up your business bank account, whether for the first business or maybe it's another business, you know, going into bank is great. Open it. Most of them you can do online now. But walking in is great. And asking either online or in the, in a, a branch for areas to still have that. We don't have a lot out here anymore.

Yeah.

Is say, hey, you know, can you have somebody call me from your business department and see if that happens? Because.

See if it happens?

Yeah, see if it happens. And then, you know, it'll be another, another test. And you know, you, you want, you want to be paid attention to. You want to feel like the customer because you are the customer. You don't want to have that banking relationship where you feel like, oh, I don't want to go ask him or, or whatever, you're of an important commod them and you know, these banks need you. Of course. Right.

Yeah.

And so I, I think that you, so you, you, you've got this banking relationship established. You put some money in the bank so they're, you know, maybe making a little bit of money off of you. And then you can start asking yourself like, okay, do I have a banking, you know, relationship person, Very important. Somebody's called you, you've reached out, you got somebody talking to you and you need to ask yourself, how, how much money do you need? You know, what do you need to get started? And if it's a brand new company, maybe it's just a minuscule little line of Credit. Maybe it's $25,000.

Right.

Maybe some small thing.

Sure.

Or even less. But something just to get started, to build the rapport with the bank, see how things work. Because you may hate the way they handle things. Right. I can remember banks that used to sit on the money. I would try to do wire transfers at like noon and they would say, oh, it's going to take a day or so. I was like, what? You know that we need that money out like right now. And I've, I've changed banks because they just haven't acted fast enough. So all those little things and I think you, as far as like, how much you need, only you can answer that question, right? It depends on your business. Are you a service provider or do you sell products? Are you a reseller? Do you need to stock a ton of inventory? So you may need to do.

I always, I always ask for. If you don't know the answer to that question, I always ask for 50k. That's, that's a great place to start. It's not a ton of money on a line of credit. Right. You know, but I don't, I don't know that that's, that's always, it's a. I found it to be a good litmus test because it.

Sure.

It. It'll tell you if your banker, I mean, they'll immediately look at your account and say, okay, like, either that's realistic or they'll ask you, why do you think that's realistic? And a fine answer to that is to tell them it's just a starting point. You know, let's look at this together. You tell me what you think is realistic and, and we'll have a conversation. You know, and now you're getting to know this person and you're lending some trust to the equation, which is never a bad thing. So. Yeah. Yeah.

And all they can do is say no or offer you less. Right?

Yeah. Okay, well, they shouldn't. If they say no without a reason, well, then go find another bank. If they say no and they, they tell you, well, it's because, you know, dude, like, you know, you've been losing money for, you know, 14 quarters here. Like, we can't really get involved in that. You know, you don't pay your stuff on time. Like, you know, whatever. Like, okay, great. Yes.

You know, I'm a big fan of asking for roadmap after. If, if you go to a banking or whatever online or whoever you're talking to.

Yeah.

And ask for something and they say no, ask them, can you give me a roadmap? What steps do I need to take?

What.

What measurements do I need to achieve? What goals do I need to set so I can come back to you and say, okay, I did all these things. Look, we're achieving these things now. I would like to ask again if you think you're in a position to where, like, well, I want to stay with this bank. You know, you want to try to make things work, Ask them for a roadmap. If they won't give it to you, then I would say you need to leave.

Yeah, that's a great. I love that idea. I mean, that's like sales 101, right? You tell me what your objections are are, and let me take them away. Right. And it doesn't force people to do anything. People can always still say no, but people feel obligated to say yes if they've told you what the objection is and you are able to take it away. Like, absolutely. It's a good tactic and it helps.

You find out what the future is going to be like with this bank. Because as I mentioned earlier, so you're going to have a relationship manager person that's going to take you to lunch, give you tickets to, to, you know, football game or whatever, as your business grows and they start throwing perks at you, hopefully.

It.

They're not the ones that are ultimately going to make the decisions about your account now. They're going to be your champion, hopefully.

Right.

And they're going to be, you know, hey, this is why I think we should do this, yada, yada, yada. But most banks, you know, it's always some unknown black box committee or some algorithm in many cases now that's going to make a decision. And, you know, so asking for that roadmap from your banker, you know, your relationship person who I would say should be on your board of advisors, you know, ask the person, hey, can you. Would you mind.

Yeah.

You know, informally being on this board of advisors with my attorney, my insurance company, you know, whatever, insurance guy. And you take these people to lunch or invite them over for an event and pick their brains and get their feedback, you're going to build a strong relationship with them. They should be able to lay that roadmap out for you. And if, if they do and you meet those, whatever those benchmarks are and they still won't give you what you want, then you got to look elsewhere.

Yeah, I, I would, I would. I've never. With my banker, specifically accountant, and, you know, your CPA and your, your attorney, I've always felt comfortable telling them, you know, or asking, would you be on my board of advisors? Right. Unofficially, or, you know, whatever. But with, and I guess I've done this with them too, but certainly with my banker, what I do is tell them instead of asking their permission, I tell them after I've gotten to know them, even just a little bit, I consider you to be one of the people on my board of advisors. And I've just found that to be a much more inviting way and a much less committing way to, you know, you're not asking them for some commitment that you're not implying that they need to make some commitment to you. Right. They're already there. You're already doing it. So you don't have to change anything about what you do. But I wanted to let you know you're on my board of advisors. You're someone I look up to. Right.

I like that.

It's just a softer way of communicating that. I've never tried it the other way with a banker. So I can't tell you that it's actually better, but it feels better. So that's. Well.

And it's complimentary.

It is. That's exactly it. It's a compliment.

That's really nice. I think that's a great way to do it. I love that idea.

Yeah.

And I think that, you know, you also need to understand that that banking person you have is not going to be the same forever. You either going to go to another bank at some point or they're going to get another job that's going to. They're going to move around either within the corporation or the bank, or they're going to go to another job somewhere else and you're going to have to bring somebody else along. And I've left banks after losing, you know, relationship people when they put new people on our account that I just, I just couldn't.

Oh, for sure.

Connect with. Yeah, sure, let's go. Let's go find another bank. But, but let's talk real quick, too, about the type of money. And I think the, the key word for me is access. You, you're going to need access to capital. You don't need to have it all right away. If you can get a credit line that's going to be better than a loan. If, if. In most cases, yeah, in most cases.

If you need a sizable chunk of cash to spend right away, your interest rate on a loan is probably going to be better than your interest rate on a line of credit. But, I mean, it's worth knowing the answers to those. So. And for, for those of you who don't know, a line of credit is exactly what Shannon means when he says access. The bank has carved out access to this kind of like your credit card. Right. You have access to credit there, but if you're not using it, you're not paying for it. And so it is that, in fact, oftentimes a line of credit will come with both a checkbook and a credit card to use against, you know, to tap in to that line.

Yeah, yeah, that's right. And so, you know, the line of credit isn't going to cost you. I mean, there's some origination fees, and of course they're going to want to make some money up front. They're usually pretty small, but you're only going to pay what you tap into.

Right.

So if you need to borrow $50,000, well, you're paying interest on that 50 until you pay it back down to zero. I think they're great. If you do need to get. If all they'll give you is a term loan. Oh, hey, we're going to help your business. I'm a big fan of taking that money out of their bank, even if you don't need it, put it somewhere else, put it in a different bank per chance and then pay it back as soon as you can, maybe in a few and say, oh yeah, hey, I used it, you know, and I'm paying it back. Just makes you help build up that relationship. You look stronger. Then maybe you can ask them for a line of credit. I think it's, it's important and I've had them my whole life. There's different ways to get them. You can all. And I mentioned on the last episode when we talked about start or maybe so before, you know, when you don't have a lot of business assets, if you're, you know, if you can take and get a home equity line of credit. I've done this, you know, many times during my career. Sounds risky, but it's really not in my opinion. As long as you believe in yourself and you know, you don't mind a little bit of risk. I wouldn't drain all the equity in your house and typically the bank is not going to let you do that anyway. But those loans are very inexpensive. More than likely, even if you get a direct business line of credit from your bank, they're going to make you sign a personal guarantee anyway. So that's almost the same as putting, you know, that, that equity in your house up for risk. So look into that. We talk about credit cards here on the show all the time. If you're just getting started and you know you want to borrow, you need access to cash or, you know, purchasing power, credit cards are just a great way to do it. We'll put a couple of links in the show notes that will list some cards that you might want to look at. One of the most important things I.

Was going to say with credit cards, there are two types of credit cards I would recommend being aware of. One is the credit card that you are planning to use almost as cash. Just the convenient form of cash, meaning you're going to pay it off every month. Right. And you're just using it A, as I said, for convenience. But B, those are the ones that you want to use as your rewards cards. Right. The key to the charmed life, all of those, you know, your hotel points, your airline points, your cash back, whatever rewards make sense for you, your life, your business, whatever that is. Those would be the ones to use as effectively cash replacements because they generally, rewards cards generally have much higher interest rates than non rewards cards. So. Yeah, that's right. The other type of credit card to have is the one that becomes more like a line of credit. If you are going to tap in and finance something, even just for six months or whatever, maybe put that on a non rewards credit card with a much lower interest rate so that you're not just paying for no good reason.

That's important. One thing that is very, has been important for me too. If you're just getting started out, you don't have a, you get a card, let's say that doesn't have a very high limit. Well, before you apply for or accept any pre approved card, you want to be sure that they offer interstatement payments because that allows you to turn a credit card with a $10,000 limit into a credit card with $100,000 limit. Right.

Because are there cards that don't let you.

Oh, absolutely. Okay, yeah.

All right.

That's how they limit, that's how they limit it. And allowing, because it's just one of the tricks, they may say, oh, you can make a payment every five days, you can make. Some of them don't allow it at all. So you just, you know, you want to be sure that those inter statement payments, you want to go to make them every 24 hours. Because if you're going to put 10 grand down and you have money coming into your business, you want to pay that off so you can go borrow 10, you know, use it again and again and again. Get those, you know, affinity points that we're talking about, the Charmed life stuff that you know, we've discussed at length at this show. But just get you access to more money if you have to wait a month or they won't apply it, you know. Well that's, that's not a good card to get because it's just not as useful for you.

Yeah.

And yeah, I can remember when I was just getting started out bank, you know, they weren't interested in loaning me any money. I had a banking relationship. They're like, well you need some time, you know, and, and some history on your account before we can talk about that. And I met a guy in similar business in mind and I went out at the time I was flying around buying, you know, stuff from auctions and you know, tech equipment and it was Apple was horribly inefficient at that time. Sure made for great purchases all over the country. And I remember this guy, his name was Jay and he said, hey, I'll meet you, we're going to Texas, come out, fly out and I'll show you how you can get a $400,000 line of credit, you know, within 30 days with, you know, no history. I'm like, okay, great. And I got there and he tossed about a 2 inch stack of credit cards at me and he's like, here's your $400,000 line of credit. Let me show you how it works. And you know, he was the one that taught me also about the points and how that is was like hidden income and you know, for your travel and family. And it doesn't matter. You could get Home Depot cards or whatever.

You're Whatever, yeah, whatever makes sense for your business.

Yeah, for your business. And that's what I did. I went out and got a bunch of credit cards that you know, were allowed that interstatement payments. He's the one that taught me about that, you know, got a couple of Amex, different Amex cards. And at the time I can remember he's like, well you get one for yourself. I mean then make sure you go get one for your wife. So you got a $20,000, you know, line of credit on one card. Well, maybe she's going to get another 20,000. So you got $40,000 to spend. You know, of course your business has to have the revenue to pay it off. These are cards that I would pay off every month.

Yes.

You know.

Right, right.

Interest. We're not.

Yeah. High interest cards. Yeah, exactly. Yeah, yeah.

These are cards with 25, you know, 28 interest that you do not cannot, you know, carry debt on them. But they're great vehicles for short term and you know, they worked out great. It really made a big difference in, you know, in my business life for sure. Interesting.

Yeah. I don't think I've ever, I know that I've never knowingly run into a card that, that blocks interstatement payments. I, because I, I mean I do it with our cards all the time. So. Yeah, I didn't even know that that was a thing.

Yeah, Lots of cash back cards do it because they want to control. They, they've realized the game. And so they say, well, you know, we're only going to allow you to make a payment every five days. Yeah, one I know that still does. It is like the Sam's Club. They have a cash back, you know, up. I think it's 2%. They cat you can, you can spend $1 million a year.

Right.

Is their whole thing. And they only let you make a payment like every five days. So it limits how much cash you're going to be able to get back. And so just, you know, they all have different terms. You just need to look at it and see what, what fits for you. Yeah. I've mentioned the amex, the Plum card. I love this card because there's no limit. It's just built on your. Your personal and business finances and your assets. And they look at it, you give them access to your, to your, you know, your bank statements and your, Your financials and I mean, the sky's the limit on this card. And you can make a decision. You can carry 60 days, no interest, or you can take. Now, I think it's only one and a half percent cash back if you pay within 30 days.

Right.

When we did it, it was 2%. I still think we're grandfathered in at 2.2%. So just a great card if you need two months to carry interest free for inventory. I'm an inventory buyer, so.

Yeah, right, right. Yeah. No, it makes a difference. Yeah, for sure. Yeah.

Yeah. So.

Yeah.

And then, you know, I also think there's lots of alternative way, alternative companies out there that will loan you money. Places like PayPal, business loans. If you're an ebay seller, they'll loan you money. Kabbage is another one that will loan you cash. I think they're great, but. And they work for some people, but you really gotta look at the fees. You know, some of these alternative fundings charge interest that I just looked at it this morning, up to 78% APR, right.

Oh, that's crazy.

I thought was it. Which I thought was illegal, but I guess not.

I guess anything is legal if, if they, if they disclose it. If you agree. Yeah, exactly. Yeah, well, I mean, not anything, but, you know, an interest, any interest rate. Let me. Yes.

Be clear about that now.

Yeah.

Short term, if you needed to go to one of these places, you know, okay. But you're much better off with, you know, the bank and maybe with cards and maybe, you know, you just got to think about to look at and see, you know, the SBA is another alternative to talk about, you know, if, if you can't get a line of credit, but you want to do something fba, you know, can help the bank feel more comfortable if you're buying equipment or, you know, something that SBA stuff, they like to back things up with assets, but it is, you know, really good. I just think the alt. Some of these alternatives really should be your last result, last resort, because they can just be so darn exp. And you got to be careful. You know, some of them do, you know, daily credit card skim like PayPal does it, where they'll basically Loan you money. It's, it's not too crazy expensive. But every dollar you bring in, if they're your merchant processor, they're going to skim off your, your daily percentage every single day, so they're going to get their cash back faster. You know, that makes sense.

Okay. Yeah.

And there's a bunch of them that'll, that'll do that. And that's one way to help mitigate those costs. If you have IT equipment financing, there's tons of companies that specialize just in that really. And it's pretty.

I guess that makes sense. Why not? Yeah, because it's, in a sense, it is a secured loan or could be a secured loan if it's being used to buy equipment. Just like a car loan is secured with your car, you know, that kind of thing.

That's right. That's right.

Yeah.

And whether you're going to lease it or buy it, I love leasing because you can typically write off an expense, the full value of that thing every month with that lease payment. However, especially in the last few years, there's been lots of incentives to purchase, trying to. Government trying to spur the economy. So ask your accountant or anybody you're involved with equipment purchasing. Are there any, you know, what state and federal incentives are there for buying things right now? I know during COVID you could expense, I think almost like 100% of up to a certain amount. So buying equipment would have been a great time to.

Section 179 got really nice and loose during COVID which is great. Yep.

Yeah. Yep, yep, yep.

I love section 179 is the, is the thing that the code, the section of the IRS code that allows you to write off the entirety of a purchase that you would otherwise or a good chunk off in the entirety of a purchase that you would otherwise have to depreciate over, you know, five years, seven years, whatever that, whatever it might be for that particular asset. And so. Yeah. Yep.

Yeah. And there's lots of crazy things too, like the weight of whatever you're buying. So if you're buying trucks, let's say, for your company or for yourself, that you're going to use for your business, do you may get a better incentive if you can buy a truck over a certain weight, let's say, for example. So they really are worth looking into. I, I often discounted them, but then I, I did, you know, learned the hard way that, oh, we, we could have taken this kind of incentives off when we bought some stuff.

I remember a friend of mine bought a, his Accountant told him, like in December one year, you need to go buy a Suburban for your family. And he's like, I want to. He's like, but like, that's crazy. He says, yeah, it would be great for like shuttling my kids off to hockey games and all this stuff. He's like, but I don't think so. And his account was like, no, you don't understand. Suburbans weigh more than whatever the number is. So you get a whole different tax break because of the weight of that vehicle. Even though you and I know you're going to use it, you know, it's like, oh, interesting. Okay, yeah, yeah, yeah, exactly.

So and then lastly there's, if you're a purchase order type of company where you're getting POS from, let's say larger businesses or distributors for your products, lots of places will finance that PO for you in they typically will give you 80 or 90% of the value of that PO. So if you needed to go buy equipment or whatever to service an account, and it could be even just a purchase order for service business too.

Sure.

Your, your bank is, they love that stuff because it's somewhat secure, especially if it's for a Fortune 1000 business that's giving you that PO or something. I mean, you see it, you ever watch Shark Tank? And they're like, oh, I got a PO from, you know, Walmart for X number of units. They love that stuff.

Right?

And your bank, your bank loves it too. So don't forget about that vehicle. And we'll put a link in the show notes for a place you can learn a little bit more about that PO Financing.

So I like it.

There's always somewhere to find the money. I always used to tell our purchasing guys, always take the deal and I will find the money. If the deal is from a buying standpoint and the inventory side of things, if the deal is good enough, someone will finance it for you if you can't do it yourself. So I always put the money second. And I had lines of credit and all that kind of stuff set up so you have a good foundation. But let's say you have a $400,000 line of credit and you have a million dollar deal. Well, if the deal is good enough, you want to go sit down, talk to your bank and say, look, look at this opportunity here. You can secure your loan from the assets, increase my credit line, or give me a term, short term loan, you know, 180 days or 12 months for this project. That stuff is great. And you want bankers that'll be open to that kind of creative stuff. We always did really well that way.

Yeah, no, it's a good way. I mean, the businesses, the types of businesses that you've run, you. You need to assume that you're going to be able to buy the inventory that you plan to sell. Right. I mean, like, so that mindset of we'll find the money is a, Is a smart one in those businesses because it, like, without being able to buy that inventory, it doesn't matter how good you are at selling or how great your network is at having buyers ready. It's all irrelevant if you can't buy whatever the thing is that you're going to sell in the first place.

Yeah, exactly. Exactly. Tell us what we've missed. We talked about a bunch of different vehicles here to find money. We didn't really talk much about financing from friends and family. I always, I've done that, but it really makes me nervous. I only did it when I was real young. The only thing I would tell you about that is just like having a working agreement to start a potential partnership or joint venture, you need to have it documented with whoever's going to loan you the money. So everybody agrees on what the terms are. Very, very important.

And even then, I don't recommend it unless it. Like I would treat it as a last resort. Yeah, yeah, yeah.

I sleep better at night knowing I never owed any friends or family money.

That's the key. Yeah, exactly. Yeah. Because changes the relationship. I mean, it's like hiring a friend or going to work for a friend or anything like that. You are forever changing the dynamic. Now, it doesn't mean that it's going to ruin the dynamic like that. That is one type of change. It might make the relationship better. Like you, you. You might get into business in whatever way. Working for. Having them work for you. Borrowing money from a friend that you only see or talk to once every couple of months. Right. And now suddenly you're talking every day. And you might really like that. Like, it could really work out, but it will almost certainly change that dynamic and be ready for that. Like you, you need to know that. That if you sit down and say, we know that this won't change our friendship, you know, we're thick, we're blood brothers. Nope. It's going to change it. Yep. And you need to come up with, especially if you're hiring a friend or a friend is hiring you, come up with a. What does it look like when one of us terminates the working relationship? Is it important to us to preserve the friendship past that. And I know we're beyond financing here, but I've done this and I've successfully done this, but it, it does change the friendship. Even, you know, even if the friendship survives the termination of the working relationship, it's still like that. History is now part of your friendship. And yeah, you know, you got to be able to. You gotta be able to deal with that.

So think about it.

Yeah.

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