EP 616 - Getting Banks To Give You Qualified Lines Of Credit For Your Business Now With Merrill Chandler

Foreign.

This is the no Closer show where you get the latest developments in distress note investing and learn the secrets of how you can control millions of dollars worth of property for pennies on the dollar. Get educated and entertained by someone who has closed thousands of deals and lives to support you in achieving the same. Now, here's your host CEO of We Close notes, Scott Carson. Good morning, good afternoon, good evening, everybody. Welcome to this episode of the no Closures show. As always, Scott Carson. Excited to be here today, and I'm here with the credit messiah, our buddy, Merrill Chandler from getfundable.com and you've got another alter ego that you're launching, is that correct? Are they good?

Are they bad?

Meryl, what's the superhero you got going rocking right now?

I'm glad you brought that up. So this last boot camp, right, we keep leveling up our bootcamp and the power of the information because we get feedback from the people who go through the bootcamp. They give us feedback. I did this. I did this. Whoa. What happened? This is crazy. So we get all this feedback, and we keep tightening up. I don't have the FICO algorithms, right? I mean, it may look like it in the results we get, but I don't actually have them. So when we get feedback from our bootcampers, from our masterminders, et cetera, that's one of the big things that we continue to improve upon. So I got some stories about that. But, yeah, the alter ego is. It was suggested somebody called me Professor Fundable in one of our Q and A's we were doing a while back, and I'm like, huh, let's try this out. So this last boot camp, I donned a lab coat. Totally looked like Bill Nye the Science Guy, but totally donned a lab coat. And every single time, we started diving into the technology of funding, right? Because there's funding, but then there's that underlying stuff. When you fill out an app and then you submit that app, a million things are happening in picoseconds, right? Not even milliseconds. All this stuff is happening in picoseconds. The bootcamp is designed to show you what is going on behind that application. 30 seconds, you're approved, right? Less than 30 seconds, you're approved. But all the stuff that's happening that they're measuring that they're looking at your borrower profile, your borrower behaviors, the 40 FICO characteristics, all that stuff is getting measured. So being the geek that I am, I try to make it simple, like, do this and get Funding here. Right. Because that's what most people care about. But I can't not be me. And so I grabbed the professor fundable, grabbed the lab coat and so I just started doing deep dive into some of those things. Now, by the way, for those of you who haven't gone to the boot camp, it's super cool stuff that's being measured. There's not a boring second in this two day event. But. But I now have a Persona that gets to represent that. Now yours truly, Scott Carson, told me that I need to brandish my superhero part of me that's actually creates the funding instead of just the technology that makes it happen. Right. And so I'll be working on a logo that's GF inside of a superhero logo for Get Fundable. So thank you, Scott Carson.

You're welcome, sir. For those of you guys that are listening to this, you about if you're listening to this episode for the first time, Merrill Chandler is the credit messiah when it comes to helping entrepreneurs and investors not only go out and get qualified for lines of credit, so you can go use that for your real estate deals, your note deals, or lend it private money lending, whole variety of things. Not a credit repair company, they're a fundability company. He talked about the different algorithms that FICO has out there. And many of you may not know this, but there are a lot of credit myths out there that are actually falsehoods that we've been learned taught that aren't actually accurate at all. So I encourage you to go back and listen to the most recent episode. We have them on a monthly basis, but you guys do such a tremendous job with your boot camp and you know, we've got a lot of students. I love jumping in on the private Facebook group and watching the replays or watching it live when I have an opportunity. For those that don't know, Get Fundable Boot Camp is one of two events outside of my own that I think are must attend. Okay. Must attend the Get Fundable Bootcamp and then also the Amplify youy Wealth with our buddy Aaron Young and Lawfulness Associates. But the Get Fundable thing, and the reason we say that is Steph and I are both clients. We're talking about that beforehand. The whole basically shock and awe of when you do pull your credit reports. You're shocked, but you're also awed at the outcome of what you can do to clear things up. So let's talk about this. You've had some amazing case studies happening after, but also, hang on a Second, people are getting lines of credit by doing what you're telling them before they even show up to the boot camp. What is up with that Merrill?

Okay, so I got you were talking about fico so I want to. We'll get back to that in just a second. But guess what? FICO sent out a call for presenters form and I am, I'm submitting this afternoon. I'm submitting my outline for a presentation how lenders can cultivate their dream borrowers.

I love it.

I am so psyched man. I don't know that I'm going to be accepted my paper because remember FICO is a lender facing organization but I can't see why they wouldn't want to hear from somebody who practices in using all the tech to optimize borrowers to become perfect borrowers. This is truly, I mean this is a nominal opportunity. If they accept my submission, dude, game changer. Not just for me, but guess what that means for our organization. We have to take all of this technology and prepare it for a borrower. I tell them in my presentation outline I talk about how borrower education is all about score and it doesn't get people prepared for real applications. It doesn't help them with their identity or anything else. And so we have to be prepared for Chase and Wells and BBT and California bank of Trust to come up after the thing and said we'd like to know about your borrower education plans. So this has just pulled a whole new level for us to make it a deliverable without manually going to the boot camp. Right. I love the ability to talk to each other and interact and all that stuff. But imagine Chevron oil 25,000 people and imagine them being able to every week in their email get a what to do this week to become more fundable as part of their benefits package. Imagine Chase sending out an email saying hey we want you to become a partner with you as a borrower. Do these activities, imagine that partnership between borrowers and lenders, that's my goal. That's where I'm headed my friend. That's where I'm headed.

So I love it because the banks right now are gonna need some good lending with them taking it in the teeth when it comes to it. You spoke of the evil empire B of A announcing on Friday that they're gonna lose. They've been stocking money aside to offset a 5.1 billion dollar bloodbath in the commercial debt space. You know, Wells, Fargo, Citi all and they're expecting banks to have roughly about a $48 billion loss. On the commercial and lending side of things out there. Do you see them really having to re ramp it, trying to offset those losses by going out and lending more or tightening things up?

Well they tightened up last time and here's my prognostication. I'm just going to look at what they've done compared to 2008. 2008, man, they circled the wagons and they said screw the borrowers, we're going to collect all the houses, we're going to collect the assets. No goodwill, no nothing. To do a loan, you remember to do a loan modification was horrible. No such thing. The word deferment, deferral, not what was never even breathed right or if it was spoken at the Circle at the Fed everybody said hell no. So I believe they're going to ramp up more automatic underwriting because they can trust the personal and small business space. Commercial, they're taking a killer because every restaurant out there is not paying their bills. You know, at least they didn't for four months. So their go to is going to be the personal borrower space and the small business space which has been pretty resilient, pretty dependable comparatively speaking because most people who didn't lose their jobs or the deferment as people are starting to get re employed they use their personal savings or the deferrals to be able to protect themselves. Once they get back on track I believe there's going to be a better consumer borrower rebound than a commercial borrower rebound. Now I'm open to being wrong on this but I think they're going to start lending more put to those things that they trust. Guess what they came out with in 2019? Fico came out with what they called then a FICO score Financial stress indicator. The financial. The FICO score Stress indicator. FSSI Financial. The fico. Yes. So but they've converted that the borrower facing version is now called the FICO Resiliency Index. So there's once again there's the consumer facing, the borrower facing side and the lender facing side. But the FICO score stress indicator that apparently they wanted to rebrand it for borrowers because we don't like stress indicators. Too high pressure of a word. So it's called the Resiliency Index. Notice the spin. I love these guys. They're an amazing. These guys know how to use language. Anyway, they've come out with that to show it's a skin that they put over the regular FICO score so that they can see should they Continue to lend. They want to know if they can continue to lend to this borrower. It's a pretty damn accurate thing for at least from my conversation with Sally Taylor who is the vice president of scores at FICO back in November. So they've introduced that at the beginning of COVID So if that's ready to go and it's already on the myfico.com credit report where you can monitor your credit profiles with FICO scores I believe that they're going to. That's just one more tool to make lenders help lenders pivot to a borrower or small business personal and small business space. So yeah, I think that's where it's headed. Where are you on that?

Well, I think you're accurate because especially with Freddie and Fannie and all the government back basically kicking the can down the road for 90 days or six months.

Yep.

You have some states like Massachusetts delayed things six months immediately in April. So that's the October that's in the fourth quarter. That gives the banks and lending institutions being able to use this stress score to look at the borrowers identify who they think they know is going to go further in debt or further down. Exactly. Keep the good ones but then offset the stuff that they can get off their books in a discount before the new year hits and effects because the announcement by bank of America dropped their shares ridiculously. And they're not the only one out there. And the biggest thing is different this time around especially the commercial space is 12 years ago all the CMBS guys financed most of that stuff is only about 20% of banks. But this time around the banks got greedier. They're on the hook for 50 to 60%.

They didn't sell it off.

They didn't. Yeah. They've held onto it. They held onto it. They're on the hook for that stuff. So when you look at that plus they expect 52% of small businesses to fail the stress test came at the right time for the bank. I wonder if they knew something. I wonder.

FICO just is dialed and they're releasing later this summer that's scheduled to release FICO 10 which is the new version of the score which is like in double digit numbers more predictive for. So based on your score it's like double digits. Some of them are 18 plus percent, some are of 11% but they're able to actually save more money from default based on the FICO 10 predictor. Once again Professor Fundable is going to get all amped to be able to get this new score and take a look at it. Two different cases. Now, we have lots of people who are doing this, but in two different cases, two separate individuals, not related, both of them. You optimize your personal. You set up your qfe, your qualified fundable entity. You optimize the borrower capacity of that entity, and then you develop relationships with banks. We have a 28. I gotta tell you about the mastermind too. That's a whole new thing since our last conversation. In the Mastermind, you actually, as a group, you get instructions, watch different examples. And everybody goes out and starts vetting banks, asking these 20, 28 questions. Because we want to be deciding who we want to partner with, right? We're not just going to take some offer. Never respond to offers.

I'm interviewing you versus you're interviewing me, basically.

Exactly. Do I want to partner with you because you meet my needs as a lender? Well, here's what's phenomenal. These guys had already vetted their banks in Mastermind, so they hadn't even become clients yet. Hadn't even become clients yet. Went into Mastermind and finished the vetting of the banks. And this one woman, I apologize, Kim, was already a client. She was going through as part of Mastermind as part of being a client, but literally walked in, had the banks vetted, sat down with the lender for the final interview. But she's supposed to be opening a checking account and getting a credit card to help build. And then over the next three to six months, use of that checking account and card would help build the relationship, right? So the woman looks at her profile. We indicate take in your Myfico so they can see the whole family of scores. She looks at her, the FICO bank card scores mid to high 700s with a narrow range of 10 points or so. And she says, you know what? I think we should apply for a business line of credit. And perfectly answered my client, Kim. She goes, I don't want to waste an inquiry. I would rather develop the relationship and so that you know me and I know you before we move into this, because I don't want to waste an inquiry. I think it'll be worth your while. She goes, okay, I'm trusting you. Literally fills out an application, submits it while she's sitting there. $50,000 business line of credit. No joke, just no relationship building at all based solely on her personal profile and the QFE fundability. The qualified fundable entity looked at those things. Approved. I'm like, we are shortening our funding track because of the work that we do in the bootcamp and the work we're doing in that first stage of being a client is called momentum. I've been doing this for a long time. We've got. Oh, and we're up 122 million in fundings. July alone. This is what's crazy. July so far. 1.3 million in fundings.

Wow, that's awesome.

I believe. But my clients are getting funded 1.3 million. We haven't even finished the damn month yet. May was 1.2 million, whereas June dropped to like 4. June dropped to 400 million.

Your mic just went out.

How's that?

1.2 in May.

1.2 in May went down to about 400 in June. I thought, okay, maybe it was an aberration. Boom, right back to 1.3. So planed out. That's like 7 to $800,000 per month in the middle of freaking Covid Covid. And everybody's shutting down. All these things are happening. The lenders. That's why I predict that it'll grow in the personal borrower space. And when I say personal borrower space, I'm also saying small business. While 30, 40, 50% of small businesses may close, the borrowers, if they are fundable, may still be resilient enough to get approved. So I think it's. If I were the guy, the Wall street guy with all the noise of rackets. I don't remember his name. I'd be like, buy, buy. Buy. Get your personal profile fundable. Get your QFE organized and fundable. Your qualified fundable entity. Because, dude, we're not even building relationships. They're getting funded out of the gate based on them hitting those funding criteria. Hit the funding criteria, you get approved. That's what automatic underwriting is. Problem is with commercial. Scott is the reason why that book is falling apart is because it's all manually underwritten. Every commercial loan on the planet is manually underwritten.

I agree to that with Kim on her QFE. Qualified Fund 100. You know how long she'd had?

That entity is 24 months old. We just take one of your entities you already have. Or it can be a shelf company. There's a number of strategies to make that happen. But she was 24 months old, and she hadn't been doing this for 24 months. She's only been a client, active client, for, like, three or four months. I was blown away. I'm an optimist. I always round up when it comes to how. Well, what the capacity is. Right? Yeah. Blew my Mind another gentleman. I won't repeat the story because it's identical. He literally goes in before Kim happened. This other guy, I don't remember his name, he literally walks in, does the same thing, they offer him a credit line and he takes it. When the strategy is to say no, come back in three months and get more right. Start out with a 75 instead of a 50. He got a 50 when he signed up for his checking account because his personal profile, which is. Guys, if this is your first podcast with us, you got to understand small business lending is not what you think it is. 80% of that decision is based on the quality of your personal profile, not your score. Screw your score. Scores are so far downstream when it comes. Your scores are in charge of rate and term, not approval. Just get that out of your head. Go to the damn boot camp, find out the truth of this stuff. But the second that this goes to the second he walked in the door, they reviewed his profile, looked at his QFE data points, he walks out with a $50,000 business line of credit. And I'm like. Then when Kim did hers, I'm like, like a half a week later, I'm like, what are you talking about? This is crazy. I'm saying it's crazy, right? So I need more data points. I'm going to update my models for a length of turn. Usually we build relationships for three to six months. We'll see.

That's the thing, is that if you show up, do the right things. Follow the instructions from Professor Fundable.

Yeah, you have to do the right things. Guys, this is not, oh, I got a good score. I'm going to go get a credit line. Yeah, that's not what we're talking about. Go to getfundablebootcamp.com Guys, just check it out. Getfundablebootcamp.com yeah, it's a great, great two day.

Best two days you can spend if you're wanting to be in business for yourself or have a business for something else that you have in the long run. And the beautiful thing is that with a ramp up set, people are still kind of chilling there. They're working from home like we hear in Texas. Back, back. Stuck at home for another two to two months. Take the time. One of the best things you do, if you're sitting looking for something to do, this is something enjoyable that you come out of the thing in 90 days, you're rock and roll and moving a whole lot further along for the end of the year. Yeah.

Oh, it is so freaking good. I just want you to. That's kind of what I wanted to share tonight in this podcast was that we are cutting down time. We call it time to funding. Right. Our time to funding is going through the floor. We are shortening that. Oh, my God. So super happy about that.

Are you having them on your podcast? Are you having both these people on your podcast to talk about their.

We are now. I just told my producer sky to make a note that we are going to do a podcast on. We need to interview those guys. Here's the thing. This is why you're such an awesome podcaster. Better than I am. That's a great podcast. And I have. Not until you just said it. That's why you. You make the big bucks.

Just trying to help, brother. Just trying to prime the pump, man. Now, let's talk about the podcast there a little bit. Let's kind of try this. We've got a few minutes left here. Tell everybody about the podcast. How do they listen to it? You know what's.

Go to getfundablepodcast.com or search podcast. Just search. Get Fundable podcast. Any of your locally produced podcasts.

Wherever you listen to podcasts at, wherever.

You listen to your podcast, just get fundable. And you're there. You'll find it. And that podcast. We're celebrating, I believe this week we're doing our 100 podcast. Dude. In six, seven months of podcasting, we're at 15,000 download in our first six, seven months. So last August, so maybe eight. Yeah, it's been 10 months. I don't know if that's good or bad, but I love knowing the 15,000. My 100. That means either 150 people watched, all near 100 of them or something else. So I'm like, I've got a super devoted fan, small fan base. Or everybody's clocking in, right? Everybody's looking at this thing. So this is. Yeah, go to GetFundable podcast or just search where you listen to podcasts for GetFundable. I'm telling you, first of all, you gotta listen to. Just to know my personality. You gotta listen to the first episode. If you like the DC Comics, the Dark Universe, you gotta listen to the first show. First show will set the stage. You'll either love me or hate me. And it looks like most people choose both.

So that brings. I want to bring something up there because you've got some. The lady we talked about with the FICO with them, their stress factor. Did you have her on as a guest?

I asked her to do so. But I have not reached back out because she said we're still validating it. But there's a post it note on my computer screen to reach out to Sally Taylor because I do want her on. And she said when she was ready, she was just. It's all lender facing. Right. She didn't even know what to say to borrowers about it. But now that it's dialed and they're offering it to myfico.com that is on deck for me to interview because that would be sick to go through that resiliency score.

Oh, yeah, totally agree. That'd be a great episode. Now, one thing I was thinking about is with the events that have kind of shrunken down. You and I were both talking about virtual events. We get started. The stuff that we've done. You doing your online boot camps, that's really. You're pretty. I think you're pretty excited that you started doing virtual ones before Corona, and it's really kind of helpful.

Yeah, we were doing all of. Well, I mean, if we had like a real estate investment group invite us there or Houston invite us there. You know, there was 60 people in the room. It was awesome. But most of them have been online, so we've really dialed in an engaging, intelligent, capable way. This is not. Now imagine 30 people being here and having a conversation with us. Right. This is super engaged. It is not a, like, I'm just talking at you. It's a highly effective learning space that we've developed. We're leveling up, but so far at the level we're at, we're masters at it. And we want to invite you to come and join us because it is. That's getfundablebootcamp.com come.

And one of the things I was just thinking about too.

Yeah.

GetFundable Bootcamp.com is that some of the bigger conferences like the DS News or the Five Star Conferences and some of the other, like the MBA conferences have started going into a voice.

I've attended those. I've been attending. The five star I attended and one they sponsored, that was Fannie Freddie. The actual. The presentation was Fannie Freddie. I dialed that in and then did Facebook Lives for kind of a catch everybody up as well as we shot one of our most recent ones. The last two or three was my review of their moratorium policies. Right. Dude, they're willing to go out a year on servicing a year. I'm like, that is so different than what it was in 2008. I was like, screw the Borrow, we're taking your home back now.

You mean basically the fact that the government backed ones have delayed it for six months, giving everybody like forbearance agreements on that stuff with the already the assumption that they're going to have to kick it in the can down another six months. Right, Merrill?

Correct.

That's what we're talking about.

Yeah, six months. And then check in to see how the borrower's doing borrower help and then are open to doing another six months. Here's the interesting thing. If they get through that entire year straight out of the rep from Fannie says and we are open to evaluating before it goes into foreclosure after a year they're open. If they're going to do a needs assessment. Nobody wants entire subdivisions of empty houses again. Right now that kind of sucks for us real estate investors. We're kind of poised and waiting to be able to swoop in. But the thing is as a super high thousand foot view, I think every one of the oh, and fico, I think I told you I tended to there was a two month long series, Tuesday, Wednesdays and Thursdays, every day for two months FICO was doing lender facing what to do, how to manage your customers, how to take care of everybody. It was designed to build relationship. I've never seen lenders lean in so much to the borrower. The first sentence in my book is it's time that borrowers and lenders partnered up. And so I said somebody's got to go first. Let's do it borrowers. Let's partner up. Let's hit their funding guidelines. Well now Covid hits and all of a sudden lenders are starting to lean in. I'm like, you know what? This is a perfect storm. Thank you Covid, because we're going to take this to a new level of being able to at least be on the same page. I will know if FICO is serious about borrower borrowers being dialed for and fundable. If they accept me as a presenter at their thing, then they want nobody else is talking borrower education. Not a soul. So if they accept my presentation to go in, dude, it is a new era and we're leading the charge, man. We're all in for helping our borrowers get ready.

So one of the big things we listen to the previous episode that we had, Marilyn, we talked about some of the mistakes that borrowers can be making during a stressful time. If you do take a forbearance agreement, knowing what that's going to do to you Know how the bank's going to view that. I want to bring it back to something you talked about. How in your mastermind, you're having your students actually go out and ask banks 28 questions. Now I have the question. Knowing the data guy that I am, are you collecting all that information and putting it in one spot to be able to identify opportunities and the good, the bad, the ugly?

Yep, we will be data mining again. I'm a nerd, but I'm not a quant. Right. I'm not a quantitative analyst. So we are collecting the data. How long it will take to mine it, I will have to give that to smarter people than myself. But we are collecting all of that data, all the answers so that we can have a lender list of. But the only problem is, as you know, banks are state regulated organizations. It's just the national association is how they get the federal mandate. Right. So there are differences between Wells Fargo Connecticut and Wells Fargo Miami or Florida. So we still tell people, we could give you a list, but you need to bank because you know, programs change on a dime, right. If something happens out here that it contracts, things will change. If it expands a little bit, they're going to change their underwriting criteria again. The thing is with manual or automatic underwriting systems, it's literally like tuning dials on their algorithm. It's like, all right, we'll accept a five now instead of a three, we'll accept a nine now instead of a two. That's all they have to do. And the approvals ramp up.

So it makes for an interesting time right now, especially when you look at them tweaking things and being more lender focused. But also looking back to the last few months, the non prime mortgages, which at a 21.8% increase in defaults, even three performers are 1 out of 5 or 1 out of 20 are defaulting. Fannie Mae or FHA loans lead the country in roughly a 10% default rate right now across the board, 1 out of 10. But that's kind of your first time homebuyer coming in and not putting anything, not knowing that value, bring it down.

This resiliency index that bico's doing, that's why I want to do a deep dive there. Because if I can understand the resiliency methodology like I do the regular FICO scoring and I'll get there. We have the clients, we have the data, we have access to all that data. Which scores, which profiles and which borrower behaviors are associated with their index, you know, with their resiliency index. So it's just about mining. It's all about mining. So I'm on the exploration side of things. So this is all in my. This is what makes professor fundable tech.

There you go.

There you go.

Exactly. Merrill the money guy. So Bill Nye the science guy. Merrill the credit guy. Have you. You may not know this, but it'd be worthy to see. When you talked about how the different banks are different on a state by state basis. Is looking at your monthly approval rate, you know, the 103 million or whatever it has been so far. Looking back to see what states those have been approved in. If there you see any type of.

This is where you're more talented than I am. I'm that guy who's like yes, great idea. And have no clue how to do it. The spreadsheeting and the. It literally is mining more data. It's all in our database. I'm not the.

You can put an Excel spreadsheet, do a filter on who's approved and see which state pops up with the most. Would be the best thing to do. Brad, give me a phone call. We can have it done in five minutes for you.

Yeah, you know what? That sounds pretty easy. Now that you put it that way.

The question I have if Brad is there, he's probably want to hit me. So if you're gonna be the getfundable super one, does that make him Robin and does he wear tights too? Yeah, Brad the boy wonder.

Here's the thing. I know I look good in tights for various Halloween costumes over the years. Actually, I will out Brad on this one. He dressed up as a Scandinavian milkmaid once, including knickers and braids. It was amazing.

He had the cloggers on too. The shoes on too, the wood clogs. I've seen that photo.

Yeah, that's it. Only imagine it is always so much fun to be always a blast.

I look forward to seeing it in person at some point instead of zooming out here. Right. Hopefully we get cleared things up. We may have to do another thing in Orlando. I know Steph is itching to be back to Disney World for some fun if rat lane ever stays open.

All right. It may be Brad joining us this time. But yes, the answer is we will be there.

Good stuff. Good stuff. Once again, everybody go check them out. Getfundable.com you can check out the Bootcamp the two day and for as little as 97 bucks you can get rock and rollin for thegetfundablebootcamp.com. trust me, the 97 is great. You probably want to upgrade to the next level there to help have Meryl helping you out.

Get recordings. Absolutely. You get recordings, access to our entire library of 16 boot camps. And you know, these boot camps are never the same. There's so much stuff they've evolved. I would tell somebody to go back to the beginning and watch the entire evolution of the tech. Right? Yeah. And then our coaching kills it based on all of those answers. So, again, thank you, man. It's so great to be on your show.

Yeah, same here, brother. And guys and gals, go listen to the Get Fundable podcast out there anywhere. You listen to the podcasts and get rock and roll. Trust me, if you're doing anything, start honing your skills, start adding the knowledge. Start coaching yourself. If you're at home or struggling with things, take that in. Learn. I know I'm doing a lot of self improvement with several things that we're doing not only mentally but also with our businesses. And Merrill's doing the same thing on a constant basis with what he's doing over there. The whole team at Get Fundable and helping listeners and investors like you guys out there. So go check it out. We'll see you guys all at the top, everybody. Bye.

Thank you, guys. Godspeed. God bless. Sam.