Real Estate Investing: How to Get Funding When Banks Say No with Wendy Shultz

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This is the no Closer show where you get the latest developments in distressed note investing and learn the secrets of how you can control millions of dollars worth of property for panties 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 Nodes, Scott Carson. Good morning, good afternoon and good evening, everybody. Hey, welcome to this episode of the Note Closure show. As always, Scott Carson. Excited to be here today. We've got a very special guest joining us on here today and it's going to be we're going to be discussing a topic that I get a lot of questions about. I get a lot of people coming to me like, hey, Scott, I'm working full time as a full I have a job and I'm looking to get full time in investing or people that are our investors. Like, hey, we've been doing this for a little while. We how do we raise capital? How more importantly for our topic matter day, how do we get lines of credit or how can we get some business funding lined up so that we can use for our fix and flips or buying notes or buying real estate or whatever we need to do, paying for business stuff like that. And so I've reached out in the last couple weeks because I've heard your questions. There's one more than one person to ask that question. So I was like, let me find somebody who's an expert in that. And lo and behold, sure enough, I connect with somebody on LinkedIn, see her commenting something, I comment, we get on a phone call. I'm like, this is going to be a great episode. So we are honored today just by taking time out of their very, very busy schedule to join us on here and answer questions that we have about you guys. Now, she is a funding specialist at Preferred Funding Group. She's been the alternative funding space for several years, assisting clients. Even startups obtain unsecured loans. Her passion is assisting clients who are not able to get a loan in the business name due to insufficient time and or revenue in business. We all know those are the two biggest roles. Who am I talking about? We're talking about the rock star, Wendy Schultz. Wendy, good morning. Thanks for joining us here in the podcast today. How you doing today?

Well, good morning, Scott. I'm doing well. How are you doing today?

I am doing great. And so guys, this is Wendy's first podcast interview as well. So there we go. Good stuff.

I'm green. Be nice to me.

That's right. Hey, Nobody's going to be mean here. We're not like that. But so Wendy, you've been in what, what does that mean by the alternative funny space? What does that mean to you in, in that words?

You know, like you had mentioned earlier, you know, we get these startups, they don't have time in business, they don't have business revenue and honestly the banks don't want to lend to them. You know, they're, they're not reliable to them if they don't have good time in business. So what we can do is we can take these startups, if they have good credit and, or personal income, we can help them get funding with major banks. So that's kind of what I refer to as the alternative. They can come to us and our niche is following these banks so we'll know if they're a good fit for these institutions.

Now when you say time in business, what does that mean for everybody out there?

Most banks want to see one to two years minimum in business and they want to see good revenue coming in from the business before they think they're reliable to give them a loan. So we don't look at that at all.

Now also, how, what does the entity type, does that affect banks willingness to lend also because I've heard folks talk about that banks don't like dealing with like real estate investors or financial tricks and flippers and stuff like that. Do you ever see that too? Is that true?

That is not true. We have no industry restrictions or restrictions on loan use. So once a client gets funded they could do whatever they need to do with the term loans.

Well, I know that with you, but you see banks turning people down in their real estate space, they don't like dealing with it. But you've got a yes where other people give a no to, right?

Exactly.

Awesome. And now are we, are these like lines of credit with individuals? Are they credit cards? Can you talk about kind of what, what, what the setup is for that?

So we don't do the true lines of credit. We have two loan programs. One, they're personal unsecured fixed term loans. So these will report to a client's personal credit and they're based on their credit and personal income. So we'll look at their credit report, their three bureau credit report, last two years of personal tax returns and then our underwriters will break those numbers down and let the client know if they're pre qualified and for how much, up to 500,000 in these unsecured term loans. And then yes, once they get Funded, they could do whatever they need to do at the capital. There's no restrictions on loan use. Then the other program would be business credit cards. Now they do have to have an entity for the business credit cards because the client, the lenders will look at their ein. So it's based on credit alone. So the, our underwriters will look at their credit report and then they'll break that down and let them know if they're pre qualified. And business credit cards a little different. Whereas the personal term loans will report to personal credit, the business credit cards will not. Those will report to the business credit, to the business credit bureau and be in the business name the cards.

Okay, nice. That's awesome. And what do you see is kind of obviously everybody's different. I'm not asking you to give specifics or stuff so but when somebody's talking about business credit, we talking like a plus. You got to have 800 score or mid-600s. Where do you kind of see that? Providing that they've got good income, where do you see the credit scores need to be to be successful? Right.

So since these are unsecured term loans, there is no collateral attached to them whatsoever. This is a loan program for those who have good credit. So the minimum that a client has to have across all three bureaus in order for us to review them is 680. We notice that once they start dipping below 680, the lenders will start to decline them.

And these term loans, how long are they for? 2 years, 5 years, 10 years, 20 years? What's the average length of these?

They're 5 or 7 years. They don't go past 7. And there's no prepayment penalty.

Very nice, very nice. And then if somebody's got good credit, what kind of interest rates are on these loans?

So there's always a range, minimum to high end. So we always tell the client you can land anywhere between 9 and 15%. And of course the stronger the credit profile, the lower their interest rate is going to be.

Sure, that makes sense. And that's kind of like taking out like a, like a second loan or a hard money loan. In a lot of cases if you're doing stuff on that, if you got good credit. So it works in line with, I mean these things are not meant to be 30 year mortgages. They're meant for you to be able to use something that you're going to be obviously making income off of this money or using it in our neck of the woods, making better than 12 to 15%.

Right, right. Yep. Agree.

Now what's, what's this? The second problem is very similar to that as well too with the business credit cards, I mean, or is that 20%? It just varies obviously on the, the bank or the credit card company.

It does depend on the lenders, but they all do start at 0% for the first six to 12 months. Most of the lenders do do 12 months. After that, typical credit card rates will kick in. And then at that time, if you're taking care of those loans, those payments with the lenders, you can go to those lenders, maybe extend that 0% and get the best interest rate that you can with them.

And what's, what kind of minimum do you usually see in the business stuff? 25 grand, 50 grand. I know it varies on credit, but usually. Or is it smaller amounts that you see the business lines.

So for the credit cards the minimum is 20,000 up to 150,000. Now keep in mind, no one lender is going to do $150,000 credit card for a client. So it's called credit card stacking. So I don't know if your listeners have heard of that. So let's say the higher the pre approval amount, it could take a few lenders to get that client, few cards to get that client to that pre approval amount.

So 50, 50, 50, 25, you know, mix it all in there. But, but if you're getting 0% for 12 months, that gives you a lot of flexibility a, to pay off some higher, higher debt, obviously. Yeah, especially the credit cards being a minimum of 24 these days for the most part. In a lot of cases, you know, our 18.99 or something like that, they're ridiculous in a lot of cases.

Pretty high, correct?

Yeah. Now what's required of people to, what do they need to, is there an online form and do they need, you said provide, is it two years of tax returns or just a credit pull or how's that work? What do they need to have?

So we have that we request two documents from a client if their scores are at least 680. So we'll request a FICO 8. That's the credit report model that we look at the FICO 8. So we look at a three bureau FICO 8 credit report, all scores have to be at least 680. And then last two years of personal tax returns. And in the most recent year we do like to see their adjusted gross income at least 50,000. So if they meet those two minimums, the 680 credit scores, the 50k income, we'll review them. So we'll collect their credit report tax returns and then we can let them know if they're pre qualified and for how much.

Awesome. And then on the business income, is there a ratio or a multiplier that you guys are looking at to qualify them for? If they're bringing in 25 grand, do they get two times that or any anything like that figured into it as well?

So are you asking like once we collect their docs like we're going to look at their debt to income ratio for the term loans and we do like that be below 35%. So we are going to look at that. We're going to look at credit now if they want credit cards, we're going to look at their credit card utilization. We like that to be below 30%. We look at credit card balances, you know, ideally we don't like that to be over 20,000, you know, in car debt already because the lenders kind of look at that and say you've got all this card debt already, I might not want to lend to you, you might be a risk to them. So we do look at credit card limits, balances. Yes. And their utilization.

Very nice. And there's something else I was going to ask, what was it? Is this an, a pretty simple online form that they can go to to fill stuff out and apply?

Absolutely. So I have an application link clients can use. It's all they do is put in their name, phone number, email, then there's a drop down box ask you know how it's asking them how much they're looking for. Then they would upload their credit report, last two years of personal tax returns and as soon as they hit submit it comes to me and then I'll have our underwriters take a look and let us know if pre qualified and for how much. So it's a short like half page application, easy.

And we'll make sure to put that link in the description for you guys out there listening. If you're listening to the podcast, it'll be in the description below. If you're watching the video, it'll be in the YouTube description as well. For you there.

And another little side note, we actually asked the client to provide their FICO 8 report to us. This way it's a soft pull always for a client to get their own credit report and we'll underwrite it based on the report they gave us. We won't pull credit to see if they're pre qualified. Now some clients like that idea. You Know that we're not pulling the credit and others are like eh, I got to give you my report. But yes, we asked the client to provide the report to us and no worries, no inquiry then to see if they're pre qualified.

And how do they get that? Do they go myfico.org or something like that or how do they.

I actually have a link where they can get it for a dollar from my score iq. If they don't want to use that one they can go to myfico.com identity guard, identityiq but those are usually typically around 30, $35 then if they go that route.

So okay, now the all important, what's the cost besides the interest rates and stuff like that? What's the cost for somebody to get signed up for these lines of credit? Is there a fee? What's, what's the, the number, the bottom line?

Oh yeah. So yeah, the magic number. What is our fee to do this? So we don't have any upfront fees or down payments. We are success based. If we don't raise capital, we don't charge the client anything. If we do raise capital, once we confirm the lender deposited the loan into the client's account, then we'll invoice them 15% of it. So that's 1:5 clients. Once we confirm they receive their loan, we'll invoice them. They have 48 hours to pay us and they can pay with the funds received. So it makes it really easy for them. And then once they pay us, they're done with our company. They would just take care of the loan that we help them get with the major banks.

Very nice. And have you had people come back and do this multiple times to get qualified one time and then maybe come back a year later?

The most I've seen is twice. Usually after that I've never seen a client. I feel like after that point now they're business, business is getting more established. They probably most likely won't need our, our services anymore because now they can go and get a loan in the bank's name. I mean in their business name.

Well yeah, now they've got the experience, now they've got the two years of seasoning.

Besides, now we've helped them get their foot in the door with these lenders. So they can always just go to the lender directly now if they need additional loans after that.

Right. And can you rattle off maybe some of the names of the lenders that.

We know that I can't disclose?

Okay, well I didn't know if it was like it was a major banks.

Or they are major banks and credit unions, that I can say they're not some like little piddly little office on the side of the road.

That's good. That's, that's the thing because that's what people are always worried about. Who am I getting this from? You know what I mean?

Major institutions.

True institutions that add value to your credit. Not you know, and with the credit cards, is it like Discover or is it, It's a Visa, MasterCard kind of line of credit with that I can.

Say yes, those are major cards.

Awesome, awesome. Now what's, let's just throw some numbers. What's the least you see people get approved for and the most you see people get approved for in your day?

You mean it cards or just in general?

Just in general. Just in general, yeah.

Worst case scenario, we can get them into, you know, processing 5, $10,000. I've had my best client got a little over 500,000 in on between term loans and cards. So of course you know, if you're going to get 500,000, those are like cream of the crop clients. You know, the best scores, best you know, credit history. They've got a combination of unsecured loans open and high limits on their credit cards and they're taking care of those. So. But yeah, I've seen 5,10,000 and I've seen 500,000 but the sweet spot is honestly probably up to 200,000.

Okay, so when you're applying for this and you said there's a drop down hunt you to look for, is it better to go a little bit more than what you're looking for or a little bit less? Or does it, does it matter?

It honestly doesn't matter because we're going to give you that pre approval based on your credit profile anyways.

Now what did you do before you got into this? What's your kind of, how did you get involved in doing this and helping people out?

I've always been in accounting, billing, numbers, payroll. I worked at UPS from, well for 35 years. I quit after 35 years. Always in the accounting department from day one, all those years. So I was actually doing the funding business and UPS at the same time because my hours were so early at UPS, my choice, they started at 4 in the morning and then I would get off around noon and then I would do the funding for the next several hours. And then yeah, four years ago I decided okay, I'm gonna doing both is too much. I'm burnt out. I'VE already been at UPS 35 years. So I retired from there and I've been doing this full time since then and I have not looked back a day. I love it.

Very nice. What would you say is the most common business type that you see? Is it investors? Is it brick and mortar companies? What's kind of a mixture of those that are applying to having success with you?

I say the most common one are people who are looking to buy a business. I've seen a little bit of everything because we have no industry restrictions, so we can look at anybody. You know, for a little while there, believe it or not, I saw a lot of food trucks, like they wanted funding for food trucks or pet services. A lot of people are opening up pet services. But I would say the number one is real estate.

That makes a lot of sense. Wild and crazy guys out there and stuff like that.

Yes.

Where. And so you've been here for a while doing that stuff and you're able to do this, you know, all across the United States, Puerto Rico. There's no limitations on where people are living as long as they're living in the United States.

Obviously we could do all 50 states. We've done Puerto Rico. But it is a little bit more limited with Puerto Rico because the lender. We don't have as many lender options that are willing to do that parts.

That makes sense. That makes sense. Definitely. I'm trying to think what else. I have a buddy in Denver and I've got some friends in California who are in the weed business. Is. Would. Would in that business would be. That would still be put potentially get approved or denied or have you seen. Don't know.

It doesn't matter. We can look at them as well because they're personal term loans. So we don't ask what business they're in, what they're using the funds for. There's a lot of flexibility there.

Yeah, that. That's definitely interesting. I might have to reach out to a few folks that were looking for some stuff and they're local. I mean that's such a difficult thing because they're like, I can't bank.

You know, some lenders won't do that. Yeah, yeah.

Interesting, interesting. This is what. What other questions have I not asked that you think would be good for people to know about? If I hit. Hit everything or.

Yeah. Our loan program is so short and simple. You know, the only thing you didn't ask. Sometimes people ask how long does the process take?

Sure. There you go.

We can do. We do pre qualifications the same day. And if they are pre qualified and they want to move forward, we can have them fully funded. And term loans in two weeks. Business credit cards, it's a little longer. I say three to four because we have to wait for the lender to mail those cards. We have to confirm they receive them before we can invoice them. Whereas the term loans are just deposited straight to their accounts.

Very nice. That's a good stuff. Have you ever, ever had anybody try not to pay you?

I just had somebody else ask me that this morning. You know, since we do work with clients who have good credit, they don't want to mess that up. And I've been doing this for quite a while and I've never had anybody not pay.

That's good.

Clients have maybe taken a little longer than that, 48 hours we'd like. But they've always paid well.

Yeah, I mean you help them out there get something that they couldn't get on their own or didn't know about. And that's the, that's the thing, it's. Most people don't know that there are other options and especially if they get turned down from their bank or other places, you know, it's not the end of the world, you know.

Exactly.

You know. Now, yes. And once again the interest rate on these things are going to be a little bit higher. But it's, it's not meant to be a 30 year mortgage. It's meant to be something that you're using to a, either make more money off of. So it's a temporary loan and like you said, there's no prepayment penalty. So if you've got a, a quick purchase, a quick flip or something you can get into and out of in under a year or year or so, that's a pretty good aspect for you. I mean even if you take a little bit longer for that, you can spread those costs out over time. But like I said, that makes sense. Buying a food truck or buying, you know, some sort of business that's generating cash flow to help you offset your cost for this, it makes it a win win for it's not really a detriment when you're making cash flow that's paying us off to help you take it down, put money in your pocket. Right.

And just like you said, I look at this loan as putting it back into your business so that you can generate more money. Like you said, I don't recommend doing this and taking a trip to Hawaii, you know, but no, you can if you want though. But I would, you know, it's. It is meant to put into the business to make your money back.

Yeah. Yeah, that's awesome. Love it, love it, love it. Well, we'll make sure and share that links. I think, Wendy, you'll send me the, the link for everybody to, to go and fill out. Yeah, the application link. We'll put that in there for them and then another if they've got questions. I'll. We'll put your information there. Is the best way for people to connect with you is to call you or email you. What do you prefer?

I'm very flexible. They can text me, email, or call because I know each one has their preference. So I'm okay with all three of them.

Awesome. And we'll make sure and put that in the contact information, if that's okay for you.

Yeah, absolutely.

Great stuff, Wendy. Thank you so much for coming on and answering questions. Was it bad? Were you, did you overstress about the episode? Right.

No. You made it very pleasurable. Thank you.

Well, no problem. But you know your stuff and that's the, the biggest thing when you know what you're doing. I'm not going to ask you something that you don't know for the most part. So good stuff there. Well, thank you so much for taking time on your busy day, guys. If you're looking to add a little extra push a mezzanine lean or a small loan of some sort to help you purchase that business or maybe buy that note or buy that flip or fund that rehab and stuff, this is the opportunity and something to think about for you, to help you get over that hubs where it doesn't have to be a no. And if you're like you said, you've got good credit, not over, you know, over not max, not your credit card, stuff like that.

Exactly. You can't be overextended.

Yeah, exactly. Be smart. This is an opportunity for you to do that. And, and like I said, it helps you build your business credit, helps your build seasoning of that business so that you can get better loans down the road in two years or whatever like that. And here's an opportunity, like I said, same day approval, you can find if you're qualified, as simple as pulling your credit report and then uploading your application with your two years of tax returns and go from there. But Wendy, thank you so much for coming on the podcast. We look forward to talking to you later. All righty.

Thank you, Scott. You have a good week.

You too. All right, guys, go out, take some action, get signed up today. If there's something that works for you and we'll see you all at the top.

Bye Bye.

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