Fundbox recently sat down for a conversation with Megan Christensen, Chief Operations Officer at Credit Suite, and Raymond Mejia, Managing Director of Fast Capital Financing to learn more about their work with small businesses.  Here are some excerpts from our conversation:

  • Fundbox: What are some of the biggest challenges you face when servicing small-business customers?
    • MC
      • Our “why,” or the reason we do what we do, is to help small businesses succeed, while helping small-business owners avoid some of the pitfalls many fall into. Most, if not all, issues that small businesses face have directly to do with financing. Many small-business owners are often not aware of self-created issues that can negatively impact their business until it’s too late.
      • The number-one issue that we see most small-business owners create is starting their business using their own personal financing, which can affect their ability to secure business-line credit in the future… e small-business owners don’t realize that their personal credit is inextricably linked to business credit.
      • A second example is when small-business owners go “credit shopping,” where they inadvertently select a solution that might not be the best fit for what they’re looking to accomplish. Many have opted for using their personal credit cards to support their business, not because it’s the best choice, but because it’s familiar and accessible at the time.   
      • In either case, our biggest challenge is helping our customers to become better educated consumers as it relates to financing. Believe it or not, many of our customers were totally unaware of what a business credit score is until they tried to get a line of credit and were denied.
    • RM
      • The biggest issue we face is the fact that we get so many applicants who take out a series of very high, very expensive loans over short periods of time. In most cases, the small-business owner finds out the hard way that the terms for these loans are very inflexible and not cash-flow friendly. The originators of these sorts of short-term loans don’t have a traditional underwriting process rather, they analyze the ability of the small business to pay the loan back quickly. Terms then focus on fast repayment with little to no consideration on the potential business impact to cash flow.    
      • So… the business owner takes one loan out to satisfy an original business need and then another loan to fill in the cash-flow gaps while repaying the first loan. Then, all of a sudden, you have the domino effect where a small-business owner takes out several loans, each one being used to pay off the previous loan. This scenario is, unfortunately, all too commonplace.
      • The other issue we see is the need for massive education and thought-leadership to help better inform our customers on what lending options are available to them – and – which options are the best fit for what they’re trying to achieve. Many small-business owners don’t do enough due diligence when looking to secure a line of credit and they end up regretting their decision after the loan is secured.  
      • We don’t want our customers to take a loan simply because it provides fast access to credit. Instead, we want to make sure that our customers think through their credit needs and then they find the right funding opportunity with the right terms that are both reasonable and manageable from a business perspective.
  • What is your process for helping small-business owners?
    • MC
      • Everything we do is specific to the needs of each client we serve.   
      • We see a good number of customers who don’t know what they want or they know exactly what they want. In either case, we have developed a process to help them achieve their goals.
      • We always look at our clients from a lender’s point of view – do they have all the right components lined up to qualify for a line of credit?
      • T [Next, we] map out a financial blueprint that reflects where the business is today and where the business would like to be in the future. This roadmap then becomes the execution plan that we hold our clients accountable to, making sure that they have clear goals set in advance. Our expertise is helping our clients put a plan in place that leads to a positive outcome.  
      • Many of the small-business owners that eventually become our clients start off trying to do everything on their own. And, while they might be experts in their area of business focus, more often than not, they lack the financial foresight or expertise when first starting their business.
      • So, by the time they reach out to us, they’ve learned the hard way that trying to do financial planning on their own comes with unanticipated challenges. For example, many business owners default to using their own personal credit when first starting off, instead of applying for and using business credit. It’s easy and familiar. The only issue is that when they want to transition from using their personal to business credit, in many cases, the way they’ve treated their personal credit has negatively impacted their business credit score. So, they are shut out from using business credit until their business credit score gets better.
      • This is why we believe in business credit education as a means to prevent small-business owners from making or repeating mistakes.
    • RM
      • Everything we do is customized to the specific needs of each client… we take a business-consultative approach to our services. What I mean by this is that [we] take a holistic view of our client’s business fundamentals.
      • We look at business models, revenue drivers, operating costs, and most importantly, business objectives, then we develop a customer plan designed to help our customers reach their goals. Our team has deep expertise in business assessment that allows us to align the right credit solutions for the right reasons. And to date, our approach has proven to be highly successful.
  • What’s different about your service vs. other brokers?
    • MC
      • I would say that experience is, by far, one of our biggest differentiators. Credit Suite is the largest broker serving small businesses, and we have a long history of producing amazing results for our customers. We’ve been able to translate our experience into proven processes and procedures designed to deliver successful funding outcomes. Every aspect of our service has been thought out and thoroughly tested. And the results speak for themselves.
      • Another differentiator is that we believe in educating our customers and teaching them good “credit governance” habits. This means not only understanding what a good business credit score looks like, but how to build one over time, and how to properly use tools like a credit report to monitor your creditworthiness or to select the best credit-solution providers like Fundbox, which has been an enormous asset to Credit Suite. Our clients have found that, by far, Fundbox has the simplest application process on the market today. So, when you add up our experience, our belief in an educated consumer, and our knowledge of the best tools or credit providers like Fundbox, we would like to think that in aggregate, all of these things help to differentiate Credit Suite from other brokers.
    • RM
      • We’ve developed a proprietary solution that generates identifiers and specific product or service recommendations best suited to help our clients achieve their goals. By automating our own evaluation processes, we can provide advice faster and with greater assurity.
      • The other difference is our financial experience as a team. For example, I have over 15 years’ financial management experience that includes not only working with commercial lenders and the business owners they serve, but also with private equity and venture capital. So, I have the ability to quickly triangulate between the needs of our business clients and the various financial solutions, consultants, or other important resources available to them. As we all know, time is a currency, so, our deep knowledge and experience enables us to provide value quickly.
  • Are there any important tips you could offer small-business owners when looking for a broker?
    • MC
      • Running a small business,as we all know,is not easy. When you’re an owner, you believe that you have to be an expert in everything from business strategy to marketing to operations and, of course, finance. But the reality is, you just can’t be an expert in everything. So, knowing that, small-business owners should pick partners that can help them make better decisions faster. There’s massive opportunity costs associated with starting and growing a business, and finance is one area where costs can add up quickly. So, don’t go it alone. Instead, partner with an experienced financing provider or consultant who can offer you trusted advice while minimizing your opportunity costs, especially as they relate to funding and credit.
      • The second tip I would give is, don’t neglect your business credit report. For all small-business owners, it’s not if you need business credit, but when you need to be monitoring your business credit. Be cautious about funding your business with your personal finances.
    • RM
      • This might sound a little counterintuitive considering the business we’re in, but when small-business owners are just starting to think about funding, they should set up a meeting with their local banker.  The reason I suggest this is that your local banker can provide meaningful insights and helpful guidance for free. One piece of valuable advice is how to prepare for applying for a business line of credit. If you apply for business credit without having your bases covered, then you can end up in a process that may not deliver what you need.
      • The other tip I would recommend is for small-business owners to get into the habit of using business credit cards when they need smaller amounts of credit. If you use a business credit card and you pay your bills on a timely basis, then this will help to build up your business credit score.  

 

 

  • What does the future hold for broker-initiated lending?

 

    • MC
      • More and more business owners are now understanding the value of their business credit report and how often business lenders check them. So, what I hope to see in the future are more small-business owners using their business credit before even thinking about using their personal credit to start their companies.
    • RM
      • With more Fintech companies popping up on the radar, the broker industry will have a broader range of tools and services available that will enable a team like ours to deliver greater client value.

 

About Megan Christensen

Megan Christensen started her banking career working for one of the largest institutions in the U.S. Megan found that small-business owners greatly benefited from a caring hand helping them navigate through the seemingly daunting banking system to identify and utilize the products and financing they really needed. Her ability to effectively listen, consult, and take action allowed her to become the number-one Small Business Lender in the nation within the banking industry. It also gave her the opportunity to train and teach other small business lenders to do the same.

After eight years of banking, she joined the Business Finance Suite team. Her main focus is to help small-business owners prepare for financing and share with them her knowledge of the financing process. Megan believes firmly in caring for each business owner and helping a small-business owner succeed. In more than six years of consulting, she has assisted more than 10,000 business clients.

About Ray Mejia

Ray Mejia

Ray Mejia brings to the table over fourteen years of financial services experience having assumed roles in consumer and commercial banking, credit, lending & underwriting, with a hyper-focus on private investment management, financial planning, securities & insurance consulting, and securities portfolio strategy, directly and in leadership capacities.
Having worked for 3 of the 4 largest banks in the US and with thousands of businesses across all industries, Ray and his team of business advisors lend a holistic approach to guiding businesses seeking access to credit while keeping cash-flow in focus.