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It's Sussman -- CEO bellcore world -- joining us hi David.
I learned that having back great to see -- for coming back question many if that's small businesses are are seeing already and I'm envisioning.
Contractors perhaps in the government.
What -- -- sorts of small.
Businesses are feeling the heat right now.
Well the SBA according to the Wall Street Journal yesterday are no longer funding loans to small businesses there's going to be a backlog and even if this thing ended today which is unlikely.
That's going to be a backlog for weeks and weeks I need and -- It's usually -- facts huge ripple effects -- blunt -- lending has cut off.
Yeah it really is and many businesses need working capital they need money to expand their business by product.
And they're just not getting -- and the SBA's public it's probably gonna slow them down for months not weeks.
A lot of businesses.
-- war really close to making ends meet at the end of the month.
They rely on capitol short term capital solutions.
To keep -- not to mention being able to expand and hire more workers.
What what's your temperature on that and and the effect of the shut down on that.
Things haven't changed since last time I joined you on this broadcast.
Banks are still not landing at the level that needs to be.
For small businesses.
They're sitting on a ton of cash right now and they're watching their money earned it.
Pretty good returns because of the quantitative easing that -- the fortune 100 in the financial institutions have enjoyed through.
Through the stimulus from the Fed which looks like it's gonna continue now with the appointment of Janet Yellen.
But what we are finding is that it is the small business it is the business owner that runs a business may be up to a hundred employees.
Which represent a massive majority of small of the business out there that are not getting the loans from the big banks right so they have to go to alternative sources and that's what we are finding we're very busy with right now.
And you came equipped with tips for small businesses out there had to raise and conserve cash the first one we have here is played.
You're calling -- based lending can he can you office -- some of the pros and cons of that.
Well unfortunately when cash slows down a lot of companies they just hold onto their cash they try to reserve capital and payments slow down to their creditors and vendors.
And so when.
If you are a business that is waiting for money to be paid to you you need that money it's the lifeblood of your business.
You're not getting it from your client you may be -- to actually use asset based lending is an option.
Where you can use factoring.
Which a lot of your viewers -- of heard of where you can actually financed the receivables to your business and it's almost like a bridge loan situation where you are getting 123 months ahead.
In in payments and there are factoring companies that are out there that provide that as an alternative and what about -- purchase orders.
-- -- fives on commercial real estate is definitely -- good way to go today a lot of obviously with the interest rates as low as they are.
Many terms are coming due right now that would taken out 200520062007.
On -- seven and ten year terms.
And on what we're seeing is that many of those commercial real estate properties may be under -- we just I'm working on a case right now out of Maryland.
And we found that they got a a piece of property in 2006.
It was appraised.
For approximately two million dollars we just looked it up yesterday and it's been appraised at one point three.
The loan -- one point five.
So what do you do you gonna have to refinance that loan may be restructure the loan with the bank.
Talked with the bank about extending out the loan or reducing the interest rates.
And if you can refinance.
That -- conserve capital for -- -- for for for your business which is obviously.
Much needed to them.
Good tip and then we have here on the another way to bypass some of these banks and lending institutions is to perhaps consider selling a small state or big stake in your company to -- -- -- Yeah -- I mean you know we're all familiar with a shark tank analogy today -- you have to ask yourself.
Is this a good match for somebody that's gonna come in and take 3040% of my company.
Management issues come into play the politics.
And then and whether or not you feel good I mean that has to be what I -- to -- -- by the census.
Do you feel good -- -- got about working with a capital management firm that's gonna maybe replace your board.
Maybe replace your brother -- -- -- you've had as you see up over the past twenty years and they may not feel that he's the best persons or to run they that the company.
And so there's going to be issues with that but the positives on that is that they may be able to bring in.
A source of cash which is much needed.
They may be able to provide opportunities by opening doors to.
Clients and vendors and other sources of of professional services that may not have otherwise been available.
And then there -- some other options perhaps more risky option that I haven't heard of these.
Mezzanine financing as well as hard money loans.
Yeah out the the we we'd like to go to those when really there is not any other option.
Unfortunately we're using more of these today than than than we ever thought we would because most businesses don't have a lot of options.
Think of mezzanine financing is a second mortgage on your home most conventional loans today will go up to 65%.
Loan to value otherwise known as LTV.
Well what happens if -- need 80%.
What happens if you need 90%.
So that remaining 25 to 35%.
That you need will go to secondary -- love it may be a higher interest loan maybe a shorter term.
It may be more expensive.
But there are companies that provide that they are called mezzanine.
Hard money is very similar to that it may be in the form of a bridge loan maybe I need it for a year or eighteen months or two years.
It will be a higher interest rate now one of the good things that we're seeing today.
And this is for your clients understand that run small businesses do not be scared of the term hard money I would have never recommended -- a few years ago.
That hard money lenders today.
Are more conventional than they have ever been where we're doing hard money loans for some of our clients through some of our lenders we have categorized lender database that we -- And we're seeing loans in the 678%.
Range which is in many case is comparable to what you sing with most banks today.
Those are great tips David Sussman thank you so much the CEO about -- worldwide have a behind the danger for all that your website and I'm very much rain.
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