1 00:00:05.190 --> 00:00:06.870 Sean Murray: Hello, everybody, it's Sean Murray with deBanked 2 00:00:06.870 --> 00:00:10.290 News and today I'm here with Peter Ribeiro, the CEO of US 3 00:00:10.290 --> 00:00:12.570 Business Funding. Peter, thank you for being here. 4 00:00:12.900 --> 00:00:14.220 Peter Ribeiro: And thanks for having me Sean. 5 00:00:14.390 --> 00:00:17.990 Sean Murray: Yeah, So I have a few questions for you today. The 6 00:00:17.990 --> 00:00:20.630 first thing I want to ask is, what is your background? And 7 00:00:20.630 --> 00:00:25.310 what does US Business Funding do? So I went to UCR, University 8 00:00:25.310 --> 00:00:29.420 of California, Riverside, I got a degree in business admin. But 9 00:00:29.420 --> 00:00:32.150 my emphasis was always in marketing, I always found 10 00:00:32.180 --> 00:00:37.760 marketing to be probably one of the most important tools to grow 11 00:00:37.760 --> 00:00:41.600 a business. And that's actually been one of the greatest things 12 00:00:41.600 --> 00:00:43.610 that's happened here at US Business Funding is we pride 13 00:00:43.610 --> 00:00:48.050 ourselves all the marketing that we have is internally done. And 14 00:00:48.080 --> 00:00:52.940 our average deal size is a lot bigger and it's because of the 15 00:00:52.940 --> 00:00:57.560 marketing techniques that we set up here. Ah, but to fast 16 00:00:57.560 --> 00:01:01.310 forward, went to UCR, got a degree in business admin, 17 00:01:01.310 --> 00:01:06.620 emphasis in marketing, worked on Wall Street, legitimately on 18 00:01:06.620 --> 00:01:11.150 Wall Street, doing wholesale banking at a Portuguese based 19 00:01:11.150 --> 00:01:15.170 bank called Millenium BCP, I was recruited to work for Provident 20 00:01:15.170 --> 00:01:20.180 Equipment Leasing, was a mid ticket, equipment financing, 21 00:01:20.540 --> 00:01:23.990 then went to Nationwide Business Credit to do small ticket 22 00:01:24.230 --> 00:01:29.150 equipment financing. And then in 2008, I opened up PAR 23 00:01:29.150 --> 00:01:33.770 consulting, which is now DBA US Business Funding, because no one 24 00:01:33.770 --> 00:01:36.500 you won't PAR Consulting was, but I wanted to be more of a 25 00:01:36.500 --> 00:01:39.380 consultant than a sales guy and so that's why I called it PAR 26 00:01:39.380 --> 00:01:41.960 consulting. But with my marketing background, I figured 27 00:01:41.960 --> 00:01:44.720 that people were like who the heck is Par consulting? Once I 28 00:01:44.720 --> 00:01:49.460 put US Business Funding that got people to apply a lot more. So. 29 00:01:50.030 --> 00:01:56.510 Got it. So your role in these transactions? I understand that 30 00:01:56.510 --> 00:01:59.750 you're facilitating them, right? You're more of a broker than a 31 00:01:59.870 --> 00:02:01.550 lender in them. Is that right? 32 00:02:01.870 --> 00:02:05.320 Peter Ribeiro: Correct. We're a broker. We have been a broker 33 00:02:05.320 --> 00:02:11.830 since 2008. Obviously, in 2018, Fora Financial bought a big 34 00:02:11.830 --> 00:02:16.000 portion, equity stake in US Business Funding. And since 35 00:02:16.000 --> 00:02:19.810 then, I would still say that we are still a broker, but we try 36 00:02:19.810 --> 00:02:22.450 to put as much stuff as we can on balance sheet with Fora. 37 00:02:23.110 --> 00:02:25.840 Sean Murray: So what's this year been like for you? It's 38 00:02:25.840 --> 00:02:30.370 obviously an anomalous year. But from your point of view, what's 39 00:02:30.400 --> 00:02:32.080 what's it been like? Has it been challenging? 40 00:02:32.980 --> 00:02:35.740 Peter Ribeiro: Now, it's been very challenging, especially on 41 00:02:35.740 --> 00:02:40.900 the working capital side. But working cap is probably down 42 00:02:40.900 --> 00:02:45.850 about 70% of where we were prior to COVID. But the great thing is 43 00:02:45.850 --> 00:02:48.790 that we were doing so well prior to COVID. The great thing about 44 00:02:48.790 --> 00:02:51.850 a downturn is that you see a lot of holes in your company, you 45 00:02:51.850 --> 00:02:55.990 see, I look for opportunity during a downturn. So I would 46 00:02:55.990 --> 00:02:59.800 say that we're a stronger company and more well positioned 47 00:02:59.800 --> 00:03:02.950 today than we were prior to COVID. Obviously, numbers are 48 00:03:02.950 --> 00:03:05.050 down because your renewal book of business, there's a lot of 49 00:03:05.050 --> 00:03:08.170 defaults. A lot of the clients are these banks, a lot of our 50 00:03:08.170 --> 00:03:13.300 lenders offered restructuring of loans. And so if renewals which 51 00:03:13.330 --> 00:03:17.230 in the working cap side of our business is 35 to 40% of your 52 00:03:17.230 --> 00:03:21.220 business, and you lose 70% of it, the numbers are going to be 53 00:03:21.220 --> 00:03:24.610 down. So our numbers are way down on the working cap side, 54 00:03:24.610 --> 00:03:29.740 but they're up about 280% on the equipment side. So we shifted a 55 00:03:29.740 --> 00:03:32.950 good portion of the business on to the equipment space, which is 56 00:03:32.950 --> 00:03:36.010 still very lucrative and it was what we've really done since 57 00:03:36.010 --> 00:03:40.450 2008. 2008 to 2012 we did equipment, then the working cap 58 00:03:40.450 --> 00:03:44.320 came in, and we were 90% working cap and 10% equipment, last 59 00:03:44.320 --> 00:03:47.830 month, we're almost 50-50. So it's been a big shift over into 60 00:03:47.830 --> 00:03:49.030 the equipment space for us. 61 00:03:50.560 --> 00:03:52.630 Sean Murray: Do you think that will only remain that way for a 62 00:03:52.630 --> 00:03:56.110 limited time? Or do you think that things will go back to the 63 00:03:56.140 --> 00:03:59.290 to the ratio that they were previously once things start to 64 00:03:59.290 --> 00:03:59.890 settle down? 65 00:04:00.500 --> 00:04:03.290 Peter Ribeiro: I've never been a guy that will sit there and 66 00:04:03.290 --> 00:04:07.280 predict the future. I just don't, I just you know, and it's 67 00:04:07.280 --> 00:04:09.320 just like in my real estate book of business. You know, people 68 00:04:09.320 --> 00:04:14.120 ask me when's a good time to buy real estate? I say anytime. And 69 00:04:14.120 --> 00:04:16.130 they say, well, we're in a bubble, it's going to go down. 70 00:04:16.130 --> 00:04:19.940 But I told the kid I said, Well, I no one got I never got an 71 00:04:19.940 --> 00:04:23.450 email that COVID was coming. So I just just like everything man, 72 00:04:23.450 --> 00:04:25.730 I keep on buying, you know, in real estate, I just keep it the 73 00:04:25.730 --> 00:04:30.110 same thing which is growing, growing. But I do like, I don't 74 00:04:30.110 --> 00:04:33.140 like that's COVID is here, but it's really helped me kind of 75 00:04:33.200 --> 00:04:36.290 take a look at all the underlying holes that USBF had 76 00:04:36.440 --> 00:04:38.630 and I've been filling up those holes. And the great thing is 77 00:04:38.630 --> 00:04:41.720 that a lot of folks have closed down or they've downsized, and 78 00:04:41.720 --> 00:04:45.590 I've picked up a lot of good talent that otherwise if COVID 79 00:04:45.590 --> 00:04:47.990 hadn't come I would never be able to get so I just I'm trying 80 00:04:47.990 --> 00:04:52.160 to build now for the future. What's the future hold? I have, 81 00:04:52.250 --> 00:04:53.240 I have no idea. 82 00:04:54.230 --> 00:04:57.110 Sean Murray: So I've seen some of your videos online. You posts 83 00:04:57.110 --> 00:05:00.200 some I think videos on LinkedIn. That's where I see them anyway. 84 00:05:00.800 --> 00:05:05.690 And it looks like that there's some fun and camaraderie in your 85 00:05:05.690 --> 00:05:10.130 office. And I think it's unique to see that especially in 2020, 86 00:05:10.190 --> 00:05:14.840 and it made me think about company culture. And it looks 87 00:05:14.840 --> 00:05:17.840 like you have good company culture. And I wanted to ask, 88 00:05:18.410 --> 00:05:21.740 you know, from your point of view, how important is creating 89 00:05:21.740 --> 00:05:26.330 a good company culture and, and good values and camaraderie, 90 00:05:26.390 --> 00:05:28.790 camaraderie, how important is that success? 91 00:05:30.820 --> 00:05:34.480 Peter Ribeiro: I think it's very important. I think that if all 92 00:05:34.480 --> 00:05:39.550 you offer is a job where there's opportunity, in sales, you have 93 00:05:39.550 --> 00:05:42.160 good months and bad months, you have good runs and bad runs, 94 00:05:42.190 --> 00:05:45.190 just like baseball players, just like basketball players with 95 00:05:45.190 --> 00:05:49.360 their hitting of their shooting percentages. So if all you offer 96 00:05:49.510 --> 00:05:54.460 is money, if that money disappears, there's nothing 97 00:05:54.460 --> 00:05:58.000 left. If you offer a great environment, and the money goes 98 00:05:58.000 --> 00:06:01.600 away, and they're still having fun, that might sugarcoat it and 99 00:06:01.600 --> 00:06:04.810 cover it where the the reps actually stay. So sales guys are 100 00:06:04.810 --> 00:06:06.970 very emotional. They're I don't know, to me, they're like wide 101 00:06:06.970 --> 00:06:09.130 receivers in the NFL, they always want their leads, they 102 00:06:09.130 --> 00:06:12.700 always want the ball, right. And so if all you offer is money, 103 00:06:12.910 --> 00:06:15.850 that will go in some type of a downtrend like we have now and 104 00:06:15.850 --> 00:06:18.670 everyone leaves. If you have a good culture and a good family 105 00:06:18.670 --> 00:06:22.300 environment, people will stay. And so I think that it's fun to 106 00:06:22.300 --> 00:06:25.480 make money. But I always tell everyone, it's more important to 107 00:06:25.480 --> 00:06:27.790 have fun than the money will come. If you put the money 108 00:06:27.790 --> 00:06:30.910 before everything else, and the money doesn't come, you're gone. 109 00:06:31.540 --> 00:06:34.330 Sean Murray: That makes a lot of sense. You were saying before 110 00:06:34.330 --> 00:06:36.490 that you can't predict the future. And you know, I get it 111 00:06:36.520 --> 00:06:39.610 especially- No, no, nobody can now you said you didn't get the 112 00:06:39.610 --> 00:06:43.630 COVID email before COVID came? Right. I didn't get that email 113 00:06:43.630 --> 00:06:51.610 either. But assuming that we don't have another curveball, 114 00:06:52.090 --> 00:06:57.850 I'm curious if you think there will be a big, like demand for 115 00:06:57.880 --> 00:07:02.650 capital from small business on the other side of this. I mean, 116 00:07:03.370 --> 00:07:06.580 you know, your team speaks to business owners every day, 117 00:07:06.610 --> 00:07:10.750 right? And I'm sure some of them probably got PPP funds or, or 118 00:07:11.290 --> 00:07:14.500 EIDL, and that might shape how they're making decisions now. 119 00:07:15.070 --> 00:07:20.050 But let's assume that part of, of the, of the cycle comes to an 120 00:07:20.050 --> 00:07:23.590 end. And we start to look toward the world where everyone can 121 00:07:23.590 --> 00:07:26.590 meet in person again, do you do you envision small businesses 122 00:07:27.160 --> 00:07:32.290 rushing to secure a financing source? Or secure financing in 123 00:07:32.290 --> 00:07:34.300 general? Or do you think that there's going to be like this 124 00:07:34.300 --> 00:07:37.090 big pullback and not do anything? And you don't have to 125 00:07:37.090 --> 00:07:39.610 predict the future. But, but what do you what do you think is 126 00:07:39.610 --> 00:07:42.520 going to happen is based off of conversations you're having, 127 00:07:42.550 --> 00:07:43.390 you're having now? 128 00:07:44.020 --> 00:07:46.240 Peter Ribeiro: That's a really good question. Because you know, 129 00:07:46.240 --> 00:07:50.380 I don't like predicting the future. I just that so i, but if 130 00:07:50.380 --> 00:07:54.850 I had to predict the future, what I would say is that, you 131 00:07:54.850 --> 00:07:58.150 know, if you're a business owner, or entrepreneur, the most 132 00:07:58.150 --> 00:08:01.330 important thing is to look for opportunity. So I just look for 133 00:08:01.330 --> 00:08:05.200 opportunity. And I do believe that if we look back, let's say 134 00:08:05.200 --> 00:08:08.830 over any economic downturn, let's take it to 2008. You know, 135 00:08:08.830 --> 00:08:11.860 all the major banks are going to take their bottom 30% of the 136 00:08:11.860 --> 00:08:14.920 portfolio and start cutting off those credit lines. I'm hoping 137 00:08:14.920 --> 00:08:20.080 that then that would, that would layer into us is I do believe 138 00:08:20.080 --> 00:08:22.570 our products are, we're not going to compete with Bank of 139 00:08:22.570 --> 00:08:24.520 America, we're not going to compete with Wells Fargo, we're 140 00:08:24.520 --> 00:08:27.160 not going to meet with Chase Bank. We're a secondary source. 141 00:08:27.700 --> 00:08:31.390 Um, and I think that we're going to benefit from an economic 142 00:08:31.390 --> 00:08:35.230 downturn. Now whether we have [----] or not, I don't know. But 143 00:08:35.230 --> 00:08:38.050 do I see demand coming back? I absolutely see demand coming 144 00:08:38.050 --> 00:08:41.020 back. I think that a lot of these clients got the EIDL and 145 00:08:41.020 --> 00:08:44.890 the PPP, but that's just going to put a bandaid on the economic 146 00:08:44.890 --> 00:08:48.220 conditions that we're currently seeing. And if things continue 147 00:08:48.220 --> 00:08:52.570 to go into, I think the direction they're going, I think 148 00:08:52.570 --> 00:08:54.550 the great thing that's going to happen is you're going to see, 149 00:08:54.580 --> 00:08:59.140 again, these banks cutting, cutting off the bottom 30% of 150 00:08:59.140 --> 00:09:03.370 their portfolio. And that's all going to have to go downstream 151 00:09:03.370 --> 00:09:05.380 and I think we're right there to pick up all that business. So 152 00:09:05.380 --> 00:09:09.670 I'm very optimistic, I would say but that's me at heart, that 153 00:09:09.670 --> 00:09:12.970 business will pick up if not actually exceed where we were 154 00:09:12.970 --> 00:09:13.780 prior to COVID. 155 00:09:14.890 --> 00:09:17.440 Sean Murray: Would you say that businesses have changed how they 156 00:09:17.440 --> 00:09:23.560 feel about working with a non bank after this whole COVID 157 00:09:23.560 --> 00:09:27.940 experience happened? I've heard just some feedback about how 158 00:09:27.940 --> 00:09:30.340 business owners who typically value the relationship with 159 00:09:30.340 --> 00:09:34.510 their bank, tried to go to that bank to get PPP funds when they 160 00:09:34.510 --> 00:09:38.140 needed it and the bank wasn't able to come through and for the 161 00:09:38.140 --> 00:09:41.260 first time ever, they were willing to entertain other 162 00:09:41.260 --> 00:09:43.720 sources, whether it be a broker, whether it be you know, 163 00:09:43.720 --> 00:09:48.580 something, an online lender, a non bank source, have you, have 164 00:09:48.580 --> 00:09:53.020 you encountered any business owners who have kind of reached 165 00:09:53.020 --> 00:09:56.830 a point where they said I'm now open to change where I wasn't 166 00:09:56.920 --> 00:09:58.660 before because of all this stuff? 167 00:09:59.620 --> 00:10:01.420 Peter Ribeiro: Yea we have. I've seen a lot of that? You know, 168 00:10:01.420 --> 00:10:03.910 one thing is I do all the marketing here. So I do still 169 00:10:03.910 --> 00:10:07.540 take calls, cold calls, sales calls, it's you know, you can't 170 00:10:07.540 --> 00:10:09.970 do the marketing without being on the front lines. Because just 171 00:10:09.970 --> 00:10:12.760 like everything else, if you're not on the front lines, how do 172 00:10:12.760 --> 00:10:15.460 you know what to market to someone. So I have had a lot of 173 00:10:15.460 --> 00:10:18.430 calls. One thing that people don't realize about banks is 174 00:10:18.430 --> 00:10:20.470 that I have worked in banks my whole life, I started working at 175 00:10:20.470 --> 00:10:24.130 banks around the world in Poland and Portugal, here in the US 176 00:10:24.130 --> 00:10:26.800 since I was the age of 14, I've gone to different departments, 177 00:10:27.280 --> 00:10:29.680 what people understand, I always tell everyone, I tell my clients 178 00:10:29.680 --> 00:10:32.260 that banks love you til they love you no more. And so when 179 00:10:32.260 --> 00:10:35.350 you look at this PPP issue that happened, who were the banks 180 00:10:35.350 --> 00:10:37.780 that helped out which clients, it was a client that had a lot 181 00:10:37.780 --> 00:10:40.000 of debt with them, it was clients that had a lot of credit 182 00:10:40.000 --> 00:10:43.420 card debt with them, home loans, and whatnot, those clients were 183 00:10:43.420 --> 00:10:47.050 taken care of, right. But I've had, I would say, 90% of our 184 00:10:47.050 --> 00:10:49.840 clients that didn't have debt, but they banked at Bank of 185 00:10:49.840 --> 00:10:52.540 America, Bank of America didn't care if they got money, didn't 186 00:10:52.540 --> 00:10:55.510 help out the business, they only wanted to help the guys that 187 00:10:55.510 --> 00:10:58.450 they knew how to fulfill, fulfill their debt obligation so 188 00:10:58.450 --> 00:11:01.750 they put those in the forefront and those companies got funded. 189 00:11:01.930 --> 00:11:04.210 But there was a lot of companies that really needed it, the Bank 190 00:11:04.210 --> 00:11:06.130 of America said you don't qualify, it wasn't it doesn't 191 00:11:06.130 --> 00:11:09.010 qualify for it. It's just that the Bank of America didn't care 192 00:11:09.010 --> 00:11:12.370 about those clients. And once clients start figuring out, that 193 00:11:12.370 --> 00:11:15.490 out, I think that yes, are a lot more susceptible now to take a 194 00:11:15.490 --> 00:11:18.880 secondary source and it's always good to diversify away from 195 00:11:18.880 --> 00:11:21.220 their bank, especially if they're in business in [----] 196 00:11:21.640 --> 00:11:23.770 they might not lose their entire credit lines, but I think you'll 197 00:11:23.770 --> 00:11:26.860 see credit lines going from like half a million to 200,000, from 198 00:11:26.860 --> 00:11:30.340 200,000 to 50 grand and from 50 grand to zero. So I think we're 199 00:11:30.340 --> 00:11:32.590 gonna fill that void. And I think we're gonna, as long as 200 00:11:32.590 --> 00:11:36.700 you position yourself right now, for that opportunity, that 201 00:11:36.700 --> 00:11:39.400 opportunity will come in the next 12 to 18 months or so. 202 00:11:41.110 --> 00:11:45.970 Sean Murray: I like it. Um, there's been a lot of lenders 203 00:11:45.970 --> 00:11:50.530 that we've heard have paused in the months of March, April, May. 204 00:11:51.460 --> 00:11:53.920 I imagine that you've probably talked with several different 205 00:11:53.920 --> 00:11:58.540 lenders and finance, financing and capital sources, have they 206 00:11:58.570 --> 00:12:03.070 mainly come back already? Or are there still some that are in 207 00:12:03.070 --> 00:12:05.080 pause mode? Like, what are you hearing from them? 208 00:12:05.300 --> 00:12:07.460 Peter Ribeiro: I think it's a combination. You know, I think 209 00:12:07.460 --> 00:12:10.820 that there's, I mean, lenders have to put money on the street 210 00:12:10.850 --> 00:12:13.790 or they go to rapid amortization at some point. So you got to 211 00:12:13.790 --> 00:12:18.050 lend money out. I think a lot of them put a pause. They first try 212 00:12:18.050 --> 00:12:20.270 to figure out how to collect from the current book of 213 00:12:20.270 --> 00:12:23.090 business. And then they try to figure out what's the best 214 00:12:23.090 --> 00:12:25.370 credit model moving forward, because remember, these credit 215 00:12:25.370 --> 00:12:27.890 models are all based on Yeah, they could probably get through 216 00:12:27.890 --> 00:12:29.990 a recession, but they couldn't get through an overnight 217 00:12:29.990 --> 00:12:33.950 complete stop on the economy. So I think there's some lenders, I 218 00:12:33.950 --> 00:12:36.680 mean, like Fora is doing such a great job, I've been super 219 00:12:36.680 --> 00:12:40.250 impressed with Fora, and not being biased. It's just I think 220 00:12:40.250 --> 00:12:43.070 they're one of the shops in the greatest job, they came back, 221 00:12:43.070 --> 00:12:45.740 they never completely stopped lending, they did a really good 222 00:12:45.740 --> 00:12:49.430 job when our renewal portfolio did a really good job mapping 223 00:12:49.430 --> 00:12:52.790 out a new credit model. And as the economy starts to open back 224 00:12:52.790 --> 00:12:56.000 up, their credit model is continuously changing every day. 225 00:12:56.150 --> 00:12:58.670 So they've done a great job. And then there's some other lenders 226 00:12:58.670 --> 00:13:01.880 that have gone through bigger changes, for example, like 227 00:13:01.910 --> 00:13:05.390 OnDeck where they just complete put a stop on funding, and now 228 00:13:05.390 --> 00:13:08.150 they're coming back into the space. So for us, it's kind of 229 00:13:08.150 --> 00:13:10.910 like it's an every day, something's always changing. But 230 00:13:10.910 --> 00:13:13.100 it for me, it makes it exciting to be honest with you, because 231 00:13:13.130 --> 00:13:16.880 you know, the only thing that's constant is change. And if you 232 00:13:16.880 --> 00:13:20.480 don't evolve and adapt, you won't survive. So I think that 233 00:13:20.510 --> 00:13:24.350 shops are going to evolve and adapt will survive the pandemic. 234 00:13:24.560 --> 00:13:27.260 I think there's some shops, unfortunately, because of the 235 00:13:27.260 --> 00:13:30.200 cost per acquisition's so high, they might not bridge that gap. 236 00:13:31.370 --> 00:13:33.140 Sean Murray: I Like it was really good explanation. 237 00:13:33.920 --> 00:13:37.520 Everybody that was Peter, Roberto, CEO of US Business 238 00:13:37.520 --> 00:13:39.380 Funding. Thank you very much for being here. 239 00:13:39.659 --> 00:13:40.379 Peter Ribeiro: Thank you, Sean.