1 00:00:00,000 --> 00:00:01,650 Sean Murray: Today we were having some audio issues. 2 00:00:01,650 --> 00:00:05,190 Hopefully they're being resolved. Our production team 3 00:00:05,190 --> 00:00:08,850 will let us know if it's not working. We don't have earpieces 4 00:00:10,020 --> 00:00:13,170 that we wear so we have no idea what is coming out like in real 5 00:00:13,170 --> 00:00:15,270 time. And so sometimes the production team will come in and 6 00:00:15,270 --> 00:00:19,020 say, sorry, guys, that's a cut. We had some issues. So we just 7 00:00:19,020 --> 00:00:23,190 restarted and we're back. It's exciting. I'm Sean Murray. 8 00:00:23,190 --> 00:00:24,680 Johny Fernandez: I'm Johny Fernandez. Thank you guys for 9 00:00:24,680 --> 00:00:28,580 tuning back in with us. So we're gonna jump into the conversation 10 00:00:28,580 --> 00:00:33,500 that we were having regarding Canada's market so that we had 11 00:00:33,500 --> 00:00:34,250 just started and then 12 00:00:34,250 --> 00:00:35,780 Sean Murray: Start it over from the beginning Johny. 13 00:00:35,810 --> 00:00:38,780 Johny Fernandez: Alright, so Canada's alternative finance 14 00:00:38,780 --> 00:00:43,310 space has started 2022 with a bang. We know that Canadian 15 00:00:43,640 --> 00:00:46,370 lending, they saw billions of dollars in growth, the industry 16 00:00:46,370 --> 00:00:49,610 hopes to utilize FinTech technology and the government's 17 00:00:49,610 --> 00:00:52,700 new take on open banking to bring the industry back into 18 00:00:52,700 --> 00:00:56,570 full swing. So Canada's new banking plan, the new take, they 19 00:00:56,570 --> 00:00:59,930 want to modernize the Canadian financial regulation regulatory 20 00:00:59,930 --> 00:01:04,430 system, with open banking and fintech in mind. So what I was 21 00:01:04,430 --> 00:01:07,310 saying earlier was that my takeaway from all that is that 22 00:01:07,730 --> 00:01:10,430 in Canada, they're using the lending space in FinTech, 23 00:01:10,430 --> 00:01:13,760 they're really trying to merge it all together, to pretty much 24 00:01:13,790 --> 00:01:16,940 kill two birds with one stone. So they want to make they want 25 00:01:16,940 --> 00:01:20,510 to see the growth, they want to see kind of everything, go back 26 00:01:20,510 --> 00:01:23,120 to normal, but they're not just sticking with lending 27 00:01:23,120 --> 00:01:26,180 specifically, they're also bringing in the FinTech aspect 28 00:01:26,180 --> 00:01:31,280 of it and kind of saying, Hey, we're gonna do both, you know, 29 00:01:31,310 --> 00:01:34,760 and kill two birds with one stone, you know, see this 30 00:01:34,760 --> 00:01:41,270 industry grow, and then also make their worth and what they 31 00:01:41,270 --> 00:01:45,350 offer to the public. You know, they can offer more. So that was 32 00:01:45,350 --> 00:01:48,740 my takeaway. Sean, let's get your thoughts. What do you 33 00:01:48,740 --> 00:01:49,100 think? 34 00:01:50,500 --> 00:01:53,890 Sean Murray: So similar to you. So what's unique about Canada is 35 00:01:53,890 --> 00:01:59,440 that during during the the early years, early years, it has been 36 00:01:59,440 --> 00:02:01,600 years early years of the pandemic, right, early years of 37 00:02:01,600 --> 00:02:05,680 the pandemic is that the Canadian regulatory or system or 38 00:02:05,680 --> 00:02:09,130 the government wasn't exactly friendly with FinTech and being 39 00:02:09,130 --> 00:02:12,460 part of the government response to what was happening on the 40 00:02:12,460 --> 00:02:15,970 ground. In the US, the FinTech companies partnered up with the 41 00:02:15,970 --> 00:02:20,560 government to help administer PPP. In Canada, that didn't 42 00:02:20,560 --> 00:02:23,260 happen. Government's like, we don't have time for experiments, 43 00:02:23,290 --> 00:02:25,570 we're going to handle this ourselves. And the FinTech 44 00:02:25,570 --> 00:02:28,270 companies are like, Hey, how can how can you know you? How can 45 00:02:28,270 --> 00:02:31,450 you take that approach? We have such big adoption with FinTech, 46 00:02:31,480 --> 00:02:35,290 our customers know us, they would trust us to get the 47 00:02:35,290 --> 00:02:38,620 financial aid from, you know, from us as it is we have the 48 00:02:38,620 --> 00:02:41,470 tools we have, we have the interface, all that other stuff. 49 00:02:42,070 --> 00:02:45,670 And they felt like they were shut out. But since then, the 50 00:02:45,670 --> 00:02:48,220 government's kind of woken up to the fact that Fintech is already 51 00:02:48,220 --> 00:02:51,520 a big part of the economy, and Canada, and now that now they 52 00:02:51,520 --> 00:02:55,000 are trying to merge everything together to say, Okay, we 53 00:02:55,000 --> 00:02:58,690 recognize the value of FinTech, how do we how do we adopt it? 54 00:02:58,750 --> 00:03:00,970 Like a national level? 55 00:03:01,050 --> 00:03:02,940 Johny Fernandez: Yeah, it is interesting, because something 56 00:03:02,940 --> 00:03:06,060 that we that I was able to read up on, was that there, there are 57 00:03:06,060 --> 00:03:08,940 certain numbers that are coming out. And there's been 58 00:03:08,940 --> 00:03:11,970 significant growth by two Canadian lenders, that they're 59 00:03:11,970 --> 00:03:14,820 acting both as a financial management tool and a lending 60 00:03:14,820 --> 00:03:17,520 source. So again, they're merging, you know, the FinTech 61 00:03:17,520 --> 00:03:21,570 and the lending all together to really, you know, it's back 62 00:03:21,570 --> 00:03:23,640 bring the market back. I know, like, I know, when we 63 00:03:23,640 --> 00:03:27,420 specifically spoke with a lot of Canadians in the, in the earlier 64 00:03:27,420 --> 00:03:31,500 years, and, you know, just us talking about Canada, there was, 65 00:03:31,680 --> 00:03:36,300 you know, 2020 20 and 2021. There was always a lot of 66 00:03:36,300 --> 00:03:38,490 question mark, what, like, what was going on up there? How, 67 00:03:38,520 --> 00:03:42,690 like, was it is everything okay? Because everything was, you 68 00:03:42,690 --> 00:03:46,020 know, we were going through what we were going through, and now 69 00:03:46,080 --> 00:03:49,050 seeing that they're coming back strong does bring, you know, a 70 00:03:49,050 --> 00:03:51,960 sigh of relief, I think for everyone, because not only for 71 00:03:51,960 --> 00:03:55,080 us, because we know that our Canadian Viewers also, you know, 72 00:03:55,110 --> 00:03:57,780 they like us, they they want to join be a part of us. You know, 73 00:03:57,780 --> 00:04:01,110 we've had events there. So people know us, but I think it's 74 00:04:01,110 --> 00:04:05,430 awesome that there is this strong feeling that the market 75 00:04:05,430 --> 00:04:10,020 will come the market is back there. So do you think let me 76 00:04:10,020 --> 00:04:15,690 ask you this? Do you think that them merging the two? The 77 00:04:15,690 --> 00:04:19,260 crossover itself of fintech I mean, it's we've covered it here 78 00:04:19,260 --> 00:04:22,080 before, but do you think that it's going to be beneficial for 79 00:04:22,080 --> 00:04:23,040 them long term? 80 00:04:23,990 --> 00:04:26,570 Sean Murray: I think everyone benefits from the crossover 81 00:04:26,600 --> 00:04:30,110 between FinTech and lending long term, no matter what doesn't 82 00:04:30,110 --> 00:04:34,010 matter where you are. There's always going to be, there's 83 00:04:34,010 --> 00:04:37,790 always going to be a demographic in the market that wants to do 84 00:04:37,790 --> 00:04:40,820 things in a very manual manner, because they want to talk to 85 00:04:40,820 --> 00:04:43,850 somebody and they're not totally comfortable with doing it 86 00:04:44,090 --> 00:04:48,320 completely online and automated. And we always say it's younger 87 00:04:48,320 --> 00:04:51,740 people and older people. And once all the you know, all the 88 00:04:51,740 --> 00:04:55,340 old people are gone. Hey, well then we'll never need. We'll 89 00:04:55,340 --> 00:04:58,490 never need the manual products anymore. That's just not true. 90 00:04:58,790 --> 00:05:02,570 Plenty of young people For like yourself, who would prefer to 91 00:05:02,570 --> 00:05:05,930 talk to somebody, there's always going to be a need for that. But 92 00:05:05,960 --> 00:05:10,610 you have to, you have to fold FinTech into lending, no matter 93 00:05:10,610 --> 00:05:14,420 what, because you just you get a more efficient market. Yeah. And 94 00:05:14,420 --> 00:05:17,570 that's ultimately, that's ultimately beneficial to 95 00:05:17,570 --> 00:05:20,300 everyone, especially in a national crisis, like a 96 00:05:20,300 --> 00:05:23,750 pandemic, when it comes to implementing a response. You 97 00:05:23,750 --> 00:05:27,500 want all the best tools that your disposal to accurately 98 00:05:27,500 --> 00:05:32,630 identify who who needs to help. Yeah, provide the help, you 99 00:05:32,630 --> 00:05:35,660 know, confirm that the ones that wanted to help are the ones that 100 00:05:35,660 --> 00:05:38,840 got it, because there's a lot of fraud and stuff. And so if 101 00:05:38,840 --> 00:05:42,650 anything, if anything, what we learned from the US market, that 102 00:05:42,650 --> 00:05:45,710 perhaps Canada is, you know, kind of proud of themselves, 103 00:05:45,890 --> 00:05:49,880 that we had so much fraud, by, by having so many people 104 00:05:49,910 --> 00:05:53,990 administer government programs, right. And so even though so 105 00:05:53,990 --> 00:05:56,780 many people got help that otherwise wouldn't have, there 106 00:05:56,780 --> 00:05:59,420 were a lot of shortcomings in that. But I think additional 107 00:05:59,420 --> 00:06:03,230 tech will help fill that gap. I think Canada recognizes that and 108 00:06:03,230 --> 00:06:06,590 we'll continue to see them implement more FinTech in their 109 00:06:06,590 --> 00:06:08,600 in their lending infrastructure. 110 00:06:08,780 --> 00:06:10,310 Johny Fernandez: Let me ask you this. Do you think, you know, 111 00:06:10,310 --> 00:06:13,910 obviously, the pandemic had a huge role in you know, these, 112 00:06:14,000 --> 00:06:16,580 this merger kind of happening? Do you think if it wasn't for 113 00:06:16,580 --> 00:06:20,210 that they would be up to speed in merging the two together? If 114 00:06:20,210 --> 00:06:24,350 it wasn't for the, for the pandemic? You're not an expert? 115 00:06:24,380 --> 00:06:27,110 No, I just like for your for your opinion purposes? 116 00:06:27,110 --> 00:06:30,376 Sean Murray: Well, I you know, I wouldn't I'm not an expert on 117 00:06:30,443 --> 00:06:34,535 the Canadian market. But I like to say, like to say that I do 118 00:06:34,602 --> 00:06:38,627 talk to experts in that market who kind of you are you are I 119 00:06:38,694 --> 00:06:42,719 consult I consult the experts. Yeah, in the Canadian market. 120 00:06:42,786 --> 00:06:46,475 And FinTech recognition of FinTech has had already been 121 00:06:46,542 --> 00:06:50,701 slower in Canada than it was in the US. Canada is a little bit 122 00:06:50,768 --> 00:06:54,860 more conservative than the US in a lot of different respects. 123 00:06:54,927 --> 00:06:59,153 Yeah. And there was already kind of just a very slow delay from 124 00:06:59,220 --> 00:07:03,513 the government. In acknowledging the benefits of FinTech even as 125 00:07:03,580 --> 00:07:07,806 their own residents adopted it. It's like the residents are all 126 00:07:07,873 --> 00:07:11,965 about it. Yeah, I mean, over time, but the government's still 127 00:07:12,032 --> 00:07:16,190 like, not hasn't hadn't caught up to what its own populace was 128 00:07:16,257 --> 00:07:17,130 already into. 129 00:07:17,130 --> 00:07:21,050 Johny Fernandez: Yeah, no, that's interesting. Well, I'm 130 00:07:21,050 --> 00:07:26,240 honestly, I've been to Canada, a handful of times, specifically, 131 00:07:26,240 --> 00:07:26,930 two times 132 00:07:26,960 --> 00:07:27,650 Sean Murray: Nice. 133 00:07:28,320 --> 00:07:30,720 Johny Fernandez: Not for debanked purposes, but just 134 00:07:31,470 --> 00:07:34,890 yeah, like family that lives out there. Okay. One family member 135 00:07:34,920 --> 00:07:39,270 was Toronto, Toronto, okay. But I've always asked you about 136 00:07:39,270 --> 00:07:41,670 Canada. I'm like, when are we gonna go to Canada? Like, that's 137 00:07:41,670 --> 00:07:44,010 like the, I think was like one of the one questions I've yeah, 138 00:07:44,070 --> 00:07:47,460 I've asked you, like, Canada, Canada, Canada, and I'm, I'm 139 00:07:47,460 --> 00:07:50,430 genuinely excited to see what's going to happen because I'm 140 00:07:50,430 --> 00:07:54,660 excited to like, go to Canada and talk to like, everyone in I 141 00:07:54,660 --> 00:07:58,110 hate the phone, you know, me, I'm in person, and just really 142 00:07:58,110 --> 00:08:00,870 see the difference. Cause I remember in Broker Fair, I was 143 00:08:00,870 --> 00:08:03,510 able to speak with some Canadians that came down for 144 00:08:03,510 --> 00:08:07,380 Broker Fair, and they were just sharing with me that the amount 145 00:08:07,380 --> 00:08:11,640 of differences that happen, you know, in the US and in Canada, 146 00:08:11,640 --> 00:08:15,960 like it's, there's massive differences. So obviously, just 147 00:08:15,960 --> 00:08:18,420 to see how things work out there, like what's going on out 148 00:08:18,420 --> 00:08:21,540 there like just, I always get blown away cuz I like to compare 149 00:08:21,540 --> 00:08:25,470 and contrast like, I'm a nerd, so Alright, well, yeah. 150 00:08:25,740 --> 00:08:29,850 Next time you're up there, bring your checklist and figure out 151 00:08:29,850 --> 00:08:31,980 what's the same and what's different. We can make a game 152 00:08:31,980 --> 00:08:32,280 out of it. 153 00:08:34,010 --> 00:08:38,870 Also, I speak French I speak very basic French. So French, 154 00:08:38,870 --> 00:08:43,190 Canadian, you know, I can I can. I just know two sentences. 155 00:08:43,250 --> 00:08:45,470 Sean Murray: Okay. That's, that's less than very basic. 156 00:08:45,920 --> 00:08:48,140 Johny Fernandez: It's extremely basic. Yeah. But anyways, I'll 157 00:08:48,140 --> 00:08:51,470 be. It'll be excited to be out there. And yeah, I'm just 158 00:08:51,470 --> 00:08:54,260 excited to see what's going on in that market, honestly, so I 159 00:08:54,740 --> 00:08:57,470 also have an interest in other parts of the world and see how 160 00:08:57,470 --> 00:08:59,720 those markets work too. I just want to take over the world. 161 00:08:59,750 --> 00:09:02,990 Yeah, clearly. Yeah. Afterwards, Johnny will be plotting his 162 00:09:02,990 --> 00:09:05,150 vacation, I guess. Across the world. 163 00:09:05,210 --> 00:09:08,090 Remember what I said last year, we're already at the weekend. 164 00:09:08,090 --> 00:09:13,070 It's Wednesday. So I mean, at this point, you know, we're at 165 00:09:13,070 --> 00:09:16,850 the weekend, I can plan my trips out and yeah, anyways, all 166 00:09:16,850 --> 00:09:19,850 right. The next topic of conversation very interesting, 167 00:09:20,090 --> 00:09:23,900 cause I read this all over Twitter this morning. And then I 168 00:09:23,900 --> 00:09:27,590 looked online, and it was like the number one topic. And we've 169 00:09:27,590 --> 00:09:30,080 talked about it here before and there was a lot of, we had a lot 170 00:09:30,080 --> 00:09:35,180 of dialogue about this. Inflation rises 7% Over the last 171 00:09:35,180 --> 00:09:39,440 year, the highest it's been since 1982. I'm not gonna say 172 00:09:39,440 --> 00:09:42,380 how old I was in 1982. I don't know how old you were in 1982. I 173 00:09:42,380 --> 00:09:50,840 wasn't born. I wasn't born either 1982. Sean, what does 174 00:09:50,840 --> 00:09:54,530 that do? Seeing these numbers go up and up? What does that do for 175 00:09:54,530 --> 00:09:55,370 our industry? 176 00:09:56,290 --> 00:10:00,280 Sean Murray: Alright, so it's a lot more than just like you know 177 00:10:00,280 --> 00:10:03,520 an economic statistic or something that affects 178 00:10:03,520 --> 00:10:06,550 Mainstreet, I think a lot of people look at it and use it as 179 00:10:06,550 --> 00:10:10,060 just a gauge for where the economy is. Yeah. Right. But it 180 00:10:10,060 --> 00:10:12,550 actually has real world implications, especially in the 181 00:10:12,550 --> 00:10:15,040 world of lending. In fact, it has more implications in the 182 00:10:15,040 --> 00:10:18,400 world of lending possibly than any anything else. Yeah. Because 183 00:10:18,430 --> 00:10:21,820 if you know, if your purchasing power is being reduced, so 184 00:10:21,820 --> 00:10:25,540 significantly, by inflation, then you need to stay ahead of 185 00:10:25,540 --> 00:10:30,400 the curve, you need to earn, you need to earn money to stay ahead 186 00:10:30,430 --> 00:10:33,250 of inflation. First of all, if you meet inflation, you broke 187 00:10:33,250 --> 00:10:36,160 even, you might think that you made money, but you didn't, 188 00:10:36,190 --> 00:10:39,010 because your purchasing power is the same. So when you hear 7% 189 00:10:40,330 --> 00:10:44,080 over a year, that's a really high number. That's, that's 190 00:10:44,080 --> 00:10:47,560 extremely high. Because there's a lot of lenders out there who 191 00:10:47,560 --> 00:10:51,370 go in with the mindset of, we're going to help the customer and 192 00:10:51,370 --> 00:10:56,080 charge really low rates, right. And that's, that's a, that's a 193 00:10:56,080 --> 00:10:56,950 great mindset. 194 00:10:56,950 --> 00:10:58,900 Johny Fernandez: But if you're charging really low rates, when 195 00:10:58,900 --> 00:11:03,340 inflation is that high, there, and this is just, you know, 196 00:11:03,370 --> 00:11:07,120 basic economic math, yeah, from like, in my mind. So if you're 197 00:11:07,120 --> 00:11:10,600 charging them something, you know, that is a low rate, 198 00:11:10,720 --> 00:11:13,540 technically, it's not low, because the inflation is so 199 00:11:13,540 --> 00:11:14,110 high. 200 00:11:14,870 --> 00:11:17,240 Sean Murray: So it's alright, so here's how here's how it works. 201 00:11:17,300 --> 00:11:21,050 Break it, break it down for those Okay, yeah. So, charge 202 00:11:21,050 --> 00:11:24,830 charging a low low rate as a lender is now a lot more 203 00:11:24,830 --> 00:11:29,990 detrimental than it used to be. Cause if you lend out $100, and 204 00:11:29,990 --> 00:11:34,100 you get $107, back at the end of the year, your game is 7%. 205 00:11:34,730 --> 00:11:38,060 Right? You know, not bad. Yeah. Right. If you put it in a 206 00:11:38,060 --> 00:11:40,910 savings account, you would have made like 0%, essentially, so 207 00:11:40,910 --> 00:11:45,650 hey, I made 7%, on my money, I made $7, on my 100. The problem 208 00:11:45,650 --> 00:11:48,710 is, according to inflation, you didn't make anything, your 209 00:11:48,710 --> 00:11:53,030 purchasing power remained the same. So you're at breakeven 210 00:11:53,030 --> 00:11:56,600 point. So you didn't actually grow anything, you just kept up 211 00:11:56,600 --> 00:12:00,980 with the level of cost, right? You need to be able to grow and 212 00:12:01,010 --> 00:12:05,570 earn above and beyond inflation. So here I am using an example of 213 00:12:05,570 --> 00:12:09,740 7% lending out of 7%. Interest, right? That assumes there's no 214 00:12:09,740 --> 00:12:12,200 defaults, let's say your a lender that lends out at 7% 215 00:12:12,410 --> 00:12:14,570 interest and you have all these defaults. You're not actually 216 00:12:14,570 --> 00:12:18,230 making 7% You're making less than 7%. Yeah, you can put on 217 00:12:18,230 --> 00:12:21,830 your books. We were profitable, you know, but your purchasing 218 00:12:21,830 --> 00:12:24,050 power has gone down. Now, when you go out and you order 219 00:12:24,050 --> 00:12:27,770 supplies for the office, you rent, you have to pay your rent, 220 00:12:27,800 --> 00:12:32,240 maybe your rent has gone up. Possibly payroll, you know what 221 00:12:32,240 --> 00:12:35,720 I mean, all these things your health insurance cost you like 222 00:12:35,780 --> 00:12:38,300 we were profitable, I don't understand it. But next year, we 223 00:12:38,300 --> 00:12:41,360 won't be profitable, because all of our expenses went up. How can 224 00:12:41,360 --> 00:12:44,450 this be? It's because well, you didn't actually make any money. 225 00:12:44,570 --> 00:12:48,320 Yes, the dollar the figure went up, but your purchasing power 226 00:12:48,380 --> 00:12:53,090 went down. That's if you're lending just to 7%, right. And 227 00:12:53,090 --> 00:12:55,970 you earn less than that, because you had defaults. So now you 228 00:12:55,970 --> 00:13:01,100 have to charge more than 7%. And if you just make 7%, all we did 229 00:13:01,100 --> 00:13:04,490 was break even, there are lenders out there who charge 7% 230 00:13:04,850 --> 00:13:11,420 and less. The wild part about that is what they're earning is 231 00:13:11,570 --> 00:13:14,450 not enough to keep up with the the increase in purchasing 232 00:13:14,450 --> 00:13:18,440 power. Yeah. So even if they're booking profits, on their, you 233 00:13:18,440 --> 00:13:21,890 know, right now, yeah, they're going to find that in like the 234 00:13:21,890 --> 00:13:26,030 next year as their expenses go up. Wait a minute. We're not 235 00:13:26,030 --> 00:13:30,170 making any money. Yeah. Right, all of our expenses went up. Now 236 00:13:30,170 --> 00:13:33,230 we have to charge higher interest rates. This is like, 237 00:13:33,500 --> 00:13:37,370 this is a huge problem, I think in the market, because borrowing 238 00:13:37,370 --> 00:13:41,420 costs are so low. That you know, the fact that you know, the 239 00:13:41,450 --> 00:13:45,230 federal funds rate is like zero 0%. Right? It doesn't make any 240 00:13:45,230 --> 00:13:48,350 sense. And you can get a you can technically get a bank or bank 241 00:13:48,350 --> 00:13:54,620 loan for 7% or less. And even if you're charging 15% And you're 242 00:13:54,620 --> 00:13:57,260 like, Whoa, whoa, whoa, 15% interest that's high add to your 243 00:13:57,260 --> 00:14:01,730 defaults. Maybe you're making 12%. Right? Well, okay, you only 244 00:14:01,730 --> 00:14:04,460 have a 5% spread between what you earn and what inflation is. 245 00:14:04,460 --> 00:14:07,610 So that's a pretty slim margin. Yeah. Especially for a lender 246 00:14:07,610 --> 00:14:10,730 who's charging 15%. You thought that number was high? There are 247 00:14:10,760 --> 00:14:14,240 there there are a lot of lenders in the market whose whole 248 00:14:14,240 --> 00:14:17,780 business model revolves around charging low rates, yeah, who 249 00:14:17,780 --> 00:14:20,720 are going to find themselves in a position where they're 250 00:14:20,720 --> 00:14:23,840 suddenly losing money? Yeah. Because they're not charging 251 00:14:23,840 --> 00:14:26,540 enough to keep up with the decrease in purchasing power. 252 00:14:26,600 --> 00:14:28,040 Johny Fernandez: So let me ask you this. So if someone's 253 00:14:28,040 --> 00:14:31,070 charging a low a lower rate, or they, you know, categorize 254 00:14:31,070 --> 00:14:32,570 themselves, or promote themselves as like, hey, we 255 00:14:32,570 --> 00:14:36,050 charge low rates. And with inflation hitting, obviously, 256 00:14:36,050 --> 00:14:38,210 they can't keep charging those low rates, they're gonna, 257 00:14:38,240 --> 00:14:40,430 they're gonna have to go higher, can they still promote 258 00:14:40,430 --> 00:14:43,430 themselves as a low rate company? If at the end of the 259 00:14:43,430 --> 00:14:47,090 day, it's not, they're not charging lower rates than what 260 00:14:47,090 --> 00:14:48,770 they used to charge? 261 00:14:48,810 --> 00:14:50,850 Sean Murray: You mean that they increase the rate? Correct. Like 262 00:14:50,850 --> 00:14:54,960 and can they still consider a low rate? So I mean, arguably, 263 00:14:54,990 --> 00:15:00,630 arguably, yes. Yeah, right. You still could, but it's it's so 264 00:15:00,630 --> 00:15:03,690 weird because you're not really seeing lenders jacking up 265 00:15:03,690 --> 00:15:06,480 interest rates right now. Yeah, that's not happening. Yeah, the 266 00:15:06,480 --> 00:15:09,180 fact that people aren't jacking up interest rates at the same 267 00:15:09,180 --> 00:15:14,610 time that inflation is soaring is sort of like an inequality 268 00:15:14,610 --> 00:15:18,300 and imbalance in the market that I would expect in the next 12 269 00:15:18,300 --> 00:15:21,900 months to start to have to be corrected. Yeah, there's no way 270 00:15:21,930 --> 00:15:25,170 I would if I were to start a lending company today. And 271 00:15:25,170 --> 00:15:27,240 they're like, hey, our mission is going to be to charge 5% 272 00:15:27,480 --> 00:15:29,670 interest, I'd like well, we're instantly out of business 273 00:15:30,060 --> 00:15:33,390 instantly. Because it's already a losing model. Yeah, we won't 274 00:15:33,390 --> 00:15:35,790 earn enough to keep up with the increase in purchasing power. 275 00:15:35,970 --> 00:15:39,570 Unless inflation magically just stops at that level. We don't 276 00:15:39,570 --> 00:15:41,640 have to worry about future years. Yeah. But what we're 277 00:15:41,640 --> 00:15:47,040 seeing is a constant increase up that 7% Number is up 100 basis 278 00:15:47,040 --> 00:15:50,670 points from the month before. So that 12 to 7% is on a trailing 279 00:15:50,670 --> 00:15:54,600 12 month basis. Last month, it was at 6.9% is ticked up to 7%. 280 00:15:55,080 --> 00:15:58,500 Yeah, so we're on a trajectory upwards, right. Yeah. Unless it 281 00:15:58,500 --> 00:16:01,470 stops and holds in place, you know, then you're in a better 282 00:16:01,470 --> 00:16:03,660 spot. But if it keeps going up, and you're charging low interest 283 00:16:03,660 --> 00:16:09,390 rates, I mean, I'd have to think you're instantly you're screwed. 284 00:16:09,450 --> 00:16:12,750 Yeah, everyone who's in the lending or funding business has 285 00:16:12,750 --> 00:16:16,620 to pay attention to inflation, because your purchasing power is 286 00:16:16,620 --> 00:16:19,890 going to go down. So you have to charge more. 287 00:16:19,930 --> 00:16:22,600 Johny Fernandez: Yeah. So if someone's going to approach you 288 00:16:22,600 --> 00:16:26,770 and ask you, Hey, Sean, what's gonna happen? You know, is this 289 00:16:26,770 --> 00:16:29,950 going to continue? When is this gonna go down? Obviously, we 290 00:16:29,950 --> 00:16:32,800 don't have a crystal ball. So we don't know. But what would you 291 00:16:32,800 --> 00:16:33,910 tell that individual? 292 00:16:34,710 --> 00:16:40,290 Sean Murray: What I think is going to happen? Yeah. I think 293 00:16:40,290 --> 00:16:44,790 that you have to invest your money in a way that's going to 294 00:16:45,570 --> 00:16:49,590 earn a yield that's going to outperform inflation. I think 295 00:16:49,680 --> 00:16:53,880 many of us who are conservative, myself included, are content to 296 00:16:53,880 --> 00:16:56,640 put money in a savings account, even if it earns, like, 1% or 297 00:16:56,640 --> 00:16:57,120 less, 298 00:16:57,120 --> 00:16:58,350 Johny Fernandez: What if it's under a mattress? 299 00:17:01,420 --> 00:17:04,090 Sean Murray: Or under a mattress or under a mattress? Like maybe 300 00:17:04,090 --> 00:17:07,210 I don't know, maybe someone you know, who's doing that. I would 301 00:17:07,210 --> 00:17:11,380 tell them that all you're doing is hurting, is it's just losing 302 00:17:11,410 --> 00:17:14,650 you're losing money. Yeah. Your you know, your $100 is now worth 303 00:17:14,650 --> 00:17:18,790 like, you know, $93 Yeah, right. After the course of a year, you 304 00:17:18,790 --> 00:17:22,450 don't want to have that happen? Yeah, your money should, should 305 00:17:22,480 --> 00:17:24,700 obviously be going up in value, you know, the stock market 306 00:17:24,700 --> 00:17:27,280 historically, has returned, like, you know, between seven 307 00:17:27,280 --> 00:17:30,310 and 10% per year, on average over a very long period of time, 308 00:17:30,340 --> 00:17:32,200 right. So you're competing against people who have a lot of 309 00:17:32,200 --> 00:17:35,080 money in the stock market is saying 7%? Well, if I earn 310 00:17:35,080 --> 00:17:38,320 between seven 10% of the stock market? I'm going to be okay, 311 00:17:38,350 --> 00:17:44,260 yeah. And the S&P 500. In 2021, I think went up 20, 20, some odd 312 00:17:44,260 --> 00:17:47,500 percent, somewhere between 20 and 29%. Right. That's, that's a 313 00:17:47,500 --> 00:17:49,900 nice number. Because not only did you stay above inflation, 314 00:17:49,900 --> 00:17:52,240 but you also made yourself a nice profit, you kept your money 315 00:17:52,240 --> 00:17:55,330 under your mattress, and you lost money. Well, guess what, 316 00:17:55,570 --> 00:17:58,390 that spread between how you know how you're doing versus other 317 00:17:58,390 --> 00:18:00,730 people, you've gotten poor and the people in the stock market 318 00:18:00,730 --> 00:18:02,980 got richer, neither of you did anything with your money other 319 00:18:02,980 --> 00:18:06,010 than pocket in different spots under the mattress seems safe. 320 00:18:06,760 --> 00:18:09,370 But now your purchasing power with that money is less person, 321 00:18:09,370 --> 00:18:11,950 putting in the stock market ahead of inflation, their 322 00:18:11,950 --> 00:18:15,610 purchasing power is more. So I would just say think of ways. 323 00:18:15,790 --> 00:18:18,190 And don't I don't mean just dump it all into like crypto or 324 00:18:18,190 --> 00:18:20,770 something. But you have to you have to stay above inflation, 325 00:18:20,770 --> 00:18:23,530 otherwise, you're just in an environment where your expenses 326 00:18:23,530 --> 00:18:27,430 are going up, but your own your own ability to pay and is not. 327 00:18:27,600 --> 00:18:29,850 Johny Fernandez: So let me ask you this. There's a lot of guys 328 00:18:29,850 --> 00:18:32,430 that I met at Broker Fair, they're young guys, you know, 329 00:18:32,430 --> 00:18:35,910 anywhere from 20 to 26 years old. They, you know, they 330 00:18:35,910 --> 00:18:38,430 started out in this industry, they either they're either 331 00:18:38,430 --> 00:18:41,850 working alone, or they're new, you know, this is the only job 332 00:18:41,850 --> 00:18:44,730 that they have, because they know that there's money in this 333 00:18:44,730 --> 00:18:48,960 and they're trying to kind of, you know, make ends meet and try 334 00:18:48,960 --> 00:18:52,980 to stay afloat. What would be your advice for them for these 335 00:18:52,980 --> 00:18:57,030 newer guys about inflation, in layman's term, and if someone's, 336 00:18:57,300 --> 00:19:00,000 you know, broke, or if someone's just starting out, they don't 337 00:19:00,000 --> 00:19:03,720 have, you know, money to pull from, you know, what would you 338 00:19:03,720 --> 00:19:04,140 say to them? 339 00:19:05,320 --> 00:19:08,740 Sean Murray: All, I mean, in regards to how Inflation affects 340 00:19:08,740 --> 00:19:14,110 them, my only advice would probably probably be not to work 341 00:19:14,350 --> 00:19:17,980 for a lender who charges extremely low interest rates, 342 00:19:18,130 --> 00:19:20,680 because in the next 12 months, they're gonna come to the 343 00:19:20,680 --> 00:19:25,840 realization that they're losing money, and are probably going to 344 00:19:25,840 --> 00:19:29,950 have to do something to resolve that. Maybe they're gonna have 345 00:19:29,950 --> 00:19:31,840 to let people go, maybe they're gonna have to change their 346 00:19:31,840 --> 00:19:36,130 rates, I don't know, but a low rate lender, in an environment 347 00:19:36,130 --> 00:19:39,550 where there's 7% inflation. I don't understand it. I don't 348 00:19:39,550 --> 00:19:41,800 know why people still do it. If I was a lender right now. If it 349 00:19:41,800 --> 00:19:44,110 was me. Yeah. If it was me. Like, Sean, what would you do if 350 00:19:44,110 --> 00:19:45,850 it was you? And you were running a lending company, a funding 351 00:19:45,850 --> 00:19:49,360 company? Yeah, I would be jacking my rates up. Like how 352 00:19:49,360 --> 00:19:53,920 much higher more than 7%, 14, 15%? I don't know if it has to 353 00:19:53,920 --> 00:19:56,860 be that high. Right. But I would I would be jacking them up. I 354 00:19:56,860 --> 00:20:00,880 would be looking at 7% be like holies holy cow, right. I would 355 00:20:00,940 --> 00:20:04,720 I would I would build in maybe, you know, one 2% per year in a 356 00:20:04,720 --> 00:20:07,330 possible on like an average year. But you tell me it's 12%. 357 00:20:07,720 --> 00:20:10,810 And on the increase, I say, I would be jacking up my rates. 358 00:20:10,840 --> 00:20:13,300 Yeah, that would be my, but then they're like, Oh, well, how do 359 00:20:13,300 --> 00:20:16,360 you compete when other people aren't doing that? Yeah, I would 360 00:20:16,360 --> 00:20:19,240 think that they would have to eventually, yeah, you can't. 361 00:20:19,440 --> 00:20:22,260 Johny Fernandez: So the game is not waiting for other people to 362 00:20:22,260 --> 00:20:25,440 jack up their prices and kind of follow the game right now, the 363 00:20:25,440 --> 00:20:28,800 plan of action should be for you to kind of take care of 364 00:20:28,800 --> 00:20:31,170 yourself, jack up the rates. And it doesn't matter what everyone 365 00:20:31,170 --> 00:20:32,070 else around you is doing? 366 00:20:32,070 --> 00:20:34,160 Sean Murray: Well, you have to still stay competitive. No one 367 00:20:34,160 --> 00:20:36,350 else is raising the rates and you are then you get no business 368 00:20:36,350 --> 00:20:39,560 doesn't matter that you raised your rates, right. So I think, 369 00:20:39,680 --> 00:20:41,480 you know, it's that weird balance, you just have to 370 00:20:41,480 --> 00:20:45,320 wonder, how can Why are there lenders out there who can lend 371 00:20:45,560 --> 00:20:49,370 below the rate of inflation, because their purchasing power, 372 00:20:49,730 --> 00:20:54,470 at the end of the day is going down? Unless lending is 373 00:20:54,470 --> 00:20:58,670 essentially an onboarding product for their other products 374 00:20:58,730 --> 00:21:01,610 or like a loss leader where we lend to these customers, but 375 00:21:01,610 --> 00:21:04,760 then we sell them all this other stuff. And so we still lend at 376 00:21:04,760 --> 00:21:07,700 these really low interest rates, because we're selling them, you 377 00:21:07,700 --> 00:21:10,190 know, a tool, a monthly fee, we're giving them a wealth 378 00:21:10,190 --> 00:21:13,970 management thing or whatever, we're selling them insurance. 379 00:21:14,180 --> 00:21:17,270 And so we don't, you know, the fact that our lending rates are 380 00:21:17,270 --> 00:21:19,670 so low, and it's below inflation doesn't matter, because it's 381 00:21:19,670 --> 00:21:21,740 just an onboarding tool. But if you're just a pure lender 382 00:21:21,740 --> 00:21:24,020 lending below the rate of inflation, that makes no sense 383 00:21:24,020 --> 00:21:27,620 to me. If I was in the market, competing against other lenders, 384 00:21:28,010 --> 00:21:30,980 I would be I would increase my rates no matter what, first of 385 00:21:30,980 --> 00:21:33,410 all, because I would have to because I would have to I would 386 00:21:33,410 --> 00:21:38,300 have to make sure that I wasn't, I wasn't hurting myself, but I'd 387 00:21:38,300 --> 00:21:40,940 have to still think about remaining competitive against 388 00:21:40,970 --> 00:21:46,190 all the other companies who are not aware of the implications of 389 00:21:46,190 --> 00:21:48,410 inflation. I think they read it and you're like, oh, it's bad 390 00:21:48,410 --> 00:21:51,620 for the economy. Yeah, oh Mainstreet is suffering you know 391 00:21:51,620 --> 00:21:54,110 what I mean, I'm going to, I'm going to save Main Street 392 00:21:54,110 --> 00:21:55,850 because I'm a lender, or a funder. You know, they're 393 00:21:55,850 --> 00:21:58,100 hurting because of inflation. Like, hey, you're a lender, 394 00:21:58,130 --> 00:22:01,040 you're the one being affected by inflation. What are you doing 395 00:22:01,040 --> 00:22:03,620 about it? Yeah, you know what I mean? Yeah, that's what you got 396 00:22:03,620 --> 00:22:05,420 to be thinking about out there. If you're a lender of funder, 397 00:22:05,450 --> 00:22:08,420 how is inflation affecting my business? It's probably going to 398 00:22:08,420 --> 00:22:09,980 hurt you. Well, I know it's hurting you. 399 00:22:10,080 --> 00:22:13,680 Johny Fernandez: Yeah. No, that's good to know. Great 400 00:22:13,680 --> 00:22:16,920 conversation. I just like how you get so excited about 401 00:22:16,980 --> 00:22:19,740 inflationn. So yeah, I had some real thoughts about it. Well, 402 00:22:19,740 --> 00:22:22,230 cause I know for a fact because because I've seen this 403 00:22:22,230 --> 00:22:25,470 firsthand. You definitely get excited about topics like 404 00:22:25,470 --> 00:22:27,510 inflation. And I remember when we were talking you're like 405 00:22:27,510 --> 00:22:30,930 this, I love this. It's like a kid in a candy store. 406 00:22:30,930 --> 00:22:33,360 Sean Murray: We have Jack Dorsey who was formerly the CEO of 407 00:22:33,360 --> 00:22:36,000 Twitter and still the CEO of Square who said a few months ago 408 00:22:36,000 --> 00:22:38,130 that there's gonna be hyperinflation. Now he stands 409 00:22:38,130 --> 00:22:43,170 alone as far as credible people. Really? Yeah. He stands alone 410 00:22:43,200 --> 00:22:47,130 among credible people who have predicted hyperinflation, 411 00:22:47,160 --> 00:22:49,170 hyperinflation, we're not talking about seven. This is not 412 00:22:49,170 --> 00:22:51,900 hyperinflation. 7% is not hyperinflation. Hyperinflation 413 00:22:51,900 --> 00:22:56,460 is like 40, 50%, you know, plus, where you know, $100 Today is 414 00:22:56,460 --> 00:22:59,730 worth $50 two months from now, or something like that, you 415 00:22:59,730 --> 00:23:02,850 know, it's crazy. But he here he was out there predicting it. And 416 00:23:02,850 --> 00:23:05,490 we're not in the hyper inflationary environment. But we 417 00:23:05,490 --> 00:23:07,530 are definitely in a real inflationary environment. You 418 00:23:07,530 --> 00:23:10,860 said 1982, I wasn't even born. So I haven't had 7% in my whole 419 00:23:10,860 --> 00:23:11,610 entire life. 420 00:23:11,700 --> 00:23:15,660 Johny Fernandez: Well, and I think honestly, like, just put 421 00:23:15,660 --> 00:23:19,560 the putting the industry aside on a day to day basis. You know, 422 00:23:19,590 --> 00:23:24,210 going grocery shopping, going to get gas go like simple things. 423 00:23:24,510 --> 00:23:27,690 And like, because I budget, typically my budget, like this 424 00:23:27,690 --> 00:23:30,600 is how much you spend on groceries. I go to the grocery 425 00:23:30,600 --> 00:23:34,260 store, and I like leave shocked out of my mind. Because the fact 426 00:23:34,260 --> 00:23:37,920 that like, certain things have gone up, or like the sandwich 427 00:23:37,950 --> 00:23:40,680 right down the street here in Brooklyn. I used to get it for 428 00:23:40,680 --> 00:23:48,750 $7 7.50 When I add extra $10 $10 429 00:23:48,780 --> 00:23:54,570 Sean Murray: Yeah. What'd he do? He jacked up his price he did. 430 00:23:55,440 --> 00:23:58,650 It hurt my feelings. But this is what I paid for it. This is what 431 00:23:58,650 --> 00:24:00,630 happens though. Yeah, prices gonna have to get jacked up. 432 00:24:00,660 --> 00:24:03,690 Yeah. So if you're the person out there saying, Oh, no. Oh, 433 00:24:03,690 --> 00:24:05,460 how can this affect? You know, it affects you? 434 00:24:05,490 --> 00:24:07,500 Johny Fernandez: Yeah, it's but it's affecting everyone. And 435 00:24:07,500 --> 00:24:10,560 everyone should be very well aware that like, what used to 436 00:24:10,560 --> 00:24:12,840 budget last year, the year before that, it just isn't 437 00:24:12,840 --> 00:24:17,010 enough now. Yeah. Even like, I love red meat, red meats up by a 438 00:24:17,010 --> 00:24:20,580 lot $20 A pound in certain stories here in New York City, 439 00:24:20,580 --> 00:24:21,240 which is insane. 440 00:24:21,930 --> 00:24:25,080 Sean Murray: Yeah, I mean, if you if you just follow some of 441 00:24:25,080 --> 00:24:27,360 the conversation among among FinTech companies, they'll tell 442 00:24:27,360 --> 00:24:30,330 you that, essentially, it's been in the money out there. Yeah. 443 00:24:30,390 --> 00:24:35,070 Trying to trying to chase deals. Yeah, so many different Wall 444 00:24:35,070 --> 00:24:37,200 Street firms just want to put out as much money as possible. 445 00:24:37,200 --> 00:24:39,420 It's because there's too much money in the market. That's why 446 00:24:39,420 --> 00:24:42,540 we have inflation. Yeah. Because it's so much money in the 447 00:24:42,540 --> 00:24:45,570 market. People don't know what to do with it at all. In order 448 00:24:45,600 --> 00:24:48,180 and now you have people who want to borrow it. We're like, oh, I 449 00:24:48,180 --> 00:24:50,370 don't know. It used to be one person want to give me money 450 00:24:50,400 --> 00:24:52,560 now. 10 do they're all desperate to give me all their money 451 00:24:52,560 --> 00:24:55,260 because they all have too much money. So what do I do as the 452 00:24:55,260 --> 00:24:57,720 borrower now I want the lowest rate. And all these people were 453 00:24:57,720 --> 00:25:00,480 like, well, I can't I can't lend at a low rate. I have inflation 454 00:25:00,510 --> 00:25:03,840 Like, Oh, I guess I'll go with your competitor. Right. And so 455 00:25:03,840 --> 00:25:06,750 you end up with low rate deals, where the only person who wins 456 00:25:06,750 --> 00:25:08,460 is the borrower, you know, when it's a great time to be a 457 00:25:08,460 --> 00:25:11,430 borrower, if you can get a low interest rate, borrow, if you're 458 00:25:11,430 --> 00:25:14,460 borrow, like crazy if you're if you can get a low rate, 459 00:25:14,490 --> 00:25:17,970 Johny Fernandez: Well, this translates into buying a house, 460 00:25:17,970 --> 00:25:18,750 for example, 461 00:25:18,870 --> 00:25:21,450 Sean Murray: Borrow. Yeah, get as many houses as possible, 462 00:25:21,450 --> 00:25:24,450 interest rates are now are to 2.5% Get all the houses you can 463 00:25:24,450 --> 00:25:26,520 get. Because think about it, the value of your house is going to 464 00:25:26,520 --> 00:25:29,640 go up with inflation. Yeah, so your $500,000 house is going to 465 00:25:29,640 --> 00:25:32,190 be a million dollar house. And if you borrow it at, you know, 466 00:25:32,220 --> 00:25:36,810 3% and inflation goes up to 10%. Man, you're, you're you're doing 467 00:25:36,840 --> 00:25:39,960 awesome. The value of the house just went up so significantly, 468 00:25:40,050 --> 00:25:42,150 and here. You are still paying this, you know, rinky dink 3% 469 00:25:42,420 --> 00:25:45,090 rate on your house. Yeah, buy your house doubled. 470 00:25:45,210 --> 00:25:48,420 Johny Fernandez: I learned I refinanced. I went down four 471 00:25:48,420 --> 00:25:55,500 points. Really? Yeah. It was wild. For the lender, that's 472 00:25:56,190 --> 00:25:57,360 you're a borrower it's a great time. 473 00:25:57,780 --> 00:25:59,700 Sean Murray: But because they haven't, there's so much money. 474 00:25:59,760 --> 00:26:02,040 That's why we haven't placed there's infinity money around, 475 00:26:02,040 --> 00:26:04,740 nobody knows what to do with it all. If you're an average person 476 00:26:04,740 --> 00:26:08,490 saying, What do you mean so much money? You know, how hard it is 477 00:26:08,490 --> 00:26:11,580 for me, I can't pay my bills on noon, you know, yeah, I just got 478 00:26:11,580 --> 00:26:14,040 to tell you at the, at the higher levels, I get, you know, 479 00:26:14,040 --> 00:26:16,320 the average people, you know, like, like us and stuff, right? 480 00:26:16,350 --> 00:26:19,830 Speak for yourself. So it was, you know, at least for myself, 481 00:26:19,830 --> 00:26:21,870 we're not swimming in, we're not swimming in dough. But when you 482 00:26:21,870 --> 00:26:24,630 get higher up the chain, yeah, they have so much money. They 483 00:26:24,630 --> 00:26:28,050 don't know what to do with it. Yeah, it's infinite. And it's 484 00:26:28,050 --> 00:26:30,990 everywhere. And we just had all these billion and trillion 485 00:26:30,990 --> 00:26:33,090 dollar packages and it is swimming and people don't know 486 00:26:33,090 --> 00:26:35,310 what to do. And that's why we have inflation, we're gonna have 487 00:26:35,310 --> 00:26:38,250 more inflation, it's great time to be a borrower. You know, 488 00:26:38,310 --> 00:26:41,670 difficult time to be a lender, but you gotta you gotta react in 489 00:26:41,670 --> 00:26:43,980 such a way so that your company is still profitable. 490 00:26:44,010 --> 00:26:48,540 Johny Fernandez: Yeah, for sure. Great conversation. I love it. I 491 00:26:48,540 --> 00:26:51,840 don't know about you. But at nighttime, I have a big bathtub 492 00:26:51,840 --> 00:26:52,530 full of money. 493 00:26:54,420 --> 00:26:56,970 Okay, that's, that's why that's why I like you know, this, this 494 00:26:56,970 --> 00:27:03,510 conversation. This conversation. Yeah. I am inflation. Inflation. 495 00:27:03,870 --> 00:27:04,980 I am the infinite money, 496 00:27:05,290 --> 00:27:09,040 No, but honestly, I think it's definitely thank you for your 497 00:27:09,040 --> 00:27:10,630 knowledge, because I know there's a lot of people out 498 00:27:10,630 --> 00:27:13,930 there that honestly, are just kind of like, they see it. And 499 00:27:13,930 --> 00:27:16,120 they're like, what's in it for me? Or like, how, how does this 500 00:27:16,120 --> 00:27:18,760 affect me? And I think especially a lot of the younger 501 00:27:18,760 --> 00:27:22,450 people they're like inflation, that's a term like economics 502 00:27:22,450 --> 00:27:25,900 class, but no, it's like, and it will impact especially if you're 503 00:27:25,900 --> 00:27:28,180 starting, I think a lot about the guys are starting out, 504 00:27:28,180 --> 00:27:31,150 because I've met so many of them, you know, earlier on in 505 00:27:31,150 --> 00:27:34,810 Broker Fair, and a lot of them just need the knowledge to 506 00:27:34,810 --> 00:27:38,260 survive in this industry. And a lot of them are just trying to 507 00:27:38,260 --> 00:27:39,460 figure out how to maneuver it. 508 00:27:39,570 --> 00:27:42,390 Sean Murray: Yeah, well, hey, short term, small business 509 00:27:42,600 --> 00:27:46,020 finance is a great business to be in, because although there's 510 00:27:46,020 --> 00:27:49,500 a lot of criticism about the high rates, guess what, it's 511 00:27:49,500 --> 00:27:53,250 inflationary protected, right, to an extent you have to do it 512 00:27:53,250 --> 00:27:56,430 responsibly, you have to do it in a way that's profitable. But 513 00:27:56,430 --> 00:28:00,780 there's an actual market where the rates reflect reality. I 514 00:28:00,780 --> 00:28:03,270 think small business finance companies are criticized, 515 00:28:03,300 --> 00:28:07,320 oftentimes, for their high cost. Maybe they're just doing things 516 00:28:07,320 --> 00:28:10,650 the right way. I think a lot of those companies don't make as 517 00:28:10,650 --> 00:28:14,940 much money, as regulators like to speculate that they do. Yeah, 518 00:28:14,970 --> 00:28:19,830 they're pricing them based upon what the market has decided. If 519 00:28:19,830 --> 00:28:22,380 they wanted to charge whatever they want, right? Customers 520 00:28:22,380 --> 00:28:24,660 would just choose a different option, and somebody else would 521 00:28:24,660 --> 00:28:27,810 provide it to them. Yeah. Why do they exist? Because it works, 522 00:28:27,810 --> 00:28:30,630 because the market has decided that is the price. It's a good 523 00:28:30,630 --> 00:28:32,550 time to be one of those companies not charging, you 524 00:28:32,550 --> 00:28:35,940 know, 1% interest or whatever, because you have a better chance 525 00:28:36,000 --> 00:28:39,000 of actually staying ahead of inflation versus all the people 526 00:28:39,030 --> 00:28:40,170 who are charging low rates. 527 00:28:40,170 --> 00:28:42,880 Johny Fernandez: Yeah, that's good. Well, thanks for your 528 00:28:42,880 --> 00:28:45,490 input. Appreciate it. Anytime. And I know people out there 529 00:28:45,490 --> 00:28:50,260 appreciate it, too. So we're gonna wrap up today with a 530 00:28:50,260 --> 00:28:53,140 lightning round. Okay. All right. It's gonna be a very 531 00:28:53,140 --> 00:28:58,450 quick one. We have one specific question for the lightning 532 00:28:58,450 --> 00:28:58,690 round. 533 00:28:58,720 --> 00:29:00,910 Just one question just one question. A one question 534 00:29:00,910 --> 00:29:02,260 lightning. Yeah. Okay. 535 00:29:02,600 --> 00:29:06,410 All right. So in this lightning round, Sean, what is an early 536 00:29:06,410 --> 00:29:07,970 payoff discount? 537 00:29:09,040 --> 00:29:10,750 That's the question that I got. That's the question that we got. 538 00:29:10,750 --> 00:29:14,530 What is an early payoff discount? So an early payoff 539 00:29:14,530 --> 00:29:19,150 discount is a discount that a borrower would get for paying 540 00:29:19,150 --> 00:29:24,460 off their loan early. Okay. But I'm presuming there's more to 541 00:29:24,460 --> 00:29:28,780 that question. And I actually think that we actually even 542 00:29:28,780 --> 00:29:33,910 bring this up. Okay. Because I don't know if people use this 543 00:29:33,910 --> 00:29:37,690 particular phrase, when they're talking about early payoffs, but 544 00:29:37,690 --> 00:29:45,370 there's a difference between loans and MCA, okay. In a loan, 545 00:29:45,400 --> 00:29:49,660 if you pay off your loan, early interest no longer accrues the 546 00:29:49,660 --> 00:29:52,120 benefit to paying off a loan early is you stop the accruing 547 00:29:52,120 --> 00:29:54,910 of interest. You're paid off and it's done. Right. So if you're 548 00:29:54,910 --> 00:29:58,090 like, Oh, my goodness, if I didn't pay this thing down, now, 549 00:29:58,090 --> 00:30:00,220 I'd incur all this interest. I just want to get rid of it I 550 00:30:00,220 --> 00:30:03,790 have the cash. If you're in a different product where someone 551 00:30:03,790 --> 00:30:06,670 bought your future receivables, and you're like, it's been three 552 00:30:06,670 --> 00:30:10,330 months of this, I just want to get out of it. I just want to, 553 00:30:10,360 --> 00:30:13,960 you know, pay whatever is required and be done with it. 554 00:30:14,290 --> 00:30:19,300 The problem with that is that you you contracted to deliver a 555 00:30:19,330 --> 00:30:24,040 fixed amount of receivables to the buyer. It's not accruing 556 00:30:24,070 --> 00:30:27,460 interest. You don't just pay it down and then stop accruing 557 00:30:27,460 --> 00:30:31,000 interest, no interest would ever accrue it, yeah, you agreed to a 558 00:30:31,000 --> 00:30:35,170 fixed amount, a fixed amount to pay, no matter when you have to 559 00:30:35,170 --> 00:30:38,230 pay it could take a short time, it could take a long time. But 560 00:30:38,230 --> 00:30:41,920 if you're like, Hey, I just want to get rid of it, there's a good 561 00:30:41,920 --> 00:30:45,160 chance that you're going to have to pay the full amount, okay, 562 00:30:45,190 --> 00:30:48,070 that you that you can track it to pay, which means there's no 563 00:30:48,070 --> 00:30:52,720 benefit to paying it off early. Okay. So that that brings us to 564 00:30:52,720 --> 00:30:55,060 the early payoff discount. Maybe that's where this question came 565 00:30:55,060 --> 00:30:57,370 from? I don't know what the genesis is for the question. 566 00:30:57,400 --> 00:31:01,780 Yeah. But that brings us to an early pay off discount on that 567 00:31:01,780 --> 00:31:05,230 particular product. There are companies that offer this 568 00:31:05,230 --> 00:31:08,980 product who understand that, you know, the average person might 569 00:31:08,980 --> 00:31:13,570 be thinking, hey, if I, if I just get out of it early, don't 570 00:31:13,570 --> 00:31:18,760 I get some type of break? Right? Like, you know, I was did the 571 00:31:18,760 --> 00:31:21,070 math, and it would probably take like a year for you to get all 572 00:31:21,070 --> 00:31:23,470 of this, but I want to just get out of it in two months, there's 573 00:31:23,470 --> 00:31:26,200 got to be some kind of a deal. Yeah, right. You know, what's, 574 00:31:26,200 --> 00:31:29,350 what are you gonna do for me? Right? Yeah. And so that brings 575 00:31:29,350 --> 00:31:32,920 in the early payoff discount. Some funding companies will 576 00:31:32,920 --> 00:31:35,560 offer an early payoff discount. I don't think that's the 577 00:31:35,620 --> 00:31:38,440 official term. But I think maybe, you know, the kind of the 578 00:31:38,440 --> 00:31:42,070 common lexicon of like, what's an early payoff discount? Some 579 00:31:42,070 --> 00:31:45,130 funding companies will offer a discount on the purchasedamount. 580 00:31:45,730 --> 00:31:51,250 If you if you decide to end the contract at a pretty early on 581 00:31:51,250 --> 00:31:54,280 date, then you know, maybe it's two months in, or three months 582 00:31:54,280 --> 00:31:56,950 in, yeah. And you say I just want to get out of this, I don't 583 00:31:56,950 --> 00:32:00,010 want to have this anymore, they might offer a discount. How will 584 00:32:00,010 --> 00:32:02,260 you know, if you have one, this is something that's going to be 585 00:32:02,260 --> 00:32:05,890 in your contract. If you're the broker, you want to see if 586 00:32:05,890 --> 00:32:08,260 that's in there, you don't want to be in a position where your 587 00:32:08,260 --> 00:32:10,840 merchant is trying to just negotiate a discount, and they 588 00:32:10,840 --> 00:32:13,570 don't have one. Yeah. So you want to know ahead of time 589 00:32:13,570 --> 00:32:16,960 what's in the contract? Because you could even use it to your 590 00:32:16,960 --> 00:32:19,180 advantage and tell the customer like, you're getting this 591 00:32:19,180 --> 00:32:21,730 amount, you're agreeing to deliver this amount of these 592 00:32:21,730 --> 00:32:24,370 amount of receivables. However, if you look at this paragraph 593 00:32:24,370 --> 00:32:26,950 here at the two months, you're like I just want to, end the 594 00:32:26,950 --> 00:32:29,980 whole thing. Yeah, that number comes down to here, right? It's 595 00:32:29,980 --> 00:32:33,040 a good way to sell some product. Okay. I think, you know, I used 596 00:32:33,040 --> 00:32:35,710 to do that a long time ago, one or two companies I worked with 597 00:32:35,710 --> 00:32:38,590 had that offer and I used to pitch that I said, you know, you 598 00:32:38,590 --> 00:32:40,870 probably won't want to do it. But it's good to know that it's, 599 00:32:41,200 --> 00:32:43,360 it's there. If you're like two months. Just get me out of this. 600 00:32:43,390 --> 00:32:45,400 Yeah, you get a nice early payoff discount. 601 00:32:45,400 --> 00:32:50,320 Yeah, there you go. Awesome. Man of wisdom. Since 1982 look at 602 00:32:50,320 --> 00:32:50,440 you. 603 00:32:50,500 --> 00:32:52,390 Sean Murray: Well, I wasn't born, I wasn't even born in 82. 604 00:32:52,420 --> 00:32:54,340 If you can believe it, don't let the gray hair fool you don't let 605 00:32:54,340 --> 00:32:55,150 the gray hair fool you. 606 00:32:55,660 --> 00:32:57,490 Johny Fernandez: Alright, so a couple other things to touch 607 00:32:57,490 --> 00:33:01,540 base on. If you haven't signed up for our Miami event, Miami. 608 00:33:02,920 --> 00:33:09,850 It's gonna be on March 24 2022 Miami. Go ahead just say 609 00:33:09,880 --> 00:33:12,130 Sean Murray: deBanked Connect Miami, March 24. 610 00:33:13,240 --> 00:33:16,240 Johny Fernandez: Obviously, Miami, deBank, deBanked Connect 611 00:33:16,240 --> 00:33:20,500 Miami. So it's gonna be at the JW Marriott Marquis. We're going 612 00:33:20,500 --> 00:33:23,380 to be there. Everyone's going to be there. This is a very 613 00:33:23,530 --> 00:33:26,860 exciting event because a lot of people that I spoke with at 614 00:33:26,860 --> 00:33:30,790 Broker Fair and then also just throughout the fright all the 615 00:33:30,790 --> 00:33:33,670 weeks after they want to get out of New York, they want to get 616 00:33:33,670 --> 00:33:35,470 out of where they're at. And they want to go to Miami, enjoy 617 00:33:35,470 --> 00:33:40,270 the sun enjoy the event. So it's very exciting. We were also 618 00:33:40,270 --> 00:33:43,270 working on making sure that it's fun for everyone. 619 00:33:43,300 --> 00:33:45,220 Sean Murray: Yeah, this is not an experiment. This is gonna be 620 00:33:45,220 --> 00:33:47,800 the fourth event we've done in Miami. Yeah, so we've done a lot 621 00:33:47,800 --> 00:33:50,260 of them. The last one we did was sold out. We sold more tickets 622 00:33:50,260 --> 00:33:52,330 than we were when we were even allowed to and we were still 623 00:33:52,330 --> 00:33:54,400 sold out. You know, people came in the door and couldn't get in 624 00:33:54,400 --> 00:33:56,830 hung out at the hotel lobby. It was completely out of control. 625 00:33:56,860 --> 00:33:59,980 Yeah, in a good way. Right. This is an event you want to go to I 626 00:33:59,980 --> 00:34:02,290 know that there were a lot of hesitations about doing an event 627 00:34:02,290 --> 00:34:05,470 in New York Broker Fair, you know, that one was vaccination 628 00:34:05,470 --> 00:34:07,810 mandatory and all that stuff. None of that none of that is 629 00:34:07,810 --> 00:34:10,330 going to be the case in Florida. You don't have to be vaccinated. 630 00:34:10,360 --> 00:34:12,280 You know, we urge you to do all the things that are required for 631 00:34:12,280 --> 00:34:14,980 you to be healthy and safe and all that stuff. This is not a 632 00:34:14,980 --> 00:34:17,470 vaccine mandatory event. It's Florida. We know where we're at. 633 00:34:17,500 --> 00:34:19,990 It's Miami every Miami is awesome. You gotta go there you 634 00:34:19,990 --> 00:34:22,300 have to get your ticket don't wait too long. We're already two 635 00:34:22,300 --> 00:34:24,550 and a half months away deBankedMiami.com 636 00:34:24,580 --> 00:34:27,070 Johny Fernandez: So Sean if someone waits last minute the 637 00:34:27,070 --> 00:34:29,710 day before or the day of and they show up and they have no 638 00:34:29,710 --> 00:34:30,670 ticket what's gonna happen 639 00:34:30,700 --> 00:34:32,890 Sean Murray: You get turned away you will you I guess you can 640 00:34:32,890 --> 00:34:35,470 hang out the lobby but we had people hanging out at the hotel 641 00:34:35,470 --> 00:34:37,510 lobby I don't say you know, like, you know, you're 642 00:34:37,510 --> 00:34:39,430 completely out of luck and you're gonna have a terrible 643 00:34:39,430 --> 00:34:42,100 time. Miami is awesome in general. Yeah, you just gonna 644 00:34:42,100 --> 00:34:47,320 miss out on all the other great parts of the event itself. And 645 00:34:47,320 --> 00:34:49,510 so I would say buy your ticket. Don't wait too late. Miami sold 646 00:34:49,510 --> 00:34:53,980 out last actually, every Miami event has always sold out before 647 00:34:54,340 --> 00:34:57,190 these events always exceed my expectation way more than Broker 648 00:34:57,190 --> 00:34:59,500 Fair in terms of what I'm predicting. Yeah, the turnout is 649 00:34:59,500 --> 00:35:02,800 going to be the last Miami, Miami event we did was January 650 00:35:02,800 --> 00:35:05,320 2020. It was completely out of control in a good way. 651 00:35:05,360 --> 00:35:08,360 Johny Fernandez: Yeah. No, it's awesome. So we have that going 652 00:35:08,360 --> 00:35:13,070 on. And then that's pretty much it. That's, that's the big thing 653 00:35:13,070 --> 00:35:19,550 we're working towards. Hang out with us at Miami. Yes. Okay. All 654 00:35:19,550 --> 00:35:22,490 right. And then also, that obviously, for other stories and 655 00:35:22,490 --> 00:35:24,650 other information regarding the industry, you can go on 656 00:35:24,650 --> 00:35:28,250 debanked.com, you can go on Daily Funder. And that is pretty 657 00:35:28,250 --> 00:35:31,250 much going to be the source to everything that is in the space. 658 00:35:32,030 --> 00:35:35,870 And then also, don't forget our social media platforms, 659 00:35:36,470 --> 00:35:39,140 LinkedIn, Twitter, Instagram, all that, but that will 660 00:35:39,200 --> 00:35:41,210 obviously lead you back to debanked.com. 661 00:35:41,420 --> 00:35:44,240 Sean Murray: And I'm supposed to tell you, okay, that you also 662 00:35:44,240 --> 00:35:47,990 have to follow deBankedConnect on social media. Yes, we have 663 00:35:47,990 --> 00:35:52,400 deBanked Yes, Broker Fair. Yes. But if you want to get updates 664 00:35:52,400 --> 00:35:55,820 about deBanked Connect Miami, other events we do related to 665 00:35:55,850 --> 00:35:59,390 deBanked Connect, follow the deBanked Connect social media 666 00:35:59,390 --> 00:36:00,530 accounts. Add that to your list. 667 00:36:00,600 --> 00:36:02,730 Johny Fernandez: Let me ask you, what are you most excited about 668 00:36:02,730 --> 00:36:04,710 for deBanked Connect Miami? 669 00:36:05,350 --> 00:36:08,950 Sean Murray: So it's honestly it's networking on a whole 670 00:36:08,950 --> 00:36:11,650 nother level? obviously a big part of it for any show that we 671 00:36:11,650 --> 00:36:15,940 do. It's there's nothing like it in Miami. And that's because the 672 00:36:15,940 --> 00:36:20,200 networking goes literally usually past midnight. Yeah. So 673 00:36:20,200 --> 00:36:23,800 like the the New York show it ends at like, yeah, right. And 674 00:36:23,800 --> 00:36:26,320 some people will do a dinner. Other people just go home. 675 00:36:26,530 --> 00:36:30,040 That's how it is. Although I was here, yeah, Miami is a whole 676 00:36:30,040 --> 00:36:32,260 nother level people stay out till two in the morning, 677 00:36:32,260 --> 00:36:35,770 sometimes even later. I do not take that. But we're talking 678 00:36:35,770 --> 00:36:39,760 about networking in Miami style. It's awesome. The right people 679 00:36:39,760 --> 00:36:42,250 are going to be there. And we get all the companies, the local 680 00:36:42,250 --> 00:36:45,610 companies from Florida. So you're going to travel to New 681 00:36:45,610 --> 00:36:48,220 York or some other place. Who are in the neighborhood Miami's 682 00:36:48,220 --> 00:36:50,920 huge, the industry. They all come there and we get to connect 683 00:36:50,920 --> 00:36:54,220 with the Miami community the Miami small business community 684 00:36:54,340 --> 00:36:56,740 and hang out with them literally all night long. 685 00:36:56,740 --> 00:36:59,845 Johny Fernandez: Yeah. So I'm excited for that. Because I've 686 00:36:59,926 --> 00:37:04,141 heard stories. I'm really excited for that. I'm also 687 00:37:04,223 --> 00:37:08,762 excited to get a Cuban sandwich in Miami. I love a Cuban 688 00:37:08,843 --> 00:37:13,707 sandwich. But then I'm also excited to just meet people that 689 00:37:13,788 --> 00:37:18,489 just that follow us interact cause I think Broker Fair was 690 00:37:18,570 --> 00:37:23,272 awesome. And you got to see everyone, but Miami. It's just 691 00:37:23,353 --> 00:37:27,974 I've been down in Florida a handful of times alone and in 692 00:37:27,974 --> 00:37:34,760 Sean Murray: It's gonna be great deBankedMiami.com buy a ticket 693 00:37:34,760 --> 00:37:34,910 2022. But it's it's different. From what, I'm excited for it. 694 00:37:34,910 --> 00:37:39,110 Johny Fernandez: And also J W JW. Marriott Marquis, there's 695 00:37:39,170 --> 00:37:39,560 different 696 00:37:39,890 --> 00:37:41,870 Sean Murray: And the rooms are actually selling out. I know 697 00:37:41,870 --> 00:37:44,330 it's two and a half months out. But our room block is already 698 00:37:45,020 --> 00:37:47,240 it. It's filling up pretty quickly. Yeah. 699 00:37:47,660 --> 00:37:50,990 Johny Fernandez: Exciting please do not miss that. So that's 700 00:37:50,990 --> 00:37:53,750 pretty much all we have for today. All right, 701 00:37:54,140 --> 00:37:55,700 Sean Murray: I think I think so. All right, 702 00:37:55,850 --> 00:38:00,740 Johny Fernandez: I guess I guess. So. Yes. Follow us. Don't 703 00:38:00,740 --> 00:38:03,650 forget to tune in time be here. We're going to give you guys the 704 00:38:03,650 --> 00:38:07,280 latest news and also have good banter conversation 705 00:38:07,280 --> 00:38:09,080 Sean Murray: And I'll be screaming about inflation. Yes. 706 00:38:10,130 --> 00:38:13,130 Johny Fernandez: Alright you guys, I'm Johnny Fernandez, I'm 707 00:38:13,130 --> 00:38:14,810 Sean Murray, see you guys next time.