Kristof Anderson-Tsang: Hi Everybody! I'm Kristof, Head of Business Loans for LoanMe. And with us, we got Jason
Chalarca one of our Account Managers. And we also Jack Malone, another one of our Account Managers. So today,
we wanted to have a session with you guys talking about keeping it real. And really open it up. So if there are
any questions you guys have, for us here among me the tough questions, the hard questions, we're happy to
answer it for you. There is a link on the bottom that Gigi helped me out. You said there's a don't do the
chat.
Moderator: Correct, it says, Q&A, so you can click on the Q&A and ask your question in there.
Speakers: Okay, so click on the Q&A, type any questions you guys have for us. In the meantime, we'll get
started just with a quick high level overview of LoanMe, kind of what we offer. And then we also have
some questions here that these guys hear all the time from their partners. And we can dive into some of
those, if we don't get questions from the audience. So LoanMe, we are a term loan lender, so we don't offer
MCA products, we only offer true term loans, monthly payments, 10 year terms, and our product range, the
loan amounts go from 3,500 - 250,000. Let these guys kind of piggyback off that.
Jack Malone: Okay, starting with the prime business loan, which is our top tier product, this is we don't
find theseto be our bread and butter. But these ranges, as you can see from 75K, all the way up to 250K. And
these are for the get the A paper. And they were slightly stricter on the requirements here for this
category of loans, you mentioned us have a stronger credit profile. So we're looking for the FICO of at
least 700. And into the homeowner and their corresponding equity in the home with the amount of
multiple sub 200K and a 200K of equity in their home.
Kristof Anderson-Tsang: Jack is just going over our kind of our fine business loan products, which is our
main product. So we for LoanMe what we offer, we can work with any for profit business, ok. Minimum time
businesses, just 90 days, business bank account, obviously, a 25% minimum ownership requirement for the
person applying for the loan. And so it's a very broad kind of open box, monthly payment term loan, obviously,
with a longer term that gives these business owners much lower more affordable minimum monthly payments.
And especially during a time like this, I think that really kind of helps them out. Where they don't have
you know, daily payments, things coming out, you know, and some monthly payment term loan, it's a great
option, you know, during these uncertain times. But, um, let's get into some questions, guys. Okay, so some
questions that you guys, you know, get some tough questions that you get from your brokers all the time,
how does LoanMe different from MCA? You know, why as a broker? Why would I bring my borrower to your company
vs. MCA? So, Jason, when she has that?
Jason Chalarca: Yeah, great question. I think we we get that question a lot. You know, I think the main thing
would be just monthly payments, the flexibility that we offer to clients, you know, compared to what an MCA or
really any other lender can offer, just the monthly payments, you know, it's going to keep more capital in
their pocket, instead of the client having to worry about those dailies and weeklies having to, you know,
just automatically coming out. With us they only have to worry about a minimum monthly payment. So I think
that's the main thing. And then, you know, in most cases, not all, it is also a rate issue, you know, so,
you know, although our rates and we'll get into that a little bit further on, because that also comes up a
lot. But although our rates may seem a little bit more higher, when you really break it down, compare apples
to apples, we're gonna save you a lot.
Kristof Anderson-Tsang: So, yeah, an earlier session today. You know, they're talking about how business
owners are wanting shorter term loans right now, especially given the uncertainty of the economic
environment. And, you know, I would agree with that, to a certain extent in the in the sense that, you know, I
think they would also want them to remove flexibility. So, by us having a 10 year term loan product that gives
the business owners that much lower more affordable minimum monthly payments, and if they only intend on
keeping the loan for, say, two or three months, you know, they can pay us off early interest stops accruing
because this is a true term loan product. And so that, you know, really kind of helps them, instead of, you
know, only being offered these daily and weekly payments, you know, they have the option with LoanMe to
be able to, you know, get a monthly payment. And yeah, really control the total cost of capital. Right, based
on early pan behavior, I say, I think that's kind of the main point of our product, is it gives the control
back to that business owner, to be able to, you know, do what's best for them. And every, every business
owners, we know, their situations are different, their products are different, what they sell, you know, the
way that they earn the revenue, you know, how frequently they get paid as well. I think that, that
really just changes per business. And so, you know, this product really helps them kind of, you know, not
feel the squeeze, if you will have any daily payments. Yeah. Okay, so another thing that we get asked all the
time is, in terms of, you know, hey, we heard you guys can do consolidations, ensuring consolidation. So Jack,
what you sell, tell everybody kind of how that works with us?
Jack Malone: Yes, we do. We do offer true consolidations. And they're particularly valuable,
because we only look at the last 90 days. So that means a lot of these merchants, you know, come to us and
they're stacked up, and we have several loans that we're looking at. And a lot of these are often taken
out beyond the 90 days, 100 days even. And what the important thing for us is, you know, we got to factor
them into our underwriting calculation here, because they're taken out today. So just means that we can
consolidate all the loans, that they've got all these days, all the weeklies into one monthly payment, and
generally save them a lot of money, get this drawing on the cash flow with one monthly payment.
Kristof Anderson-Tsang: Absolutely. And I think I think the main point there is that, you know, a true
consolidation in the sense where we don't require them to net anything, okay, they can, if they qualify for
$100,000 loan with LoanMe, you know, we can pay off up to 100,000, and turn them daily weekly payments into a
monthly payment. So I think that's another big thing. But kind of sidestep to that, too. You know, one of the
things that a lot of our brokers really enjoyed really like is the fact that we're able to offer business
owners a lot larger loan size compared to the offers that they get in the traditional, you know, MCA market.
And, you know, they're always baffled, because, you know, for example, we funded one last week, we funded a
guy $100,000. And their average monthly deposits was only 20,000. And so what's the question that we always
get from from our brokers for some like that?
Jack Malone: How do we get 100K when there is only 20,000? How do you do that?
Kristof Anderson-Tsang: Right? So how are we able to that?
Jason Chalarca: Well, we focus on the average daily balance, so we only go back 90 days. And now our main,
our biggest thing is, we look to see them last 90 days, how much money are you keeping in the account on a day
by day basis, so we really don't care as to how much money you know, monthly, you're bringing in. I mean,
our minimum monthly is they need to average 30 - 3500 done the last three months. So I mean, that just goes
back to you know, why LoanMe that just shows one of the one of the differences as to how we look at files here,
how we are going to underwrite that file and really determine, you know, that loan size. on our end, again,
going back to that point, you know, someone with a $20,000, monthly inflow, you know, they'll get
qualified for 70K, 100K, because on our end, again, we're only focusing on that average daily balance. So
as long as you know, their average daily balance within the last 90 days, is steady. And it shows on our end
that, you know, they can make that minimum monthly payment with us, then they're golden with us.
Kristof Anderson-Tsang: Yeah, and one thing I would say one thing, I'm bad at that, Jason is that it's not that
we don't care guys about their money, obviously, you know, a business needs to have money coming in in order
to be able to afford to make the payments right in nonpregnant situation that kind of gets them in
trouble. But I think the focus and the point of what we're trying to say is that, you know, we focus more on
the average and daily balances to determine if they can afford our monthly payment. And because the monthly
payment is stretched out amortized over 10 years, our average term is nine years across our entire portfolio.
So we're not one of these lenders that says, Oh, we offer terms up to 10 years and everybody gets, you
know, 18-24 months. In fact, most businesses get a 10 year term with the LoanMe product and so You know, by
focusing on the average ending daily balance that tells us, you know, they can afford a monthly payment. And
that's what dictates the loan amount, that's how kind of the calculation, it's looked at, in a very different
light, right, you take a merchant doing $10,000 a month in revenue, and most merchant cash advance companies
are going to give that business owner a maximum of 8 to $10,000 advance, right? With loan before we can
actually fund that guy. And we do quite often 50, 60, 70, $80,000 you know, if they can afford that minimum
monthly payments, okay. And so, you know, that's, that's one of the good things, but the things that that
I think are different from what a lot of brokers are used to in our industry. And that's where some of the
misconceptions come about with LoanMe. Oh, you know, LoanMe is just, you know, very expensive, okay, so
let's get into that, right, we're talking about real talk, okay, our loan sizes, we're talking about range
from 3,500 to 250,000. But our interest rates, okay, and we do charge, you know, interest rates, this is not
an advanced, it's not a fact rate, but our interest rates range from 14.9% to 159%. And so a lot of people
say, you know, do you have to tell the borrower about the interest rate, you know, that turns them off, and,
you know, so on and so forth. And what I would say to them is, look, we're in the business to be transparent,
and to get a business owner to understand that it's not cheap money. And if we're being honest, right, as an
industry, this is called alternative lending for a reason. And that reason is that these people are, you
know, for the most part, either unbankable or they want to get these funds put in their bank account,
immediately, right, as an immediate need, man with that there comes a cost, right? And that's just the truth of
the matter. So, you know, to answer ISOs questions, when they say, you know, do you have to go over the
interest rate, you know, with the borrower with the business owner? The answer, quite frankly, is yes.
Because that's transparent. And that's what you know, businesses deserve. But I think more importantly, it's
not necessarily about the rate, but it's about the total cost of capital. And it's about how a business
owner uses these funds responsibly in order to make our loan work for them. Right. And so, you know, that's
what we focus on, right? Our agents focus on educating these business owners on early repayments, okay, the
only borrower loan for 10 days, you're paying 10 days worth of interest, right? You know, and so there is
definitely a benefit to repaying our loan early. There isn't a fixed cost associated, like, you know, merchant
cash advance simply has a fixed cost, because that fact rate is sort of, you know, baked in there, the
repayment amount. with LoanMeI, it's kind of the opposite, interest accrues. And so if you borrowed for
10 days, you pay 10 days worth of interest, you borrow for two months, you pay two months worth of interest,
or we're going to give you an extraordinary long term, so that you have the ability, you know, to have that
cash flow working for you, and your payments, not going to your first payment not going to be due the very next
day. And so, you know, there's obviously good and bad with, you know, a lot of products. And I think what
we're trying to say is, this product is a very complementary product in the space, right? It's great
for an ISO, you know, to offer a multitude of different things, right, offer lines of credit products offer,
MCA products offer SBAs, but also offer, you know, a product like ours, which is a longer term, term loan
product, and, you know, we take care of a lot of a lot of the stuff for them, you know, when you have a
business owner looking for more funds than they, you know, more money than they bring in each month, you
know, the first place a lot of our ISOs look is LoanMe, right, for that for that exact reason.
Jason Chalarca: And I would say just to piggyback off of that, I mean, if, especially if they have an exit
strategy, if these clients, you know, they need the money today, construction company, they need supplies,
they need to finish up the job and they know, X amount of months, right, they're going to be able to pay us
off sooner than later. I mean, it's a it's ideal for them. They know that they'll be paying us off again a
lot sooner than that 10 years or a few years, and they're going to save tons of money on interest. So
that interest rate that you all see online or you hear from us or you see it on a on a promissory note. It can
be scary. But if they have an exit strategy, and they know they're going to pay us off, right, so a lot
sooner than later. It's perfect.
Jack Malone: We're often used as a bridge. Well, they'd like some for that longer term like the SBA loan, right
or something more traditional people, you know, local merchants.
Kristof Anderson-Tsang: Yeah, and that's that's a great thing. You know, great takeaway for the audience, I
think is to understand that the LoanMe product is not a product for business owner should take and keep for 10
years, it's a product where somebody should use it as a bridge loan as emergency funds or something where they
can take the money turn a profit and pay us off as soon as possible. We work often with you know, not just
merchant cash advance brokers, but we also work with equipment leasing brokers, you know, where they need to
complete their equipment leasing transaction, that business owner cannot have, you know, other 10 to 15%
down payment to, to finish something, you know, complete that equipment leasing transaction, they come
to us get funded, oftentimes the same day, because we can fund it as soon as two hours, they take those
funds, and they complete their transaction and getting the business on understand, hey, pay LoanMe off first.
Right? And so this is a great product to really kind of help people do that. So we, uh, you know, I want to
open it up, I know, we've we've kind of said a lot about kind of what we do and what our product is, and
kind of the way that the industry in our brokers should kind of look at our product and how to use it. We've
got about nine minutes left. And what I want to do is kind of open up to any questions that you know, you
guys. You know, want us to answer from you guys directly. And I think Gigi is going to see if there's
any of those questions and kind of read those questions to us.
Moderator: So if anybody wants, we do have about 15 minutes left for this panel. So you can just send in
your Q&A, right now, and I'm happy to read him.
Speakers: All right, GiGi, as people are typing those out, we're gonna we're gonna kind of read some more
questions that we get from our ISOs. Okay. And, you know, feel free to kind of, you know, give us some of
the live questions, you know, that will kind of fill it in with some of this content here. So one of the ones
that, you know, we've gotten from a lot of our brokers, especially during times like this is, you know, what
have you guys done in terms of, you know, offering loan modification, production payment plans for existing
clients, that have been hurt by the covid environment? And, you know, if we're being honest, right, and this
is kind of what this panel is about right now is just being honest and open and transparent. It has affected,
you know, a lot of businesses, the United States, obviously, and that's no secret. But I think how you
treat your customers and how you treat your employees during a time like this really speaks volumes as to the
type of company that you are, the kind of focus that you have, and more importantly, are you going to be
around? And are you going to be there, you know, for the long term? And so, you know, the answer to that,
for us as a company is yes, we've, you know, had a furlough a couple people, not many, but we haven't laid
anybody off during that time. And so, you know, we're slowly starting to bring back, you know, those that are
on furlough. In terms of customers, what we have done for them is if they've called in and said, Hey, you
know, money able to make some payments, you know, initially when this whole thing started, middle of
March, was it right? We paused our funding March 16, we resumed it again, May 6. Okay, so we are lending right
now. During that time, when we paused it, you know, people would call in, hey, I can't make a payment, we
understand their situation, we asked them, if they could make any payments, you know, even a small portion
of that payment during that time. And we would collect that, and then we let them know is we're going to bring
their account current, you know, with that small payment, whatever it was at the time, and we actually
made their next two payments for them. So as a company, you know, the executive team, myself included, you
know, what we did personally was, we took a reduction in pay. And so we use, you know, some of that those
funds that we saved there to pay monthly payments for customers and bring them current, we didn't roll it
into the back end of that loan, what we did was we actually made those payments for them. And so, you
know, some of the reactions our customer service team got from the customers, just that sigh of relief. In an
uncertain time, like this, I think really made went went a long way. And so, you know, wanted to kind of
share that you guys, you know, let you guys and everybody says we're all together, but at the end of
the day, you know, when it comes down to brass tacks and comes back down to, you know, are these merchants
making their payments, and that does affect the livelihoods of, you know, the people that we employ, we
employ about 250 people here at LoanMe. So, you know, we're not some small 500 company. Most of you guys, you
know, have seen us on bank statements, you know, out there in the marketplace. So You know, we're here to
stay. And we're here to just do the right things by customers. And so a lot of the misconceptions that I
see about LoanMe, that I Hear about LoanMe is oh, you know, lonely, that's the really expensive monthly
payment term loan company and their loan sharks, and they, you know, and the reality is, you know, it's
quite the opposite. I think, you know, we have to price in certain things, you know, just like anybody does
with their business model. But at the end of the day, it's really about doing what's right for, you know, the
community, our brokers, our customers, the business owners, you know, and that's what's important.
Moderator: Great. Um, so we do have a question that came in, and it is, what is the minimum credit score
that you can lend to?
Speakers: So the minimum credit score, we actually don't have one, right? Okay. In the past, it was at
500, minimum 500. What I would say, though, is any business owner, with a FICO score under 600, I will
tell you that we'll take a look at it, we'll run credit, right, we'll take a look at the business. But
that only makes up about 5% of our portfolio. Okay. So while we don't have a hard guideline on minimum FICO,
we do have, you know, numbers to show that 600 plus really gets, you know, a better look than those under
600.
[cross-talk]
Kristof Anderson-Tsang: And again, you know, kind of sidestep from that, too, is that we only look at 25%
ownership. So let's say you have four business owners that own a business, we can take an application, each
person, each person can fall into one of our set tiers and buckets, which correlate with a set interest rate
set loan term, and set products. We obviously can't fund all four owners for the same business, but we can
find the best one, right, the person who's got the highest credit score, so a lot of our current ISOs. And
brokers understand this. They you know, make sure they're sending over, you know, the best credit worthy
individual.
Jason Chalarca: Great question.
Kristof Anderson-Tsang: Yeah. All right. What else we got here? What are some other questions you guys get
that you will probably want to address?
Jack Malone: And say the most important one to brokers perspective and to get us would be about the
commission.
Kristof Anderson-Tsang: Commissions. All right. Let's start with commissions. Okay, so as a term loan five
lender, what we offer is we offer five points on the net funding. Okay. So for example, let's say it's
$100,000 loan that business owners have 10% of origination, aka for use round numbers. So the net
funding for the business owner is 90,000. Right? In that example, five points on 90,000. Right, that's 4500
for a commision, we ISOs all the time saying, Oh, you only pay five points, you know, I get 10 points here
from, you know, XYZ funder. I get, you know, 15 points here. And what we'd say to that is, yeah, but you're
going to get a smaller loan, right? So take, for example, business are doing $20,000 in revenue, right,
that MCA company, that other funder lender might be giving you 10 or 15 points on 20,000, right? Whereas
we're giving you five on, you know, this example we're using on 90, okay, so you can do the math there. And
you can see that the commissions is larger, it actually might be double the commission. So I would urge our
ISOs and those listening as brokers, you know, viewing this to understand that it's not always about the
points, it's not always about, you know, I could make 10 or 15 points, it's about what is being done for the
customer first, and then you figure out your commission. Right. And you'll find with us that
oftentimes, that means long does give you a larger commission than that 10 to 15 point funder.
Jack Malone: Absolutely.
Kristof Anderson-Tsang: How we doing on time GiGi.
Moderator: We have six minutes left.
Kristof Anderson-Tsang: Okay. Any other questions from the audience?
Moderator: I don't see any in the queue at the moment, but we still have an audience.
Speakers: Okay, great. We We definitely got some here that have come in, you know, throughout the day and
things like that. So let's pick another one. That sounds good.
Jason Chalarca: Let's see. Other lenders let me pitch loan myself. Why can I not with you guys? So we get
that a lot. Me and Jack, we hear that a lot. Yeah, from partners.
Speakers: [cross-talk]
Moderator: I'm sorry to interrupt, Kristof, we actually just got a few questions coming in.
Speakers: All right, let's, let's go to your questions.
Moderator: Okay. So we'll start by are you adding any additional states soon?
Kristof Anderson-Tsang: Good question. So we do get that question a lot as well. Right. So we currently
today lend in 30. States, okay. 30 out of the 50 states. And what I would say with that is, we are
always looking to add additional states, but as a lender and a loan product, we have to be aware of those
lending laws user recaps in certain states. And so it's not really a choice, I would say, for us to say, Okay,
I want to lend in Texas or New York, as we all know, New York has an interest rate cap rate a lot of the for
as interest rate cap, Texas as interest rate cap. And so, you know, the answer is it's really going to be up
to those states and those lending laws, you know, as those things change over time, we're closely
monitoring. Okay, I will tell you that we are looking at entering in another an additional state, I'll save
that for when we actually get there, because so we're gonna be in 31, here shortly. But other than that,
that's the reason behind the limited amount of states. Okay. And that's probably Yeah, one of the biggest
gripes our ISOs have is, you know, I got a perfect file, but it's in a state that you don't lend it.
Right. And then, you know, there's nothing we can do at that point. You know, want to make sure we're following
all the rules and laws and guidelines and those those states. So.
Moderator: Great. Next question is, so how does the monthly product work? And then right, after that, we
have one more.
Kristof Anderson-Tsang: Okay. How does the monthly product work? Is there was there a follow up portion to
that question? In what sense? So, monthly product works in a way that business owners make a monthly payment?
Moderator: So, yes, so do the owners besides the 25% have to sign the application?
Speakers: No, they do not. Okay, so the owner that is applying for the loan, okay, does sign a personal
guarantee? And so they're responsible, you know, you know, personally, for the repayment alone, these loans
that we offer are also unsecured. Okay, so these are unsecured term loans. There's, you know, no UCC is
going to be filed or regular working capital product. We do file a blanket UCC on our prime business on
products. But that's because those interest rates range from 14.9% to 24.9%, those are our lowest interest rate
products. And so you know, we have to have some security there for that type of product, but on
everything else, there is no security.
Moderator: Great, um, and another is confirming that it is a hard credit pull on the front side.
Kristof Anderson-Tsang: That was before. Okay, and so we don't we no longer do a hard credit pull, right on
the front end. We actually just I was actually talking to you today about this right. Before we get started.
We just kind of launched a new CRM system, right? So everything Salesforce base, it's really going to help
you know our brokers kind of get connected with their systems. So our old system, yes, did a hard credit pull
upfront. Our new system will allow for a soft credit poll. And then prior to being submitted to underwriting
right for underwriter take a look at that. That's when we will do a hard credit pull. So it might almost be
Bang, bang, or it does seem like it's a hard credit pull and only are critical. But the reality is we do a
soft credit pull. Now if the borrower wants to move forward at that point and submit the documents for
underwriting to take a look at. We will then do a hard pull.
Moderator: Great, and another question came in. So sorry, they came late. But what documents do you need?
I'm assuming you only do you do only term loans and not MCA?
Kristof Anderson-Tsang: That's correct. At this time, we are only doing term loans. Okay, so no MCA products.
And so in terms of documentation, what we're looking for is 90 days transaction history. And we'll do that
you know, via decision logic pull. If decision logic is not compatible with the Bank of business owners using,
then we will look at, you know 90 days worth of bank statements and transaction history so the most
immediate 90 days prior driver's license And yeah, voided check, we're not going to need it's not a hard
requirement, you know, if it comes through with decision logic, but in some cases, we'll need a voided
check. So it's really just, you know, valid ID and 90 days bank statements for us to kind of take a look at
average daily balance. Great questions, guys. Okay, I know we're running out of time here. Want to be
respectful of time, I know Rapid going to be next. And so what I want to do is invite you guys to take a look
at our website, contact us if you have any questions about our products. You know, these guys are great. And
we also we have four other account managers. You know, he's couldn't fit everybody in here for social
distancing reasons. But yeah, I just wanted to, you know, let you guys take a look at our website,
loanmebusiness.com. It's our new website. These are old logos. So you guys might see some new logos. Don't be
scared away. We're kind of transition to you know, new CRM system, new logos, refresh, take a look,
everything's going to be blue. So Loanmebusiness.com. And then if you need to reach out to these guys the
phone number, I think it's, it's incorrect on the virtual deBanked, I'm sorry, the virtual Broker Fair
site right now. So just want to clarify that the number is 949-535-7798. Okay, so 949-535-7798. Okay. Thank you
guys. And very, very good show. Guys. I want to thank the whole deBanked team, Sean, Gigi, Janene, all you
guys. It's been fantastic, given the circumstances, you know, kudos to you guys. It's been a wonderful day.
Moderator: Thank you so much, and we really appreciate having LoanMe as always.
Speakers: You guys. Take care