1 00:00:05.520 --> 00:00:07.890 Sean Murray: Hello, everybody, I'm here with Chris Pepe, who is 2 00:00:07.890 --> 00:00:11.040 the head of ISO relations for World Business Lenders. Thank 3 00:00:11.040 --> 00:00:11.970 you for being here today. 4 00:00:12.680 --> 00:00:13.970 Chris Pepe: Thanks, Sean. Thank you for having me. 5 00:00:14.510 --> 00:00:18.080 Sean Murray: No problem. So everybody wants to know, 6 00:00:18.560 --> 00:00:22.520 especially with what WBL does, how is your company fared during 7 00:00:22.520 --> 00:00:24.740 the pandemic? Are you lending right now? And have you been 8 00:00:24.740 --> 00:00:26.540 lending over the last few months? 9 00:00:26.810 --> 00:00:30.080 Chris Pepe: Yeah, so so great question. So we are, we've been 10 00:00:30.080 --> 00:00:34.940 lending the entire time. So when this all started in May, let's 11 00:00:34.940 --> 00:00:38.600 take, let's call it mid to late March, we continued to lend the 12 00:00:38.600 --> 00:00:45.320 entire time, we actually when the when the pandemic hit, we 13 00:00:45.320 --> 00:00:49.460 were able to sort of pivot right away. And what we did is we 14 00:00:49.460 --> 00:00:52.520 launched a new product, which is our COVID-19 relief Loan 15 00:00:52.520 --> 00:00:55.940 Program, which I'll go into more details later on. But we had to 16 00:00:55.940 --> 00:00:59.300 adapt with what was going on in the environment. So we thought 17 00:00:59.300 --> 00:01:02.330 it was really important that we couldn't just offer our original 18 00:01:02.330 --> 00:01:06.530 program, if the businesses aren't generating revenue like 19 00:01:06.530 --> 00:01:10.580 they used to. So we, we sort of pivoted, we created a new 20 00:01:10.580 --> 00:01:14.570 program for our merchants and for ISOs. And in addition to 21 00:01:14.570 --> 00:01:17.360 that, we also had to go remote, right, we're working remotely. 22 00:01:17.360 --> 00:01:21.860 Now, the office, we're located in Jersey City, but our office 23 00:01:21.860 --> 00:01:25.760 is now empty, because we had to make sure that the safety of our 24 00:01:25.760 --> 00:01:29.270 employees comes first and foremost. So we made it 25 00:01:29.270 --> 00:01:32.630 mandatory where we started operating remotely in mid March. 26 00:01:32.630 --> 00:01:36.290 So we continued to lend, we're still lending the entire time, 27 00:01:36.410 --> 00:01:39.260 that has not changed at all. But it was a big adjustment for 28 00:01:39.260 --> 00:01:43.220 everyone, sort of go remote when we're all used to going into an 29 00:01:43.220 --> 00:01:44.450 office every day. 30 00:01:44.930 --> 00:01:46.460 Sean Murray: So let me ask you, because you mentioned at 31 00:01:46.460 --> 00:01:50.390 COVID-19 Relief Program, we've spoken to a lot of unsecured 32 00:01:50.390 --> 00:01:54.080 lenders, and we've spoken to some companies that do merchant 33 00:01:54.080 --> 00:01:57.200 cash advances, but it's my understanding that WBL does 34 00:01:57.200 --> 00:01:59.630 something a little different. Can you explain to me what what 35 00:01:59.660 --> 00:02:01.010 your company offers? 36 00:02:01.010 --> 00:02:05.200 Chris Pepe: Yeah, so so we offer, we're similar to a cash 37 00:02:05.200 --> 00:02:07.540 advance, but we're not a cash advance. We're, it's a 38 00:02:07.540 --> 00:02:11.020 commercial loan and all of our loans are secured against real 39 00:02:11.020 --> 00:02:14.620 estate. And what makes us different and unique is because 40 00:02:14.620 --> 00:02:17.770 our loans are secured against real estate, it allows us to be 41 00:02:17.770 --> 00:02:22.180 a lot more flexible with some of our underwriting criteria. So 42 00:02:22.240 --> 00:02:26.200 some of the normal reasons why an MCA may get declined and 43 00:02:26.200 --> 00:02:28.630 everyone you know that's watching this probably knows, 44 00:02:28.810 --> 00:02:32.830 maybe there's too many NSFs, too many negative days, defaulted to 45 00:02:32.830 --> 00:02:36.670 another lender, a lot of those items, normal decline reasons 46 00:02:36.670 --> 00:02:40.000 for an MCA, because we have a hard asset and because we have 47 00:02:40.000 --> 00:02:42.520 real estate, we're underwriting the file a little bit 48 00:02:42.520 --> 00:02:45.070 differently. We're, we're underwriting to the revenue on 49 00:02:45.070 --> 00:02:48.130 the business, but we're also looking at the the amount of 50 00:02:48.130 --> 00:02:51.340 equity in the real estate in order for us to make, to make an 51 00:02:51.340 --> 00:02:54.940 underwriting decision. So that, that's what sort of makes us 52 00:02:54.940 --> 00:02:58.390 stand out so a lot of brokers and ISOs, think we're very 53 00:02:58.390 --> 00:03:02.470 valuable, because we're not saying that we're in replacement 54 00:03:02.470 --> 00:03:07.120 of an MCA, it's sort of in addition to or in the event that 55 00:03:07.240 --> 00:03:10.420 maybe a merchant doesn't get enough money from an MCA, or 56 00:03:10.420 --> 00:03:13.930 doesn't get approved in general. So it allows us to be, because 57 00:03:13.930 --> 00:03:17.140 of the real estate component, a lot more flexible when we're 58 00:03:17.140 --> 00:03:18.220 underwriting the files. 59 00:03:18.330 --> 00:03:20.790 Sean Murray: I have a question about the real estate component, 60 00:03:20.910 --> 00:03:24.060 because I would imagine that what's happened in the last few 61 00:03:24.060 --> 00:03:27.390 months has had an effect on real estate prices. What type of 62 00:03:27.390 --> 00:03:29.520 trends are you seeing in real estate right now? 63 00:03:29.520 --> 00:03:31.670 Chris Pepe: Yeah, it's a great, you know, we talk about this all 64 00:03:31.670 --> 00:03:35.720 the time. It's something that's near and dear to our hearts. So 65 00:03:35.840 --> 00:03:39.800 so it's very interesting. And so we're seeing sort of a 66 00:03:39.800 --> 00:03:44.270 splintering in the market. We're seeing in major cities where 67 00:03:44.270 --> 00:03:48.350 it's very, very densely populated. Everyone's, not 68 00:03:48.350 --> 00:03:51.470 everybody, a lot of people are fleeing major cities. And we're 69 00:03:51.470 --> 00:03:55.700 seeing those prices, condo prices, co op prices in major 70 00:03:55.700 --> 00:04:00.320 cities. Let's take Manhattan for an example where I live, we're 71 00:04:00.320 --> 00:04:05.480 seeing those prices sort of flat to declining a bit because 72 00:04:05.480 --> 00:04:09.560 people are not comfortable living in major cities anymore. 73 00:04:10.190 --> 00:04:14.840 And on the opposite end of the spectrum, we're seeing, let's 74 00:04:14.840 --> 00:04:19.010 say, in areas that are in the suburbs that are 30, 45 minutes 75 00:04:19.010 --> 00:04:22.940 away from a major city, let's say, those prices are going 76 00:04:22.940 --> 00:04:26.990 through the roof, because people don't want to necessarily live 77 00:04:26.990 --> 00:04:31.280 in an area that there are so many people around, in addition 78 00:04:31.280 --> 00:04:35.480 to if their offices aren't in a major city anymore, and a lot 79 00:04:35.480 --> 00:04:38.540 more offices and businesses, as you know have been going remote. 80 00:04:38.750 --> 00:04:41.300 They don't necessarily need to go to an office. So if they 81 00:04:41.300 --> 00:04:43.940 don't need to go to an office in a major city, they don't 82 00:04:43.940 --> 00:04:46.610 necessarily have to live there. And if they're not living there, 83 00:04:46.610 --> 00:04:49.070 and they're moving out, it's driving up prices in the 84 00:04:49.070 --> 00:04:53.030 suburbs, and in the major cities like New York City. Now I'm not 85 00:04:53.030 --> 00:04:55.730 saying the prices are going to zero but I'm just saying that 86 00:04:55.760 --> 00:05:00.680 we've definitely seen an impact on prices in major cities go 87 00:05:00.680 --> 00:05:04.220 down a little bit and continue to go down and vacancy rates go 88 00:05:04.220 --> 00:05:09.860 up slightly. And major suburb markets increase. And I know 89 00:05:09.860 --> 00:05:12.650 this on a personal level, some family members have just 90 00:05:12.650 --> 00:05:16.700 purchased properties, three or four of them, and all of them 91 00:05:16.700 --> 00:05:20.870 had to, had to bid above asking price in order to get the 92 00:05:20.870 --> 00:05:24.110 property. So every property turned into sort of a bidding 93 00:05:24.110 --> 00:05:26.510 war. So really interesting what's happening in the market. 94 00:05:26.510 --> 00:05:30.290 And I think we're gonna continue to see that happen going forward 95 00:05:30.290 --> 00:05:33.020 because think about what's happening with the restaurants 96 00:05:33.020 --> 00:05:37.610 and in New York City and major cities, you know, they, they 97 00:05:37.610 --> 00:05:40.190 can't have people inside, they can't generate the revenue they 98 00:05:40.190 --> 00:05:43.850 used to, and, and a lot of them were already sort of just barely 99 00:05:43.850 --> 00:05:46.520 making it. And now they're only allowed this little outdoor 100 00:05:46.520 --> 00:05:50.000 space to sort of serve some drinks and some food, well they 101 00:05:50.000 --> 00:05:53.120 can't generate the revenue they used to generate. And same thing 102 00:05:53.120 --> 00:05:56.120 goes for retail businesses, right? retail businesses, where 103 00:05:56.120 --> 00:06:01.460 people are going on to try on items to buy, like, why not just 104 00:06:01.460 --> 00:06:05.300 buy it online? Why are you going into a store to risk, maybe 105 00:06:05.300 --> 00:06:09.110 someone else's health to your health, to buy something where 106 00:06:09.140 --> 00:06:12.170 everything's readily available online, so people who have 107 00:06:12.170 --> 00:06:16.400 flagship stores in Manhattan and, and or little boutique 108 00:06:16.400 --> 00:06:19.220 stores in Manhattan, I think that's going to change over the 109 00:06:19.220 --> 00:06:23.150 next 6 to 12 months as well. So, so we're sort of sort of seeing 110 00:06:23.150 --> 00:06:27.350 the beginning effects to the real estate market. I think in 111 00:06:27.350 --> 00:06:30.080 the next 6 to 12 months, because real estate, sort of like a 112 00:06:30.080 --> 00:06:33.530 lagging indicator, we're going to see more and more of what I'm 113 00:06:33.530 --> 00:06:35.990 talking about, really come out in the market. 114 00:06:36.710 --> 00:06:39.890 Sean Murray: Wow. Yeah, I mean, I can totally relate to a little 115 00:06:39.890 --> 00:06:42.080 bit of what you're saying, in the city, you know, I take the 116 00:06:42.080 --> 00:06:44.390 train every day, I was telling you a little bit earlier before, 117 00:06:44.720 --> 00:06:47.690 we connected about how the trains are still empty. And 118 00:06:47.840 --> 00:06:51.020 sometimes I'm even the only person on the entire train. So- 119 00:06:51.470 --> 00:06:52.220 Chris Pepe: Which is wild... 120 00:06:52.700 --> 00:06:56.060 Sean Murray: [----] right? Like, we would never have imagined it 121 00:06:56.210 --> 00:06:58.760 back in March, when we were told there would be a shutdowns or an 122 00:06:58.760 --> 00:07:03.170 adjustment, But, but here we are. And so my question would 123 00:07:03.170 --> 00:07:07.640 be, so we have, we have this this big change, right? You just 124 00:07:07.640 --> 00:07:10.580 told me what's going on, but does it create any 125 00:07:10.580 --> 00:07:13.220 opportunities? Are there any opportunities in the market 126 00:07:13.250 --> 00:07:14.510 right now In your opinion? 127 00:07:15.320 --> 00:07:17.900 Chris Pepe: Yeah, so I think there's big opportunities. I you 128 00:07:17.900 --> 00:07:22.700 know, what I would say, as far as the opportunities go, the, 129 00:07:23.180 --> 00:07:27.440 we're seeing more and more lenders either pause funding, 130 00:07:27.470 --> 00:07:32.960 change their guidelines. And, you know, I think that, that 131 00:07:32.960 --> 00:07:35.570 becomes an opportunity for us, but not only for us, for other 132 00:07:35.600 --> 00:07:39.440 lenders, also in the space, because we have to, if you do 133 00:07:39.440 --> 00:07:42.410 not adapt and change with the times and change to what's going 134 00:07:42.410 --> 00:07:45.800 on the market, it's it's very possible that you may struggle 135 00:07:45.800 --> 00:07:49.970 going forward. So I think there are major opportunities in the 136 00:07:49.970 --> 00:07:54.890 market for, for lenders, and brokers. On the lender side for 137 00:07:54.890 --> 00:07:58.700 people that are continuing to lend because there are less 138 00:07:59.180 --> 00:08:02.960 resources out there for the brokers to utilize. So and the 139 00:08:02.960 --> 00:08:06.260 brokers have to adapt to say, Okay, I'm going to open up my 140 00:08:06.260 --> 00:08:10.820 eyes to other other lending products and other opportunities 141 00:08:10.940 --> 00:08:15.440 for my merchants, in order to find them find a home for their 142 00:08:15.440 --> 00:08:19.310 loan. So I think there are major opportunities. In addition to 143 00:08:19.310 --> 00:08:23.300 that, I think right now, and I don't know how to quantify this, 144 00:08:23.300 --> 00:08:27.320 but I think right now, there's never been higher demands for 145 00:08:27.320 --> 00:08:30.680 small business finance, and small business lending ever, 146 00:08:30.740 --> 00:08:33.800 right? Think about how many businesses right now are 147 00:08:33.800 --> 00:08:36.710 struggling to pay their bills, because they're not generating 148 00:08:36.710 --> 00:08:40.550 the revenue. That opportunity, I don't know if there's going to 149 00:08:40.550 --> 00:08:45.200 be a bigger opportunity in our space, you know in my lifetime 150 00:08:45.200 --> 00:08:49.880 after this is going on right now. So, so that, I think, is 151 00:08:49.880 --> 00:08:53.840 the main opportunity, but how do you, how do you capitalize on 152 00:08:53.840 --> 00:08:57.290 that opportunity? And so, so we have to get to the business 153 00:08:57.290 --> 00:09:01.100 owners and, and we're seeing some ISOs and some brokers, you 154 00:09:01.100 --> 00:09:06.050 know, we've seen some closed their doors, some have downsized 155 00:09:06.050 --> 00:09:09.920 their, the amount of employees they have. So, so for us, we 156 00:09:09.920 --> 00:09:12.020 need to get to the merchants, we want to get to the business 157 00:09:12.050 --> 00:09:14.810 because we're still lending and we want to get in and we have 158 00:09:14.810 --> 00:09:16.610 money to give to our merchants as long as they have real 159 00:09:16.610 --> 00:09:21.020 estate. However, we have to get to the merchants maybe in a in a 160 00:09:21.020 --> 00:09:26.330 different way, and which is sort of changing the way that we're 161 00:09:26.330 --> 00:09:30.680 looking at the market, right? Because, because our brokers are 162 00:09:30.680 --> 00:09:35.360 how we see our business right now. 100% of our business, we're 163 00:09:35.360 --> 00:09:38.510 on a wholesale model. 100% of our business comes from brokers. 164 00:09:38.780 --> 00:09:41.870 So we want to know and we, you know, to the brokers we exist, 165 00:09:41.870 --> 00:09:45.770 we're here, we're lending and we want them to know as much about 166 00:09:45.770 --> 00:09:48.320 our product so they can deliver it to the merchants because 167 00:09:48.470 --> 00:09:52.670 there's never been a stronger demand for business finance and 168 00:09:52.670 --> 00:09:56.300 small business lending than there is right now. And it's 169 00:09:56.300 --> 00:09:59.150 just a matter of everyone adapting to the different 170 00:09:59.150 --> 00:10:00.830 products that exist in the market. 171 00:10:02.120 --> 00:10:04.730 Sean Murray: That brings me to an interesting question, because 172 00:10:04.730 --> 00:10:07.820 I don't doubt that there's a lot of demand for capital. But are 173 00:10:07.820 --> 00:10:11.000 you encountering any type of hesitation from business owners 174 00:10:11.000 --> 00:10:17.120 who have may have already gotten PPP financing or EIDL? And who 175 00:10:17.120 --> 00:10:20.510 may have the expectation that more government financing could 176 00:10:20.510 --> 00:10:23.690 be coming down the road? Is that creating any type of obstacles 177 00:10:23.690 --> 00:10:24.560 for you at all? 178 00:10:24.600 --> 00:10:26.790 Chris Pepe: So, so great question, again, something we 179 00:10:26.790 --> 00:10:33.210 speak about constantly. So I have, it's yes and no, I hear 180 00:10:33.240 --> 00:10:39.000 you can hear the, in some of the merchants' voice, when you have 181 00:10:39.000 --> 00:10:42.060 an offer for them, let's say we have an offer for them and some 182 00:10:42.060 --> 00:10:46.290 of them are concerned to move forward and take it because the, 183 00:10:46.380 --> 00:10:48.750 you know, it's unknown, a lot of things are unknown, right now. 184 00:10:48.750 --> 00:10:52.710 It's unknown what's going to happen in the world. And so, so, 185 00:10:53.280 --> 00:10:58.110 in the beginning, when PPP and EIDL first rolled out, a lot of 186 00:10:58.110 --> 00:11:00.600 the merchants were waiting for that to hit. Okay, so that 187 00:11:00.600 --> 00:11:05.280 happens. And, and we saw hesitation in the beginning. And 188 00:11:05.280 --> 00:11:07.500 then they got that money. And they realized, well, that's not 189 00:11:07.500 --> 00:11:09.870 enough money for me for them but for most of them, not all of 190 00:11:09.870 --> 00:11:12.930 them, but but for some of them, they said, that's not enough 191 00:11:12.930 --> 00:11:15.930 money, it's two and a half times payroll plus some rent plus and 192 00:11:15.930 --> 00:11:19.200 [----], like, I need a lot more money from that for than that. 193 00:11:19.470 --> 00:11:24.420 So, so then we saw a spike in demand and we saw a spike in 194 00:11:24.420 --> 00:11:27.630 applications, because they needed more money than what they 195 00:11:27.630 --> 00:11:30.960 got from the government. And then there was another round of 196 00:11:30.960 --> 00:11:33.990 the PPP. So then we saw, okay, I'm gonna wait around because 197 00:11:33.990 --> 00:11:37.890 the government money sort of, you know, very cheap and very 198 00:11:37.890 --> 00:11:41.910 advantageous terms. So I'm going to wait for that. But there is 199 00:11:41.970 --> 00:11:46.110 a, you know, through all of it, there is been the sort of the 200 00:11:46.110 --> 00:11:50.370 fear of the unknown, where the merchants are sort of concerned 201 00:11:50.370 --> 00:11:53.340 to commit to anything, only because they don't know what's 202 00:11:53.340 --> 00:11:57.720 going to happen in the market. But at the end of the day, they 203 00:11:57.720 --> 00:12:00.600 need capital, they need capital to run their businesses, whether 204 00:12:00.600 --> 00:12:04.800 it's to, to pay their rent to, you know, we're seeing a big 205 00:12:04.800 --> 00:12:08.760 demand, people are building outdoor spaces now on their, for 206 00:12:08.760 --> 00:12:11.490 their restaurants and for, you know, they can have people 207 00:12:11.490 --> 00:12:14.910 outside, so they need money for that. And, and so the government 208 00:12:14.910 --> 00:12:19.350 didn't, maybe satisfied a little bit of what their needs were and 209 00:12:19.350 --> 00:12:23.160 there was that hesitation when the EIDL and the PPP sort of 210 00:12:23.280 --> 00:12:28.170 first came out. But they also needed more money. So, so our 211 00:12:28.230 --> 00:12:31.890 capital sort of complemented those in some cases. We did have 212 00:12:31.890 --> 00:12:35.250 some merchants completely scared, that they didn't want to 213 00:12:35.250 --> 00:12:38.010 commit to anything, which is understandable and I get that. 214 00:12:38.190 --> 00:12:42.360 So, so it's sort of a yes and no answer. Because I, they're the 215 00:12:42.390 --> 00:12:46.590 PPP and EIDL I think created opportunities, because they, 216 00:12:46.620 --> 00:12:50.100 they needed that money, but they also needed our money. But in 217 00:12:50.100 --> 00:12:53.760 addition to that, we also saw a lot of merchants that were 218 00:12:54.120 --> 00:12:57.810 scared or concerned to move forward, because of the fear of 219 00:12:57.810 --> 00:13:01.860 the unknown in the future. So I think there's, there's both 220 00:13:01.860 --> 00:13:04.710 sides of it, and we're seeing both sides of it. And I think 221 00:13:04.710 --> 00:13:07.200 we're going to continue to see both sides of it. Because, you 222 00:13:07.200 --> 00:13:09.300 know, our financing is different, right? We need real 223 00:13:09.300 --> 00:13:14.610 estate, on our transaction. So for a merchant to commit, not 224 00:13:14.610 --> 00:13:17.370 only to the business loan, but to use real estate, they were, 225 00:13:17.400 --> 00:13:21.480 you know, what, we sort of get more of a, we hear more of a 226 00:13:21.480 --> 00:13:25.830 concern from a merchant, rather than them, you know, not using 227 00:13:25.830 --> 00:13:30.180 any real estate. So, so, so we see both sides of it. But I do 228 00:13:30.180 --> 00:13:33.750 think that the demand for the financing from the businesses 229 00:13:33.930 --> 00:13:37.320 sort of outweighs a lot of that. And we're going to continue to 230 00:13:37.320 --> 00:13:42.930 see a lot of demands in the, in for business lending and for our 231 00:13:42.930 --> 00:13:43.500 product. 232 00:13:44.040 --> 00:13:46.680 Sean Murray: Yeah, you made some really good points. And I think, 233 00:13:47.310 --> 00:13:50.400 a lot of what's misunderstood about PPP, it's like you said it 234 00:13:50.400 --> 00:13:53.430 was what, two and a half times payroll, and it was supposed to 235 00:13:53.430 --> 00:13:56.340 be for payroll, right? It wasn't supposed to be for your 236 00:13:56.340 --> 00:13:59.280 operating costs, unless you could be counted as an operating 237 00:13:59.280 --> 00:14:03.330 costs. And so even, even if a merchant got that, it's kind of 238 00:14:03.330 --> 00:14:05.910 you know, they got it back in April or May or whatever, and 239 00:14:06.240 --> 00:14:07.230 they spent it all so- 240 00:14:07.650 --> 00:14:09.630 Chris Pepe: Yeah, it could be gone. It's probably gone. 241 00:14:09.960 --> 00:14:12.630 Sean Murray: Yeah, it's all it's all gone. Exactly. So it's not 242 00:14:12.630 --> 00:14:17.640 like, that's just sitting around at this point. So I'm curious, 243 00:14:18.000 --> 00:14:22.710 you mentioned brokers before, um, what are, what are, what are 244 00:14:22.710 --> 00:14:26.430 brokers, ISOs, what are they telling you? How are they 245 00:14:26.430 --> 00:14:30.360 feeling about the market? Is their optimism, pessimism? Are 246 00:14:30.360 --> 00:14:32.460 they are they looking to make changes? Are they working 247 00:14:32.460 --> 00:14:34.860 remotely? Like what what are your partners telling you? 248 00:14:35.860 --> 00:14:38.800 Chris Pepe: Yeah, so telling me a lot, you know, I speak to the 249 00:14:38.800 --> 00:14:42.010 I speak to brokers and ISOs every single day, I have close 250 00:14:42.010 --> 00:14:45.880 close friends that are ISOs and brokers in the space and, you 251 00:14:45.880 --> 00:14:49.060 know, I'm hearing a lot of constant- consistent themes, 252 00:14:49.120 --> 00:14:53.530 one, hearing a lot of giving up their offices, you know, a lot 253 00:14:53.530 --> 00:14:57.190 of them are going remote. That's been something that's been 254 00:14:57.190 --> 00:15:02.020 consistent and not for good, but through the end of the year 255 00:15:02.020 --> 00:15:04.750 until they figure out what's going to be or what's going to 256 00:15:04.750 --> 00:15:07.750 happen through next year through the end of this year into next 257 00:15:07.750 --> 00:15:10.330 year. So that's one thing I'm hearing. The second thing I'm 258 00:15:10.330 --> 00:15:14.140 hearing is, you know, concerns about spending money on 259 00:15:14.140 --> 00:15:17.680 marketing. There's, you know, the people that used to spend 260 00:15:17.680 --> 00:15:21.640 six figure ISOs, brokers spending six figures a month on 261 00:15:21.640 --> 00:15:26.230 marketing. You know, that's sort of scary when you're not sure if 262 00:15:26.230 --> 00:15:29.200 the funders are still funding or if they're giving you approvals 263 00:15:29.200 --> 00:15:32.710 and they're not necessarily funding the loan, because the 264 00:15:32.710 --> 00:15:37.420 approvals are very, very tough to meet the conditions. So why 265 00:15:37.420 --> 00:15:40.390 are they, why, why should they commit to spend marketing 266 00:15:40.390 --> 00:15:42.700 dollars if they're unsure if they're going to get a return on 267 00:15:42.700 --> 00:15:47.050 it? In addition to that, there are a lot of them have downsized 268 00:15:47.050 --> 00:15:49.570 the amount of employees they have because of the same reason 269 00:15:49.570 --> 00:15:53.260 I just said, right, unknowns with the funders and, and, and 270 00:15:53.260 --> 00:15:59.440 so so there's a lot of uncertainty in that- in on that 271 00:15:59.440 --> 00:16:03.010 aspect with the with the ISOs and the brokers. On the flip 272 00:16:03.010 --> 00:16:06.790 side, we're seeing brokers who may be used to send a little bit 273 00:16:06.790 --> 00:16:09.400 of business to us, because, you know, we consider our- we're 274 00:16:09.400 --> 00:16:12.640 very, we're different than other funders or lenders in the space, 275 00:16:12.940 --> 00:16:17.230 and a lot of ISOs. And brokers who maybe used to send the deal 276 00:16:17.230 --> 00:16:21.250 here and there. well, they know WBL is lending, our product 277 00:16:21.280 --> 00:16:24.370 exists, we have this new product, and sort of they've 278 00:16:24.370 --> 00:16:28.870 adapted and changed their strategy to focus more on 279 00:16:28.870 --> 00:16:33.910 collateralized type programs, then not at not instead of MCAs, 280 00:16:33.910 --> 00:16:37.270 but in addition to the MCA. So some brokers and ISOs, who used 281 00:16:37.270 --> 00:16:40.240 to submit a deal here and there, now they're submitting more than 282 00:16:40.240 --> 00:16:43.660 ever. And we've actually given them some tools and resources 283 00:16:43.810 --> 00:16:47.920 where they can market to their merchants to figure out whether 284 00:16:47.920 --> 00:16:51.550 or not they may be a good fit for us. So, you know, I'm 285 00:16:51.550 --> 00:16:53.830 definitely hearing their concerns about spending money on 286 00:16:53.830 --> 00:16:58.660 marketing, the downsizing of the employees, the possibly giving 287 00:16:58.660 --> 00:17:04.450 up space for the office space. But you know, I'm also hearing 288 00:17:04.450 --> 00:17:06.880 they have a lot of demand, they have a ton of applications, they 289 00:17:06.880 --> 00:17:10.270 can't keep up with them. There- they've a lot of them have 290 00:17:10.270 --> 00:17:14.830 focused on the PPP and EIDL for their merchants sort of being a 291 00:17:15.010 --> 00:17:18.520 consultant in that way for the business owners and they're 292 00:17:18.520 --> 00:17:22.630 using that as an acquisition tool to find new, to find new 293 00:17:22.630 --> 00:17:26.320 business. And then they have to figure out okay, well, we got 294 00:17:26.320 --> 00:17:29.140 them, we helped them with the PPP, we helped them with the 295 00:17:29.200 --> 00:17:33.640 EIDL. Now, what else do they need? And so they're opening up 296 00:17:33.640 --> 00:17:38.680 their eyes to more different products in the market in order 297 00:17:38.680 --> 00:17:41.230 to help their business owners and their merchants, us being 298 00:17:41.230 --> 00:17:44.230 one of them. There's others out there, but but we're sort of 299 00:17:44.230 --> 00:17:48.490 seeing a lot more brokers increase their submissions to 300 00:17:48.490 --> 00:17:54.340 us, just because of the reduced resources and liquidity in the, 301 00:17:54.490 --> 00:17:55.900 in the unsecured space. 302 00:17:57.160 --> 00:18:01.180 Sean Murray: Got it? Yeah. It's wild how many companies have 303 00:18:01.180 --> 00:18:03.400 found that they don't need to have an office. I was just 304 00:18:03.400 --> 00:18:07.840 talking to someone, had to be like a week or two ago, and he 305 00:18:07.840 --> 00:18:10.930 was operating remotely from Turkey, like then, like the 306 00:18:10.930 --> 00:18:13.540 nation of Turkey and was able, you know, there was still 307 00:18:13.540 --> 00:18:16.930 lending and able to do it. So it just goes to prove that, you 308 00:18:16.930 --> 00:18:21.190 know, perhaps all the the office space that's out there is really 309 00:18:21.190 --> 00:18:23.830 unnecessary. And I wonder what that means for the New York City 310 00:18:23.830 --> 00:18:26.950 real estate market because so many had offices in New York. 311 00:18:27.010 --> 00:18:29.920 Right. So that could definitely be a change. 312 00:18:29.920 --> 00:18:32.690 Chris Pepe: I think Yeah, I think so I think it's going to 313 00:18:32.690 --> 00:18:37.100 affect everything dramatically. Like, like for us. We never 314 00:18:37.100 --> 00:18:39.740 thought we could operate the company remotely, but we were 315 00:18:39.740 --> 00:18:44.120 forced to do it. and we sort of didn't miss a beat, which was 316 00:18:44.120 --> 00:18:47.510 great, but then it makes you think like, okay, well, we have 317 00:18:47.510 --> 00:18:50.480 this big office and, and you know, we would have to change 318 00:18:50.510 --> 00:18:55.010 around the entire office. So, so but it's not just us. I'm sure a 319 00:18:55.010 --> 00:18:58.010 ton of companies are thinking and saying the same exact thing. 320 00:18:58.790 --> 00:19:02.660 Sean Murray: Probably are. Earlier, you mentioned that 321 00:19:02.690 --> 00:19:05.540 there's a lot of unknowns, right, a lot of uncertainty. And 322 00:19:05.540 --> 00:19:08.330 I think everyone would agree with you. So I'm not gonna, I'm 323 00:19:08.330 --> 00:19:11.990 not gonna hold you to a definitive answer. But what what 324 00:19:11.990 --> 00:19:16.010 does Chris Pepe, the individual what does he think, when do you 325 00:19:16.010 --> 00:19:18.530 think that things are going to return to normal? What's your 326 00:19:18.530 --> 00:19:20.540 prediction about how things are gonna go here? 327 00:19:22.040 --> 00:19:26.900 Chris Pepe: Wow, tough question. So, you know, first of all, we 328 00:19:26.900 --> 00:19:30.680 have to define what's normal, right? There's, there's no, 329 00:19:30.890 --> 00:19:36.140 there's no way to know what the new normal is going to be. But I 330 00:19:36.140 --> 00:19:39.830 sort of feel like we're living in it right now, the new normal. 331 00:19:40.130 --> 00:19:44.360 And I don't think we're going to know what the new normal is 332 00:19:44.360 --> 00:19:48.140 until early next year. I think the rest of this year we're 333 00:19:48.140 --> 00:19:53.750 going to sort of be in the same state we're in now. And we won't 334 00:19:53.750 --> 00:19:58.700 know until early next year, what the new normal will be and what 335 00:19:58.700 --> 00:20:01.370 that means for our business. Right? Our business, if you 336 00:20:01.370 --> 00:20:07.160 think about it in early to mid March, the business sort of shut 337 00:20:07.160 --> 00:20:11.000 down, like, we saw a massive change in our market. You know, 338 00:20:11.570 --> 00:20:14.120 we had a different type of change. But we, everyone saw a 339 00:20:14.120 --> 00:20:18.500 change in the market. And so now we're sort of seeing, okay, 340 00:20:18.500 --> 00:20:24.500 well, if you lasted through the last four months, I can sort of 341 00:20:24.500 --> 00:20:28.490 predict that you'll be here going forward, right? If you 342 00:20:28.490 --> 00:20:30.800 lasted through the last four months that we went through 343 00:20:31.040 --> 00:20:34.070 that, that you'll be you're going forward. Now it's sort, 344 00:20:34.070 --> 00:20:37.940 just sort of everyone has to adapt to find merchants in a 345 00:20:37.940 --> 00:20:43.910 different way to pair up and sign up with funders and lenders 346 00:20:43.970 --> 00:20:47.180 that are doing different things like we're here, then the main 347 00:20:47.180 --> 00:20:49.640 reason we're here, all of our files are secured against real 348 00:20:49.640 --> 00:20:53.450 estate. So, so we have a, and that makes us very different 349 00:20:53.450 --> 00:20:56.270 than everyone else and it, and it makes us a lot more flexible 350 00:20:56.270 --> 00:21:01.520 than everyone else. So I think that next year, early next year, 351 00:21:01.520 --> 00:21:05.780 sort of when we'll see normal, but I don't even know what 352 00:21:06.080 --> 00:21:10.940 normal means anymore. I just know that the one thing I'll 353 00:21:10.940 --> 00:21:14.780 state that I know to be fact is that I think there's a lot of 354 00:21:14.780 --> 00:21:17.510 opportunity in our market, I think the demand for small 355 00:21:17.510 --> 00:21:22.520 business lending has never been higher. I just think that us and 356 00:21:22.550 --> 00:21:26.630 or, you know, all brokers, ISOs, lenders, funders, everyone's 357 00:21:26.630 --> 00:21:31.910 sort of got to adapt and adjust to the new normal and figure 358 00:21:31.910 --> 00:21:37.910 out, okay, how do we monetize on, on the marketing dollars we 359 00:21:37.910 --> 00:21:43.280 spend? How do we help our merchants to get the financing 360 00:21:43.280 --> 00:21:46.850 they need, and it's sort of has everyone's eyes have to stay 361 00:21:46.850 --> 00:21:50.780 open to think about, we got to think differently. Now we can't 362 00:21:50.780 --> 00:21:53.030 do the same thing. If we're gonna, if we're going to do the 363 00:21:53.030 --> 00:21:56.630 same thing and only try to get unsecured lending, well, you're 364 00:21:56.630 --> 00:21:59.720 going to get the same result. And, and sort of, you know, you 365 00:21:59.720 --> 00:22:03.740 have to change and adapt to the time. So really tough question 366 00:22:04.250 --> 00:22:08.090 to answer. But I think, you know, the new normal, we won't 367 00:22:08.090 --> 00:22:11.180 know until early next year, I think the rest of this year, 368 00:22:11.180 --> 00:22:15.110 will still sort of be what we're experiencing right now. Right? 369 00:22:15.110 --> 00:22:17.960 We've sort of went through the storm. And now we're sort of 370 00:22:17.960 --> 00:22:21.590 figuring out what's going on. And then early next year, I 371 00:22:21.590 --> 00:22:26.720 think we're going to see, we're going to see people that were in 372 00:22:26.720 --> 00:22:30.950 the space, you know, possibly, you know, may not be here 373 00:22:30.950 --> 00:22:33.590 anymore, and then we're going to see new people enter into this 374 00:22:33.590 --> 00:22:38.450 space. And, and so that's when I think it's going to create some 375 00:22:38.450 --> 00:22:43.580 opportunity. But I do feel that if, if whoever's lasted through 376 00:22:43.580 --> 00:22:48.650 the last four months, says a lot, right? I mean, it was, it 377 00:22:48.650 --> 00:22:53.540 was, it was a, we didn't know what was going to happen. And 378 00:22:53.540 --> 00:22:58.220 so, so for us, we had to adapt and change, we, we rolled out 379 00:22:58.220 --> 00:23:01.340 this new program and the main reason why we rolled out the 380 00:23:01.340 --> 00:23:05.180 program is we said, we can't offer our same programs, we 381 00:23:05.180 --> 00:23:08.270 offer our same program, that means that the day after 382 00:23:08.270 --> 00:23:11.390 funding, they have to make a payment, or the week after 383 00:23:11.390 --> 00:23:14.030 funding, they have to make a payment. So with our new 384 00:23:14.030 --> 00:23:19.430 program, we said okay, we have to give them relief in the very 385 00:23:19.430 --> 00:23:23.480 beginning of the loan to say, "Hey, Mr. Merchant, after 386 00:23:23.480 --> 00:23:26.960 funding, you don't have to worry about making a payment on this 387 00:23:26.960 --> 00:23:30.830 loan until the fourth month, and we're going to give you time to 388 00:23:30.830 --> 00:23:33.980 put the money to use and don't worry about making a payment." 389 00:23:34.040 --> 00:23:38.420 And so that was sort of how we adapted and adjusted to the new 390 00:23:38.420 --> 00:23:40.880 normal. And I'm sure we're gonna have to, you know, we're gonna 391 00:23:40.880 --> 00:23:44.930 roll out new programs the end of this year also and, and so I 392 00:23:44.930 --> 00:23:48.860 think the new normal will, you know, we won't know until the 393 00:23:48.860 --> 00:23:53.270 beginning part of next year, and I sort of think that everyone 394 00:23:53.270 --> 00:23:57.230 that remains in the space will have to adapt and adjust and, 395 00:23:57.260 --> 00:24:02.030 and be able to, to, you know, utilize different resources for 396 00:24:02.030 --> 00:24:05.030 their merchants and their brand and their their clients. 397 00:24:05.840 --> 00:24:08.690 Sean Murray: So, so basically, you're saying February 21st is 398 00:24:08.720 --> 00:24:11.390 the day that it's all going to return to normal. Right. Did I 399 00:24:11.390 --> 00:24:11.990 hear that right? [laughter] 400 00:24:12.320 --> 00:24:13.400 Chris Pepe: You could hold me to it. [laughter] 401 00:24:14.960 --> 00:24:16.790 Sean Murray: Okay, well, I appreciate your insight and 402 00:24:16.790 --> 00:24:20.600 commentary, everybody that was Chris Pepe, head of ISO 403 00:24:20.600 --> 00:24:24.110 Relations at World Business Lenders. Thank you, Chris. 404 00:24:24.200 --> 00:24:25.130 Chris Pepe: Thanks, Sean.