Sean Murray: Hello, everybody, it's Sean Murray with deBanked
News and today I'm here with Peter Ribeiro, the CEO of US
Business Funding. Peter, thank you for being here.
Peter Ribeiro: And thanks for having me Sean.
Sean Murray: Yeah, So I have a few questions for you today. The
first thing I want to ask is, what is your background? And
what does US Business Funding do? So I went to UCR, University
of California, Riverside, I got a degree in business admin. But
my emphasis was always in marketing, I always found
marketing to be probably one of the most important tools to grow
a business. And that's actually been one of the greatest things
that's happened here at US Business Funding is we pride
ourselves all the marketing that we have is internally done. And
our average deal size is a lot bigger and it's because of the
marketing techniques that we set up here. Ah, but to fast
forward, went to UCR, got a degree in business admin,
emphasis in marketing, worked on Wall Street, legitimately on
Wall Street, doing wholesale banking at a Portuguese based
bank called Millenium BCP, I was recruited to work for Provident
Equipment Leasing, was a mid ticket, equipment financing,
then went to Nationwide Business Credit to do small ticket
equipment financing. And then in 2008, I opened up PAR
consulting, which is now DBA US Business Funding, because no one
you won't PAR Consulting was, but I wanted to be more of a
consultant than a sales guy and so that's why I called it PAR
consulting. But with my marketing background, I figured
that people were like who the heck is Par consulting? Once I
put US Business Funding that got people to apply a lot more. So.
Got it. So your role in these transactions? I understand that
you're facilitating them, right? You're more of a broker than a
lender in them. Is that right?
Peter Ribeiro: Correct. We're a broker. We have been a broker
since 2008. Obviously, in 2018, Fora Financial bought a big
portion, equity stake in US Business Funding. And since
then, I would still say that we are still a broker, but we try
to put as much stuff as we can on balance sheet with Fora.
Sean Murray: So what's this year been like for you? It's
obviously an anomalous year. But from your point of view, what's
what's it been like? Has it been challenging?
Peter Ribeiro: Now, it's been very challenging, especially on
the working capital side. But working cap is probably down
about 70% of where we were prior to COVID. But the great thing is
that we were doing so well prior to COVID. The great thing about
a downturn is that you see a lot of holes in your company, you
see, I look for opportunity during a downturn. So I would
say that we're a stronger company and more well positioned
today than we were prior to COVID. Obviously, numbers are
down because your renewal book of business, there's a lot of
defaults. A lot of the clients are these banks, a lot of our
lenders offered restructuring of loans. And so if renewals which
in the working cap side of our business is 35 to 40% of your
business, and you lose 70% of it, the numbers are going to be
down. So our numbers are way down on the working cap side,
but they're up about 280% on the equipment side. So we shifted a
good portion of the business on to the equipment space, which is
still very lucrative and it was what we've really done since
2008. 2008 to 2012 we did equipment, then the working cap
came in, and we were 90% working cap and 10% equipment, last
month, we're almost 50-50. So it's been a big shift over into
the equipment space for us.
Sean Murray: Do you think that will only remain that way for a
limited time? Or do you think that things will go back to the
to the ratio that they were previously once things start to
settle down?
Peter Ribeiro: I've never been a guy that will sit there and
predict the future. I just don't, I just you know, and it's
just like in my real estate book of business. You know, people
ask me when's a good time to buy real estate? I say anytime. And
they say, well, we're in a bubble, it's going to go down.
But I told the kid I said, Well, I no one got I never got an
email that COVID was coming. So I just just like everything man,
I keep on buying, you know, in real estate, I just keep it the
same thing which is growing, growing. But I do like, I don't
like that's COVID is here, but it's really helped me kind of
take a look at all the underlying holes that USBF had
and I've been filling up those holes. And the great thing is
that a lot of folks have closed down or they've downsized, and
I've picked up a lot of good talent that otherwise if COVID
hadn't come I would never be able to get so I just I'm trying
to build now for the future. What's the future hold? I have,
I have no idea.
Sean Murray: So I've seen some of your videos online. You posts
some I think videos on LinkedIn. That's where I see them anyway.
And it looks like that there's some fun and camaraderie in your
office. And I think it's unique to see that especially in 2020,
and it made me think about company culture. And it looks
like you have good company culture. And I wanted to ask,
you know, from your point of view, how important is creating
a good company culture and, and good values and camaraderie,
camaraderie, how important is that success?
Peter Ribeiro: I think it's very important. I think that if all
you offer is a job where there's opportunity, in sales, you have
good months and bad months, you have good runs and bad runs,
just like baseball players, just like basketball players with
their hitting of their shooting percentages. So if all you offer
is money, if that money disappears, there's nothing
left. If you offer a great environment, and the money goes
away, and they're still having fun, that might sugarcoat it and
cover it where the the reps actually stay. So sales guys are
very emotional. They're I don't know, to me, they're like wide
receivers in the NFL, they always want their leads, they
always want the ball, right. And so if all you offer is money,
that will go in some type of a downtrend like we have now and
everyone leaves. If you have a good culture and a good family
environment, people will stay. And so I think that it's fun to
make money. But I always tell everyone, it's more important to
have fun than the money will come. If you put the money
before everything else, and the money doesn't come, you're gone.
Sean Murray: That makes a lot of sense. You were saying before
that you can't predict the future. And you know, I get it
especially- No, no, nobody can now you said you didn't get the
COVID email before COVID came? Right. I didn't get that email
either. But assuming that we don't have another curveball,
I'm curious if you think there will be a big, like demand for
capital from small business on the other side of this. I mean,
you know, your team speaks to business owners every day,
right? And I'm sure some of them probably got PPP funds or, or
EIDL, and that might shape how they're making decisions now.
But let's assume that part of, of the, of the cycle comes to an
end. And we start to look toward the world where everyone can
meet in person again, do you do you envision small businesses
rushing to secure a financing source? Or secure financing in
general? Or do you think that there's going to be like this
big pullback and not do anything? And you don't have to
predict the future. But, but what do you what do you think is
going to happen is based off of conversations you're having,
you're having now?
Peter Ribeiro: That's a really good question. Because you know,
I don't like predicting the future. I just that so i, but if
I had to predict the future, what I would say is that, you
know, if you're a business owner, or entrepreneur, the most
important thing is to look for opportunity. So I just look for
opportunity. And I do believe that if we look back, let's say
over any economic downturn, let's take it to 2008. You know,
all the major banks are going to take their bottom 30% of the
portfolio and start cutting off those credit lines. I'm hoping
that then that would, that would layer into us is I do believe
our products are, we're not going to compete with Bank of
America, we're not going to compete with Wells Fargo, we're
not going to meet with Chase Bank. We're a secondary source.
Um, and I think that we're going to benefit from an economic
downturn. Now whether we have [----] or not, I don't know. But
do I see demand coming back? I absolutely see demand coming
back. I think that a lot of these clients got the EIDL and
the PPP, but that's just going to put a bandaid on the economic
conditions that we're currently seeing. And if things continue
to go into, I think the direction they're going, I think
the great thing that's going to happen is you're going to see,
again, these banks cutting, cutting off the bottom 30% of
their portfolio. And that's all going to have to go downstream
and I think we're right there to pick up all that business. So
I'm very optimistic, I would say but that's me at heart, that
business will pick up if not actually exceed where we were
prior to COVID.
Sean Murray: Would you say that businesses have changed how they
feel about working with a non bank after this whole COVID
experience happened? I've heard just some feedback about how
business owners who typically value the relationship with
their bank, tried to go to that bank to get PPP funds when they
needed it and the bank wasn't able to come through and for the
first time ever, they were willing to entertain other
sources, whether it be a broker, whether it be you know,
something, an online lender, a non bank source, have you, have
you encountered any business owners who have kind of reached
a point where they said I'm now open to change where I wasn't
before because of all this stuff?
Peter Ribeiro: Yea we have. I've seen a lot of that? You know,
one thing is I do all the marketing here. So I do still
take calls, cold calls, sales calls, it's you know, you can't
do the marketing without being on the front lines. Because just
like everything else, if you're not on the front lines, how do
you know what to market to someone. So I have had a lot of
calls. One thing that people don't realize about banks is
that I have worked in banks my whole life, I started working at
banks around the world in Poland and Portugal, here in the US
since I was the age of 14, I've gone to different departments,
what people understand, I always tell everyone, I tell my clients
that banks love you til they love you no more. And so when
you look at this PPP issue that happened, who were the banks
that helped out which clients, it was a client that had a lot
of debt with them, it was clients that had a lot of credit
card debt with them, home loans, and whatnot, those clients were
taken care of, right. But I've had, I would say, 90% of our
clients that didn't have debt, but they banked at Bank of
America, Bank of America didn't care if they got money, didn't
help out the business, they only wanted to help the guys that
they knew how to fulfill, fulfill their debt obligation so
they put those in the forefront and those companies got funded.
But there was a lot of companies that really needed it, the Bank
of America said you don't qualify, it wasn't it doesn't
qualify for it. It's just that the Bank of America didn't care
about those clients. And once clients start figuring out, that
out, I think that yes, are a lot more susceptible now to take a
secondary source and it's always good to diversify away from
their bank, especially if they're in business in [----]
they might not lose their entire credit lines, but I think you'll
see credit lines going from like half a million to 200,000, from
200,000 to 50 grand and from 50 grand to zero. So I think we're
gonna fill that void. And I think we're gonna, as long as
you position yourself right now, for that opportunity, that
opportunity will come in the next 12 to 18 months or so.
Sean Murray: I like it. Um, there's been a lot of lenders
that we've heard have paused in the months of March, April, May.
I imagine that you've probably talked with several different
lenders and finance, financing and capital sources, have they
mainly come back already? Or are there still some that are in
pause mode? Like, what are you hearing from them?
Peter Ribeiro: I think it's a combination. You know, I think
that there's, I mean, lenders have to put money on the street
or they go to rapid amortization at some point. So you got to
lend money out. I think a lot of them put a pause. They first try
to figure out how to collect from the current book of
business. And then they try to figure out what's the best
credit model moving forward, because remember, these credit
models are all based on Yeah, they could probably get through
a recession, but they couldn't get through an overnight
complete stop on the economy. So I think there's some lenders, I
mean, like Fora is doing such a great job, I've been super
impressed with Fora, and not being biased. It's just I think
they're one of the shops in the greatest job, they came back,
they never completely stopped lending, they did a really good
job when our renewal portfolio did a really good job mapping
out a new credit model. And as the economy starts to open back
up, their credit model is continuously changing every day.
So they've done a great job. And then there's some other lenders
that have gone through bigger changes, for example, like
OnDeck where they just complete put a stop on funding, and now
they're coming back into the space. So for us, it's kind of
like it's an every day, something's always changing. But
it for me, it makes it exciting to be honest with you, because
you know, the only thing that's constant is change. And if you
don't evolve and adapt, you won't survive. So I think that
shops are going to evolve and adapt will survive the pandemic.
I think there's some shops, unfortunately, because of the
cost per acquisition's so high, they might not bridge that gap.
Sean Murray: I Like it was really good explanation.
Everybody that was Peter, Roberto, CEO of US Business
Funding. Thank you very much for being here.
Peter Ribeiro: Thank you, Sean.