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