1 00:00:00.690 --> 00:00:03.120 Johny Fernandez: What is a high risk lender? 2 00:00:04.530 --> 00:00:07.500 Sean Murray: Okay, what is a high risk lender? A high risk 3 00:00:07.500 --> 00:00:13.230 lender is a lender that underwrites and focuses on high 4 00:00:13.230 --> 00:00:16.590 risk applicants. But maybe that doesn't answer your question, 5 00:00:16.620 --> 00:00:20.640 right? It really should be I think, at the end of the day, 6 00:00:20.640 --> 00:00:25.320 what is high risk? And if we're talking about non bank finance, 7 00:00:25.710 --> 00:00:29.940 non bank lenders, non bank funders, they can help 8 00:00:29.940 --> 00:00:32.700 businesses all across the spectrum, they can help ones 9 00:00:32.700 --> 00:00:36.150 with very good credit, very weak credit, high revenue, low 10 00:00:36.150 --> 00:00:39.570 revenue, a long time in business, low time in business. 11 00:00:40.770 --> 00:00:44.940 But there is, you know, there is a category for those for 12 00:00:44.940 --> 00:00:47.370 businesses that are essentially impaired in some way, you know, 13 00:00:47.370 --> 00:00:53.040 they have unsteady cash flow, history of NSS, the owners have 14 00:00:53.070 --> 00:00:57.120 poor credit, maybe they have a past or a recent bankruptcy, 15 00:00:57.510 --> 00:01:00.780 maybe they're having issues with their rent, maybe their sales 16 00:01:00.780 --> 00:01:04.740 are going down. And that enters the you know the realm of high 17 00:01:04.740 --> 00:01:08.460 risk. But when I think people say, what is a high risk lender? 18 00:01:08.670 --> 00:01:13.020 I think they're often asking about the highest risk possible, 19 00:01:13.080 --> 00:01:16.110 basically, like, everything is going wrong type type of thing. 20 00:01:16.110 --> 00:01:19.500 That's just been my experience when people say, you know, Sean, 21 00:01:19.530 --> 00:01:22.020 what do you know, do you know a high risk lender, I have this 22 00:01:22.020 --> 00:01:25.230 deal, they're typically talking about, you know, the, the most 23 00:01:25.230 --> 00:01:28.860 difficult of difficult situations. And so a high risk 24 00:01:28.860 --> 00:01:34.110 lender in that context is someone who can offer capital or 25 00:01:34.110 --> 00:01:38.610 financing or funding to businesses or applicants in that 26 00:01:38.610 --> 00:01:42.900 type of circumstance. And, you know, the one thing that could 27 00:01:42.900 --> 00:01:46.050 be universally true is that the cost is probably going to be 28 00:01:46.050 --> 00:01:48.900 quite high versus a low risk lender. 29 00:01:48.930 --> 00:01:52.470 Johny Fernandez: So let's, to back up. So high risk, like if 30 00:01:52.470 --> 00:01:55.740 you're a high risk client, or individual, and you're trying to 31 00:01:55.740 --> 00:01:59.040 work with a company, what, what would what would make you fall 32 00:01:59.040 --> 00:02:04.530 into that category of being a high risk person, company, etc? 33 00:02:04.620 --> 00:02:07.348 Sean Murray: Yeah. So you know, it's, it depends on the lender 34 00:02:07.404 --> 00:02:10.466 or their funder who is underwriting the deal. They have 35 00:02:10.522 --> 00:02:13.640 their own risk categories. So you know, the answer is it 36 00:02:13.696 --> 00:02:16.926 depends, right. But there are certain factors that kind of 37 00:02:16.981 --> 00:02:20.211 play a role throughout and across the industry. The credit 38 00:02:20.267 --> 00:02:23.775 score of the owners is usually a factor. Yeah. It's going to be 39 00:02:23.831 --> 00:02:27.116 things like whether or not there's like liens and judgments 40 00:02:27.172 --> 00:02:30.791 that could play a factor time in business is a factor. If you are 41 00:02:30.847 --> 00:02:33.742 a, if you are a brand new business, you've been open 42 00:02:33.798 --> 00:02:37.195 three, you know, three to six months, and you're applying for 43 00:02:37.250 --> 00:02:40.814 capital, you may have all these other great attributes about you 44 00:02:40.870 --> 00:02:44.322 that make you look so good. But at the same time, three to six 45 00:02:44.378 --> 00:02:47.608 months, it's hard to gauge what the future success of your 46 00:02:47.663 --> 00:02:51.060 business is gonna be, even if you started off pretty well. So 47 00:02:51.116 --> 00:02:54.290 that can be considered high risk. So it's really not just 48 00:02:54.346 --> 00:02:57.742 about it's really not just about credit, it could it could be 49 00:02:57.798 --> 00:03:01.250 about a business thats seasonal, that only does, you know very 50 00:03:01.306 --> 00:03:04.926 well in say three or four months of the year. And you now have to 51 00:03:04.981 --> 00:03:08.322 worry about whether or not the seasons are going to going to 52 00:03:08.378 --> 00:03:11.441 remain consistent. Is there going to be snow at the ski 53 00:03:11.496 --> 00:03:14.949 resort? You know what I mean. Yeah. Or or is there going to be 54 00:03:15.004 --> 00:03:18.234 a hurricane at the beach resort, Right? Yeah. That type of 55 00:03:18.290 --> 00:03:21.519 business could be high risk. It's all gonna depend on upon 56 00:03:21.575 --> 00:03:24.861 the appetite the lender or the funder has for the deal that 57 00:03:24.916 --> 00:03:28.257 determines what risk category it falls in. But those are the 58 00:03:28.313 --> 00:03:31.431 those are the general the general things that they'll be 59 00:03:31.487 --> 00:03:32.100 looking at.