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Well, I am super excited today

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to be here in South Florida at the Biddy Advance

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Headquarters with Craig.

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Craig. Uh, we, we've been on here before.

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We've chatted before.

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So for those that don't know you go ahead

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and introduce yourself, your title and the company

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and what the company does. Yeah.

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Well, first of all, thank you for having me.

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Uh, my name's Craig Hecker.

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Our company is Biddy Advance,

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and I bought the company in February of 2020.

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And, uh, we provide working capital solutions

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to small businesses all over the country.

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Talk really quick about like the

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specific products you guys offer.

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Different small businesses.

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So we offer a revenue based finance product

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where we're buying their future sales at a discount,

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and we fund as low as $2,000 per merchant in

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as high as 500,000.

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We're funding the whole gamut,

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but what we find is that every, every particular

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business has a different margin threshold, you know, of, of,

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in terms of their profitability.

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So since 2020, let's talk a little bit about like what,

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how you've seen this business evolve, uh,

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whether it's like the MCA space,

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the alternative finance space, uh,

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and especially here in south Florida.

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Yeah, so it's been interesting since Covid, you know,

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COVID has changed a a lot, obviously, as we all,

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as we all know in terms of, you know, remote working

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and the ability for, for, you know, companies to employ

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people to work remotely.

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I've seen an influx of newer companies, uh,

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companies in our space, funders, brokers that have kind

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of flocked to South Florida post Covid just

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because Florida, you know, had more conservative views,

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you know, opening up sooner

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after Covid, it was maybe a more friendly place to,

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to do business, and I think that's sustained since then.

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Uh, so I see, you know, still a, a number of

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merchant cash advance companies,

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revenue based finance companies that are still

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located in, in South Florida.

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So what would you say is the biggest difference?

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I mean, when you're working with a company to,

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to provide your services,

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what would you say is the one thing

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that is evolving constantly?

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So I think the, the one thing

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that's evolving constantly is continuing to get better

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with the, with the technology.

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Um, and, and creating a better user experience

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for both our merchants and our sales partners.

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So, you know, we've worked really hard since early 2020,

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you know, constantly refining

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and upgrading our sales partner portal, for example,

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improving service levels, you know, improving

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and adding additional product offerings that meet the needs

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of our partners, you know, constantly changing

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and adapting so that we're, you know, better able

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to service our partners in a, in a streamlined way.

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So how has this industry changed since you bought Biddy

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Advance back in 2020?

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So, I think clearly, you know, the last year, year

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and a half for our merchant client has been trickier.

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Um, you know, the inflationary pressures

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and inflation is, has been real for,

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for our small businesses that we serve.

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Um, you know, we've definitely seen, you know, quite a bit

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of margin suppression across the board, you know,

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which translates into, you know, us having to

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right rightsize the advances that we're making, you know,

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making sure that we're, you know,

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really understanding their revenue

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in the underwriting phase.

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So I think, I think that's one of the biggest things

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that's changed is, you know, our

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merchant customer is dealing with, you know,

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higher expenses, you know, maybe stagnant to lower revenue.

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Um, so it's been a little bit more

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of a challenging environment for, for them.

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So have you guys taken different steps now

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that like when you're gonna offer your product to someone,

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have you changed, uh, like the underwriting process

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or anything of that nature?

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So we're constantly evolving.

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The nice part about our business is these are short duration

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products, okay.

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Where, you know, the, the longest, you know,

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duration we go out is 12 months.

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So we're able to acquire so much data on a,

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on a monthly vintage, on a portfolio so quickly

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that we're able to, you know, using our, our, our data,

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we're able to make changes

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to our credit decisioning algorithms in real time based on

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what the data's telling us.

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So it's, it's, it's constantly evolving and it's,

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and it's a constant rotation of, you know, if we go back to

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2021, it was very heavy, you know, post covid for example,

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it was, it was very heavy transportation

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and now, you know, in even into 2022.

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But then we all saw that transportation struggled as an in,

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as an industry overall.

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So we're able to look at the data

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because we get it, we get it back

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so quickly based on the performance

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of the underlying assets,

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and then we're able to make adjustments

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and pare down, for example,

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how we wanna risk-based price transportation, for example,

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or change guidelines for transportation in general.

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So it's, it's, it's a very dynamic business that, you know,

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the data allows us to rotate, you know,

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rotate industries if you will, you know,

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constantly, you know, over time.

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So for 2024

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and for 2023, what is the data that you've collected?

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What is it showing about your clients?

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So we're showing very healthy,

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a very healthy merchant base.

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Um, you know, we've clearly seen the Declan declination

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rates, you know, escalate.

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Um, meaning our approval rate has,

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has declined, said differently.

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We're, we're clearly more selective with the files

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that we're approving.

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Okay. So we're, you know, constantly evolving and pruning

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and changing, you know, the, the criteria, you know,

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what's the maximum withhold we're willing to, to,

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to give the merchant towards their gross revenue

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or, you know, with our bank aggregation sources, you know,

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we're able to sort the data.

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We're able to, you know, exclude certain revenue

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that maybe in previous months or years we would've included.

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We're able to say, you know what, that's not real revenue.

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We're not gonna give them credit for it.

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So we're able to size the deals better. Okay.

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So that it's, it puts them in a position

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to be more successful in terms

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of the repayment puts us in a position

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to be more successful in terms of hitting our

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hurdles in terms of where we need to collect to.

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So those are the types of adjustments

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that I'm speaking about.

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For someone that's new into this industry that needs money

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that, you know, is trying to maneuver how

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to get into the MCA space,

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what advice would you have for them?

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Kind of keep your belt tight, um, you know,

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be very aware of your expenses.

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You know, it's, it's a lot trickier right now to,

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to navigate in, in, in an inflationary environment when,

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you know, your, you SSG A is going up, your cost

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of goods is going up, you know,

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you're spending more money on payroll.

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So I think, I think it's, it's a time for merchants

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to be prudent in terms of how they're,

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how they're running their business, right?

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It's not, it's not a, a free for all

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where they can just kind of run wild.

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They, they have to be super disciplined in terms of,

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you know, how they're managing their operation so

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that they can still yield the profitability that they're,

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that they're looking to achieve.

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And for those small businesses

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that are running into trouble

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and that, you know, are not organized,

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and they're, they're in a, in a weird situation, uh,

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what would you tell those guys?

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I, I would tell them that, you know, you just have to kind

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of rightsize the business to, you know, what you're,

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what you're able to handle, you know, based on staffing.

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You know, everything's, everything's constantly evolving

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and becoming a little bit trickier.

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You know, certain industries maybe are having

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a more difficult time hiring, for example.

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Or maybe they're hiring people that just don't have,

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don't have the experience that, you know, folks

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that they used to hire back a few years ago.

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So I think it's a, it's a time for the small business owner

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to probably have to work harder, put more of their own time,

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energy, and effort into their business.

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They're obviously a big part of their small business, so,

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you know, they can, they can clearly help compress a lot

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of their costs by working harder

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or, you know, logging more hours.

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And maybe they don't need

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as many staff members if they're willing

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to contribute a little bit more than they, you know,

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might have contributed in previous years

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Overall for 2024.

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I mean, with the companies that you work with,

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what, what are your predictions?

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So I think it's, you know, it's a, it's a time

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to stay conservative.

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Um, right now, I, I feel that, you know,

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I don't have a crystal ball.

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I don't, I don't think anyone has a crystal ball.

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You know, are we going to go into a, a,

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you know, a recession?

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Are we going to soft land?

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Are we gonna have some, some bumpy landing?

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I, I think it's gonna be,

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you know, it's gonna be one of those.

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So I think this is a time in our space, in, in my opinion,

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to, you know, really stick to your knitting

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and, you know, stick to the products

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and the product offerings that you have data on,

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and that the data can guide you and be your compass and,

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and, you know, navigate you through this period

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of time in terms of providing working capital

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to these small businesses, you need

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to really rely on historical data to, you know,

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to help you predict the future.

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I think it's a time to be conservative

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and kind of stay flat in terms of your, your volume,

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you know, get incrementally better every day in terms of,

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you know, the things you can control as a,

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as a, as a funding company.

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The, the service levels, the user experience

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that you're providing to the merchants

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and, you know, to, to the sales partners that are, are,

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are sourcing the deals, um, you know,

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collection activities, right?

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Customer service, the customer service aspect of that.

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You know, making sure that you're taking a,

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a very friendly approach with the customers.

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You know, you're sensitive to their, you know, circumstances

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that they're dealing with, and the, you know, the ebbs

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and flows and the bumps in the road so

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that you can keep them on track, keep them paying, you know,

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get to the ultimate goal for them

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and for us, which is, you know, to complete the advance

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and, you know, to move on with their business

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and continue to have success.

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So for someone that's looking

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or that's interested in working with you for 2024,

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what's the best piece of advice? My

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Best piece of advice would be to take

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what you need, right?

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Don't, don't take more capital than,

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than you have a use for.

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So I think that use of proceeds is, is very big.

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You know, if I'm running a small business, I'm going

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to be super sensitive right now in 2024 to

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how much capital I actually need in order to

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function my business, right?

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I don't think it's healthy to take more.

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Just because somebody's willing to give it

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to you doesn't mean that you should necessarily take it,

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because that requires you to, to pay it back

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and you know, it, it, it eats into your margins

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as you're, as you're paying it back.

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So I would say, you know, kind of right-size your operation

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and, you know, of course take working capital

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when you need it to expand your business, kind

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of keep your head above water, make payroll,

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all the different uses of capital

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that you're gonna have as a small business.

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But, but don't take more than, than what you need.

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Be be thoughtful

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and mindful about, about, you know, kind of

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how much capital you're, you're taking for your business.

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And then for the other person,

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you said, 'cause you said merchant,

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So for the, for the sales partners.

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Yeah. So advice that I would give to the sales partners is,

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you know, pick the right funders.

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I, I know it's important to, to all brokers to have

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multiple funders because they need optionality, right?

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Like they're spending a lot of money on lead generation

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sourcing the, the full application,

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you know, from the merchant.

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And they need to make sure that they have enough options.

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A funder, they need to have their B

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and C funders, they need to have kind

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of the higher risk bucket.

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Um, so I understand that, that ISOs need this waterfall of,

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you know, multiple funders.

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But I would advise ISOs

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and sales partners to really hone in on kind

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of the best in breed funders that are consistent,

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that have good platforms, that are reliable, that

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pay them contemporaneously with funding,

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funding the merchant.

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You know, I think reliability is very important,

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and I think building goodwill

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with the funders will help the brokers achieve more

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and achieve more of their goals.

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So for 2024, I mean,

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what is 2024 gonna hold for Biddy Advance?

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So for, for Biddy advance it, you know, we're,

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we're doing much of the same.

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We're, you know, continuing to improve constantly with,

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with technology, we're continuing to constantly improve

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with our scoring models.

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You know, we have, we have so much data, you know, I,

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I've had Biddy Advance since beginning of 2020, so,

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you know, we have so many merchants that we funded,

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you know, in, in four years, that, you know, we're able to

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constantly change our, our credit decisioning model,

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which is a positive, which means, you know, we're,

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we're able to look at the data in real time

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and, you know, choose more good, you know,

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and choose less bad, which to the sales partners

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and to the merchants is, is healthy

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because it means, you know, we should be able to fund more

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of their opportunities because we understand the risk. So

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To wrap it up, what are your predictions for the MCA space

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and for the alternative finance space?

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I, I'm bullish on alternative finance,

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space revenue-based finance space, you know,

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A-K-A-M-C-A space, whatever you wanna call it.

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I'm, I'm very optimistic.

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I think that the disclosure laws are really healthy, um,

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very, very optimistic.

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Um, last year was a big year for us

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with California disclosures, Virginia disclosures,

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Utah disclosures, you know, January we launched, um, Georgia

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and Florida more to come in 2024.

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So I think disclosure laws are great.

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I think disclosure laws require the funders to be,

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you know, super compliant.

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And it's kind of, you know, the first opportunity

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that we've had in, in years since I've been in the business

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since 2008, to really separate yourself, you know, and,

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and separate kind of the, the good actors from, you know,

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the, not the not so good actors or, or,

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or said differently the companies that have the,

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the resources and the, the technology resources

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to implement these disclosure laws quickly and efficiently

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and, and not miss a beat.

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So I think, you know, I'm,

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I'm very optimistic about the state

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of the state of the industry.

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I think we just need to kind of, you know,

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take it one day, one day at a time.

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And, and this is probably not the year to go crazy.

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I think it's a year to just kind, you know, maintain,

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you know, stick to what you're good at, stick

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to your knitting, service your customers and, and, you know,

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and have a successful year.

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Craig, thanks so much. Okay.

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I appreciate you chatting with us and giving us Absolutely.

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Advice and just, uh, how to maneuver this, this industry. So

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Absolutely. Appreciate it.

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Yep. Appreciate you having me.