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When and Why Should I Get More Business Funding?


Ben Goldstein

Being a committed partner to small businesses means providing additional capital when our customers need it. We call it “Customer Engagement,” and it’s a critical part of how Credibly builds long-term relationships with business owners.

But when does borrowing more money make sense for your business, and when should you proceed with caution? In this candid interview, Credibly’s Director of Customer Engagement Oliver Mupas and Business Development Manager Craig Wilson explain the entire process of re-funding, and why timing is everything.

What is the role of Customer Engagement at Credibly?

CRAIG WILSON: The focus of the Engagement department is to continue to build the relationship with our customers and work with them to achieve both their short and long-term goals.

I always tell our customers that we’re here to help you grow, and we’re going to keep an eye out for anything that would hinder that. Hopefully, what we do will allow these small businesses to keep growing and prospering.

How exactly does the Engagement process work? What are the first steps?

OLIVER MUPAS: When a business owner is 49% remitted or paid in on their current funding, we advise them that they’ve become eligible for review for additional funds. At this time, this alert is to advise the customer that should they have a need for additional funding now or in the future, that they are eligible for a review of their account.

We discuss how the previous funding has assisted in their growth and what upcoming capital needs they may have both in the short and long term. We assist our customers with additional capital needs for things such as: inventory, equipment upgrades/replacement, renovations, expansion and acquisitions to name a few. We also assist with the unforeseen obstacles that may occur during a business owner’s life cycle.

The goal is to build long-term relationships and partnerships with our customers, and let them know that we’re by their side at every phase they’re in. We want to see our customers continue to grow and be successful in their marketplace.

CRAIG WILSON: “Partnership” is a really important word for us. We don’t want our clients to feel like we own the money, so we call the shots. We’re working alongside these businesses, and when they need the money, we’re going to help them get it.

Our customers become eligible for re-funding when they’re 49% remitted. Why is that?

OLIVER MUPAS: When a customer renews their advance or loan, they will net the difference between their current remaining amount/balance and the new advance/loan amount. When they are 49% remitted/paid in, the customer should be able to net the minimum amount required to A) be affordable to the customer from a cash flow standpoint, and B) allow them to net enough capital to complete the things they need to accomplish.

CRAIG WILSON: There has to be a net tangible benefit. When I was on the sales team, the way I used to explain it to business owners was, “Let’s look at the cost of the money, and let’s look at what you’re using it for. If the return will be greater than the cost of the capital, it’s a win. It’s a win for us, and it’s a win for you because you can’t get money at this size and speed anywhere else.”

How often do you give customers better rates during engagement, compared to their original funding?

OLIVER MUPAS: In general, every time a customer comes back, they are at a better term than they were previously, assuming there hasn’t been any deterioration of their credit profile or cash flow. Now, that comes in various forms. A better offer could be a higher funding amount. It could be a longer term or turn on the loan or advance. It could also be a lower factor amount.

As our clients are growing their businesses and qualifying for new products, they are sometimes netting triple benefit: A higher funding amount, a lower factor amount, and a longer term/turn. So at least one of those things are typically met during engagement, many times two, and in some cases all three are met.

Is it wise to borrow more money when you’re only 49% repaid, or does it make more sense to wait until the funding is closer to paid off?

OLIVER MUPAS: Being 49% remitted/paid in only means that you’re eligible for review, not that you are required to take additional funding at that time. I always tell our customers, “It’s always best to get to as close to zero or fully remitted as possible. I’m just letting you know, that should anything pop up and you need additional funds, we’re here for you.”

At the time you’re 49% remitted/paid in, or any time after that point, should the need for additional funds arise, we are here to assist. Whether it’s at 49%, 100% or anywhere in between that you are paid in, as long as your overall benefits outweigh the cost of the capital, it makes sense to proceed.

Like what? What are some situations where it would make sense for a customer to borrow more money as soon as they become eligible?

CRAIG WILSON: As long as you’re continuing to grow your business, it makes sense. Anything that you’re doing to use the capital to increase revenues is a good thing. If you have a restaurant or bar, you can often get discounts if you buy your liquor in bulk. Clothing retailers can fill their shelves by purchasing in bulk from their suppliers.

Right now, we’re in the winter season coming into spring, and a restaurant owner might be thinking about upgrading to a patio that will drive summer and spring revenues. Or, as Oliver mentioned before, there’s a hiccup in the business, for whatever reason — a bill that needs to be paid, an unexpected equipment failure or transportation vehicle breakdown — if taking out more funds will help your business, do it.

However, if the money is just a band-aid, it’s not a good idea to take the funds because it’s really just delaying the inevitable crash of your cash flow. If you come in and you have rent issues, that’s okay, we’ll pay you current. But if that continues to be a theme, there’s another underlying issue that needs to be addressed.

Have either of you ever had to talk customers out of re-funding?

OLIVER MUPAS: I don’t think it’s a matter of talking them out of it. More of those conversations are around the lines of paying down the advance or loan a little bit further so they can net what they need. You can take the money now, but if you don’t absolutely need it, you might as well wait, because you’re going to net more for the same cost as the remaining amount/balance comes down.

CRAIG WILSON: It’s important to mention the diligence we do on the engagement side. If a funding is approved by our underwriting team, the merchant has to make the best decision based on the offers provided that will work within their needs. Our customers know their business best as they run it each day, we are here to partner with them to assist in their growth along the way. I will try and give them my best advice from doing this for four years — what I’ve seen work, what I was saying before about the return needing to be being higher than the cost — but if they’re approved, they’ve got to ultimately make their own decision.

What happens if a business owner is not approved for more funding?

OLIVER MUPAS: If we’re unable to approve an engagement, we’ll have a conversation with the merchant as to why that is. Even when a merchant is declined, we’re still consulting them. We give them the information they need so that they can come back to help grow their business when their situation has improved.

Finally, what’s the most important piece of advice you can give business owners when they’re thinking about taking more funding?

OLIVER MUPAS: You have to ask yourself, “If I take this money, how is it going to help grow my business?” It has to be for growth, and it can’t be to cover up other issues.