#311 – Let’s Talk About Money: FinTech, Cashflow, & Funding Your Amazon Business
In episode 311 of the AM/PM Podcast, Kevin and Alexandra discuss:
- 01:30 – Who Is Alexandra And How Did She Get Started In The E-comm Space?
- 03:30 – How Much Money Do I Need To Start My Amazon Business?
- 04:40 – Cashflow Kills Most Businesses
- 09:20 – Over 75,000 Registrants And The Features Of SellersFunding
- 13:30 – How They Helped Kevin On One Of His Business
- 17:00 – Why Should You Consider Helium 10 Alta And SellersFunding’s Services?
- 20:00 – Loans Versus Equities
- 26:00 – Working With Big Aggregators On The Space
- 27:30 – Requirements To Start Getting Loans
- 43:00 – The Top Cashflow And Funding Strategies Sellers Should Do
- 31:00 – What About Default Rates?
- 35:00 – A Hypothetical Example From Kevin
- 40:30 – How To Get Better Rates And Offers From Helium 10 Alta
- 41:00 – SellersFunding Is A Partner Of Helium 10 Through The Alta Tool
- 41:50 – How To Get In Touch With Alexandra Ramirez
- 42:30 – The Golden Nugget Tip Of The Week
Transcript
Kevin King:
Welcome to episode 311 of the AM/PM Podcast. I just have one quick question for you. Do you like money? Do you need money right now for your e-com business, maybe to buy some inventory to get ready for the fourth quarter or for some other promotion, or to expand into other marketplaces? Well, today’s episode with Alexandra Ramirez from SellersFunding is gonna be all about money. You’re gonna learn a lot of stuff that you need to know when it comes to financing your business. Enjoy. Alexandra Ramirez. How are you doing it? It’s so great to have you here on the AM/PM Podcast. Welcome.
Alexandra:
Thank you. Thank you. It’s great to be here and very happy to speak to you again. We were just together at BDSS, so good to see your face again.
Kevin King:
It seems weird to be talking to you this way. I’m talking to you on a podcast. Usually, we’re like hanging out in at a bar or hanging out at a party or something like that.
Alexandra:
Somewhere in the world, right?
Kevin King:
Somewhere in the world at some event. Because in case those of you don’t know, she works for SellersFunding, which is one of the biggest financial–, how would you describe one of the biggest financial–
Alexandra:
Financial technology I would say we’re a FinTech.
Kevin King:
One of the biggest FinTech companies in the space that specializes in helping e-commerce sellers of all kinds, but even more niche down into the Amazon stuff. So what is your exact role? What is your title there? What is your role?
Alexandra:
So I actually am transitioning as of this week from Director of Sales to Director of Business Development. So I’m gonna be working more with our partnerships team partnerships within the industry, and other service providers, and then our sales team will be handling our sellers and actually getting them funded as quickly as we can.
Kevin King:
So how did you, do you have a background in finance, or how did you end up in this position, in this job? Or were you doing e-commerce before you or did you just answer an ad on LinkedIn? Or how did you get into SellersFunding?
Alexandra:
So, I was actually at a FinTech company for about six years. It wasn’t in the funding space, it was in the lease-to-own space. So still similar in the people that we were serving but very different offerings. So I loved every minute of it there. It really jump-started my career in the financial world. The pandemic hit and one of our biggest clients was Sears. So we were already having some trouble with the biggest client that we had. Them doing their bankruptcy and everything, and unfortunately was part of a very large layoff right at the beginning of the pandemic SellersFunding interviewed me probably four weeks after I got laid off, and six weeks later I had a job with them. So it was a really quick start to the e-com world. I was already starting to work with some e-commerce companies in my last company. We were trying to move out of the brick-and-mortar side and move into e-commerce. So kind of dipped my toes, but didn’t really work as much with e-commerce until I got to SellersFunding. And it’s been two years of an incredible learning experience.
Kevin King:
Now, I know this is a big problem. A lot of sellers, come to me and they’re like, “How much money do I need to start my business?” And I say, “Oh, it just depends.” “Well, I got $3,000 gonna start.” “Yeah, you could start with 3000, but you’re not gonna be able to do much.” You’re gonna have to niche down and if you just need to make a little extra beer money for the weekend $3,000 might make you that business.” And then there are other people like, “Well, I got 20 grand,” or “I got 50 grand,” or “I got 100 grand.” I’m like, “You have a better chance at actually getting a good head start in building a brand.” And then you have people that always say, “Who here started with a thousand dollars and someone in the room that’s doing like 10 million bucks right now on Amazon raises their hand.” Yeah. I’m like, “Okay, you might have started with a thousand dollars on your credit card, but I’m telling you two weeks or a month later, your uncle was giving you some money or you’re doing something else.” I call BS on that growing from a thousand to 10,000, never taken a dime.
Alexandra:
It’s not scalable, you know it depends–
Kevin King:
It doesn’t happen. There’s more to the story and it sounds good that someone started with a thousand bucks and grew it to a $10 million business, but there’s no way there. I’m not gonna say it’s never gonna happen. Someone may have just gotten lucky in their supplier and said, “I’ll back you on everything and you don’t have to pay a dime,” or something crazy like that. But it’s extremely where you gotta go out and you get money and cash flow kills most business. Not just Amazon or e-commerce businesses. What’s the death of most businesses, especially when it comes to e-com? I mean, if you’re successful in this, you’re robbing Peter to pay Paul. I mean, there are a lot of people there doing $10 million on Amazon. They don’t have two nickels to rub together because they’re constantly, they make their money when they sell the business or if they ever get a chance to come up for air.
Kevin King:
And so you’re always looking for money. And before there was a SellersFunding, there was a company, I think it was Emilio or something like that. There was a fellow that started it. He’s a good guy. He started this company and it was a strange name back in like 2016. And he was a seller and he saw this problem and he is like, I’m gonna start this little company. And he got some venture capital, like a few million bucks behind him, to set up this website. People would go to apply on this website. They were Amazon sellers. They would tie into the Amazon account, and do some little checking, but it wasn’t as thorough as it should be. And they would go up to like 50 grand or a hundred grand. I think he ended up doing about 30 loans or so.
Kevin King:
And I think half of ’em defaulted. And cuz they didn’t do their homework upfront. And it ended up closing that thing down. But that was one of the first, before that, I remember in 2015, I was having to like Rob Peter to pay Paul. I was like maxing out credit cards. I was going to my friends saying, Hey would you let me use your credit card and I’ll pay you a little fee? I was using people like OnDeck and Blue Vine and all these other places, anybody that would gimme money. I was stacking loans because I was, my products were selling, Well, I started with a couple of hundred grand to start this business, five brands. So I wasn’t starting cheap. And I had a business partner that was putting in some money and I put in a bunch of mines, but we still, were growing so quick that we needed money.
Kevin King:
And the banks just laughed at you. Amazon, I don’t get this. And then I ended up having to go down a route where I got–, I call ’em mafia loans. They’re almost like payday advanced loans. They’re called Merchant Cash Advance or MCA. And there’s a whole group of people mostly in New York, they’re few of them in Florida, because of the laws of Florida, New York is friendly to these guys that will come out and they couch it as a loan, but it’s not alone. It’s technically not alone. They will give you the money in 24 hours. So I needed, at one point, I think I may have told this story to you, you might have heard it before, but I was selling Apple charging docks and this was Christmas, 2015. And I developed this apple charging dock from scratch.
Kevin King:
Like I custom made this thing, I had the molds made, its like $30,000 of molds. It was a really cool product. I was selling it for $89. It would charge like three different devices once hide all the cables. It was nice. It’s called Basecamp. And I was selling like 15, $20,000 worth of these a day. In December, I was like, I’m not gonna run out. And my factor’s like, we can have the guys go around the clock. We can put these on an airplane, and we can get some more of these to you in two weeks, but we need 160 grand. I’m like, “I don’t have 160 grand and I had nowhere to get that, but a cash advance.” So some loan broker told me, “Hey, go to this MCA company. They’ll give you the 120 grand.”
Kevin King:
They’re gonna charge you a ridiculous interest rate. You’re gonna have to pay this back in like six months. We’re gonna take daily withdrawals off your bank account for like $1,500 a day or whatever it is for the next six months, starting tomorrow, the day after you get the money. I had to sign a default letter. I had to go and get a default judgment signed and notarized and FedEx to ’em before they would wire the money so that way they could take it if I defaulted, they’d have to sue me. They just take it to the special court in White Plains, New York that was very friendly to these guys. This has all been outlawed now. And they would just turn that over to them and instantly get a judgment and could freeze your Chase bank account, your Wells, any bank account that was in New York.
Kevin King:
It was extreme. But that was the only choice I had. I had to stack some of these like two or three or four of these on top of each other because I just couldn’t get the money. There was no SellersFunding at that time. Now the beauty is there was Amazon lending back then, but it was hard to get and it was small and they had the data of your business, but they didn’t really look into it that much. Then here comes like 2018, 2019 before you started here comes SellersFunding. And I remember one of their guys came to a little meet-up here in Austin. We had a little marketing group here in Austin that had 10 or 15 people, one Amazon is just general internet marketing type of stuff. We got together and someone came out, I think from New York actually, instead of Florida at that time.
Alexandra:
Yep. Our headquarters used to be in New York, our CEO and all of our executives were actually up there and they’ve all moved down to Florida since.
Kevin King:
Yeah. He came to meet. I’m like, Dude, you’re onto something here. This is desperately needed, someone that understands this business and can help these people out. And so that’s where SellersFunding has come in and I think it’s made a huge difference for a lot of people cuz I think I saw some crazy number of accounts at least have applied or gone through you guys, like it’s in the tens of thousands, right?
Alexandra:
Yeah, I think 75,000 registrants are actually in our system using at least one of our products. So not necessarily taking a loan, but we have multiple products in our dashboard. So they’re either using our wallet to make payments to our suppliers to receive money, or they’re applying for a loan just to see how much they can potentially actually go through with. We have also a data analytics tool. So there’s just a world of financial tools on our dashboard, not just lending. The lending part of it’s a whole world in itself as well because it’s to your point with Amazon lending even nowadays a lot of people say, “Oh well I have Amazon lending at this rate?” And they still don’t go through with it because it’s not the terms that they need.
Alexandra:
It’s not the length of time or it’s not the flexibility. And that’s one of the biggest things with SellersFunding is that we’re able to be very flexible with our sellers by offering either interest-only periods or grace periods or offering percentages upfront for our revenue-advanced product. And we don’t take a percentage of sales over time, it’s just the fee is taken up front and that’s it. So you know exactly how much you’re gonna pay. And that one allows you to have a great period. We go to 24 months rather than the 12-month option and you can pay off at any time. So those are just a few of the ways that we can be very flexible with our sellers. That’s one of the biggest things that when we ask people to like, “Why did you go with us versus a competitor versus the Amazon loan that you do have available to you?” These are the main reasons they say are flexibility, ease, and quickness. Because they could get the money pretty much immediately when they needed it to be able to pay 160, for example, to a supplier to make sure they have everything they need for say, Black Friday or for another Prime Day.
Kevin King:
What she said there, don’t just dismiss that you could pay off at any time. That’s important, you’re like, Yeah, of course, I can pay off at any time. But no, you gotta understand, most people that are doing lending in this, this environment, they stack the interest at the front. So, if you go to Blue Vine and you get $20,000 from Blue Vine and you gotta pay that over six months, the first month’s payment if you divide that out, let’s call it just doing rough math, $3,500 a month, that first month’s payment, 2,500 of that’s interest and a thousand dollars is towards the note just by example. That may not be the exact figures, but, and then the next month it’s like, like the same thing. And then in month three, it flips and so you are actually, you could pay it off early, but you’re really still paying a tremendous rate of interest versus SellersFunding doesn’t do that. SellersFunding you could pay it off early and it actually, it’s like paying off your house or something early, it actually saves you. That’s correct. Right?
Alexandra:
Yep. As long as you pay it off after 90 days. So our regular working capital or credit limit that has an actual APR, as long as you pay it off after the first 90 days, you actually save on fees because whatever is accrued up to that particular day is what you’ll pay. So we’re not gonna charge you interest of 12 months if you’re paying it off at month five, for example. And there’s no prepayment penalty for paying it off as long as it’s after the 90-day mark. So that’s something that also most of our competitors do not offer. And another way that helps is it grows your relationship with us too. So let’s say you paid off at 12 months instead of 24 and were making payments all on time and things like that. We can, you know, continue growing your line. You don’t have to pay early for that to occur of course. But you know that we can continue to grow your line even before you pay it off.
Kevin King:
And one of the things that I like too is I’ve personally used SellersFunding you’ve helped me out on one of my accounts and we had a company in 2020 during the pandemic that we started and we came, we needed, we put in a lot, well into the millions of dollars our, our own. But we came into a time where like the investors were like I’m tapped out right now. Let’s get it from somewhere else. And so we came to SellersFunding and you guys were very generous in what you gave us. We asked for a certain amount and you’re like, No, I think you might need a little bit more. We gave you this. And then that business, we had all kinds of problems with Amazon. It was cranking, like just doing crazy numbers and then just all kinds of problems with algorithms and stuff.
Kevin King:
And so we ended up coming back to you and saying, Hey, you know, this original deal, I forget what we had a six month maybe or eight month or something. We need to rework this because this paying this much every two weeks or whatever it was, is too much for us. And so you’re like, no problem. And y’all just shifted it and worked with us. A Bank or somebody else, most people wouldn’t have done that. This is the deal. Stick by the deal. If you default we’re coming after you guys were like, No, we’ll work with you. And then we had to come back to you one more time when we actually close that company down. There is in most cases there’s a personal guarantee that usually, you know, small businesses or even in corporations, usually at this level there’s oftentimes a personal guarantee by someone. And so when we closed this business down, I was a personal guarantee cuz my partners were not in the US, and so you guys worked with me again like, hey, I need to make some changes here and the way this is done cuz I’m gonna be paying this myself at a and you’re like, no problem. And you worked with me and that’s unheard of a lot in the FinTech business and you worked with, you’re dealing with humans here and not with just some algorithm or machine like you might be with Amazon.
Alexandra:
And one of the really important things to mention, very similar to your experience is that in that case, I was your account manager and we have an entire team of account managers and sales staff that are just unbelievable. They each have a dedicated WhatsApp for their clients. So our clients actually reach out to them via phone, email, or WhatsApp at all times. They can let them know we’re having issues with a shipment or my Amazon store just got shut down, it should be reinstated within 48 hours or something of that nature. So we are consistently communicating with our clients and they can let us know if there’s gonna be an issue or an error so we can communicate with our team and see what we can do at that point within reason, of course. But just that communication is the huge part because you can let a person know rather than a call center going through multiple people until you get to the right person.
Alexandra:
You just reach out to your person and say, this is what’s going on, what can we do? Or this is what’s going on, I need more money. It can be any reason that you wanna reach out to your account manager. So it’s that personalized touch that if you even go on our trust pilot reviews, the number of reviews that mention an actual account manager and our reviews are actually not sent by our sales team. That’s something that our operations team sends when they’re sending you the money and just ask how was your experience. We genuinely wanna know how was your experience with us so we can improve. And when you look through those reviews, you see just name after name after name. Like my account manager was there every step of the way they handheld me and that is the pride portion of it that they’re, they’re not dealing with thousands of phone numbers and back and forth. It’s just that personalized such is unbelievable.
Kevin King:
So a lot of people actually come to me and they say, Yeah, “I’ve heard his SellersFunding” and I say, “Oh, have you reached out to him?” You’re trying to get some money for your inventory? And like, “no, their rates are too high.” “I’m just gonna try to get an SBA loan.” Or “I’m gonna try to find my rich uncle, see if I can find his phone number and see what he’s got” or something like that. And so what, what are some misconceptions that people might have when it comes to like SellersFunding? Is it loan shark loaning or is it just crazy interest rates? Why should someone actually take the time to look into you guys?
Alexandra:
So one of the first things that, that, it takes five minutes to apply and there is zero commitment whatsoever. So when you go through our dashboard, it just asks for very basic information. It’s your personal information, your business information, and then connectivity to whatever marketplace. Because we have API, direct API connection with Amazon, Shopify, eBay, and pretty much all the major marketplaces. So it takes five minutes and it can take us between one to three days to send you an offer. If it’s something around–, we’re thinking let’s say a hundred thousand dollars or less, we can send you that pretty much within hours of you applying. And it’s just there for you to see, for you to observe, for you to play with on the dashboard. And when I say play with is because you have all the power on the flexibility, we have sliders on there that allow you to choose the length of time you’d like to use it for.
Alexandra:
If you’d like an interest-only period. And you get to see how your schedule will change and what the payments are gonna look like. So whenever you apply five minutes non-committal, that’s all it takes. If you’re looking for a larger amount, you actually get to be on a call not only with a salesperson, but you get to be on a call with a salesperson and a credit and underwriting team. So you get to sit there with your actual financials and walk the underwriting team through your financials and why you would think you need, let’s say a million dollars and this is what I would like to utilize it in, and as you can see in the financials, and you can go through it and it usually results in a much better rate and a much higher amount because they get to see also the side of the business behind the numbers because the numbers don’t always tell the full story.
Alexandra:
So that’s part of again, the very highly customizable and flexible things that we can offer. It’s not a machine spitting out a cookie-cutter offer. We have actual underwriters looking at every aspect of your business at your cash flow. We don’t wanna put anybody in a chokehold with our offer. We wanna be able to grow with them. So we wanna be able to extend an amount that we know will help them grow and that we can grow with them so that we can a few months down the line give them a higher amount so they can continue reinvesting. It’s not a loan shark to try to just give them as much money as we can, get what we can, and then hope for the best. Right. That, that’s really not our model and it’s not what we’re achieving to be.
Alexandra:
So that’s really what the main thing that I always say. And another thing is, sometimes people do have SBA loans that are 30 years at a very, very low percentage, but they still need more. They need a shorter term and they need something that’s flexible and they need something that’s for now for a PO for inventory or things of that nature we can be in addition to. So just because you have something else doesn’t mean that you can’t work with SellersFunding. So those are just all the things that we’re gonna be looking at and again, you know, we can get on a call and, and make it very, very customizable to your business.
Kevin King:
A lot of people don’t realize just because you have a lot of money doesn’t mean you don’t need to take a loan. I mean, some people always look at the things like why don’t I just give equity and why would I pay all this interest and take, you know, take a million dollar loan and pay, I don’t know, 10% interest to say pay a hundred thousand dollars in interest. Why not just give equity to somebody that’s gonna put in a million bucks and give them? How would you argue that loans oftentimes are actually better than taking on partners or giving away equity?
Alexandra:
So I think there are benefits to both. We obviously work mainly with debt. So we do non-dilutive capital equity has, you know, less risk and profitability can be sometimes better or if you’re not very profitable, then that’s the way to go with equity. However, with debt, you have more control. So you can choose who you wanna work with when you wanna work with them. You don’t have to share profits with anyone, you don’t have to worry about potential percentages to be taken out and it can be tax deductible. So there are definitely benefits to both. But I think depending on where your business is now, if you know you need money, I mean it’s specifically for inventory or growing your business or let’s say advertising in PPC or marketing debt is the way to go because there’s a lot of tax benefits and other benefits as well to it. And most of our competitors actually force you to use it for inventory. And at SellersFunding, we don’t force you to use it for anything in particular. It can be for anything that has to do with the growth of the business.
Kevin King:
So when I get a loan from you, you’re not actually paying it to the supplier. I mean you can if we use that aspect of your business, but you’re just like, once you’re approved here for a hundred grand, let’s say I get approved, it’s the next day or two days later, whatever, it’s wider ACH into my account. And then if I choose to use that to go buy a Lamborghini, so be it, I’m still on the hook. But other places they like, no, okay, we’ll give you the money, but we’re gonna pay your factory directly and give us all their contact. But y’all don’t do that, right? Correct?
Alexandra:
We do have programs that are for wholesalers or for somebody that’s on Vendor Central on Amazon that is invoice factoring so that you can get paid quicker. And we’ve just recently started–, we’ve done a few clients where we’ve done PO financing. However, our main thing is really just credit limits where we will send you into your business bank account the amount that we’ve offered you that you’ve accepted, and then you go ahead and use what you need. So you use it for your PPC, your marketing, maybe a new product that you’re gonna launch under the same entity that we’ve underwritten. So it doesn’t even have to be for the product that you already have on there, it can be for the launch of a new product. So really the sky’s the limit whenever you actually take a loan for us.
Kevin King:
Let’s say I have a dog treat and I’m doing really well on Amazon and Walmart selling this dog treat and I’ve got chewy.com that just came to me and said, “Hey, we would like to buy a bunch of your dog treats but we need 90-day terms.” And my factory says I gotta pay 50% upfront and 50% on a shipment or something like that. I can’t afford to cash flow this 90-day term. I’ve already got a couple of other loans out, maybe some other places. Could I come to you? And because Chewy’s a big company that’s owned by Pet Smarts or whatever it is, could I come to you and factor that and so factor that whole PO and so just get a specific loan just for that because, and basically for people that don’t know what factoring is maybe we can explain that as well, but is that a possibility with SellersFunding?
Alexandra:
Yeah, so right now we only do that for US-based businesses selling in USD. So that’s something that we’re hoping to be able to expand. But we have been able to do that for a few sellers and it’s working magnificently because a lot of these 90-day, hundred, and 20-day terms, sometimes it’s just not feasible for the seller. So we can basically front that money and then collect it over time. So it’s something that really is been very helpful and eye-opening for our sellers to say we can even get a loan and invoice factoring. And in addition to that, in one of our most recent case studies, we had somebody that had to get a payment out to Sam’s Club and they just did not have the amount of money, they wouldn’t have lost the deal with Sam’s. And we were able to help them get that deal. And their item is actually in Sam’s Clubs right now for over the summer. So it was very, very cool to see it, you know, actually happen in real person when you see the product in the picture on Sam’s Club shelves.
Kevin King:
So you’re factoring it’s a little different than a common invoice factoring. If I have a PO from Chewy that’s payable in 90 days, I basically assign those rights over to the factoring company and then they collect from Chewy. But in your case, it doesn’t work that way. It, it’s, you would just loan the value of that PO for that and I would be paying that back over those 90 days, or I would have to pay a small amount during the 90 days or I could wait til I get paid from them to pay you plus your fee or how, how would that work?
Alexandra:
So there are a few different ways that we can approach it. Again, it goes into like our flexibility. We would wanna make sure that we have all the information for the person that’s gonna be factoring and your business as well. So we need to ensure that everything is on the same page. We would have those invoices to know how much we had to pay out, and then we would structure them with different terms. So it’s gonna depend also, if you have a loan with us and you do invoice factoring, that’s something that we can even work in tandem and we can make an even better offer. So all the terms of invoice factoring are highly customizable because each type of business is very different and depends on what type of factory they’re working with. But that’s one of the things that we would actually again get on the phone with our underwriters and they would explain how if we were to do two items versus, or two of our products versus one of our products, how we could structure each one.
Kevin King:
And so a lot of people probably don’t realize some of the biggest aggregators in this space have actually used SellersFunding to finance themselves and some of their inventory. Is that correct?
Alexandra:
Yeah, we have worked with some aggregators, some big-name aggregators in the space that we’ve been able to fund them for the purchase of other businesses. So that’s something that we’re very proud to work with, you know, every type of service provider and seller in this space that we can.
Kevin King:
What is the range of loans? What’s the range like? Is it from a thousand dollars to a million or it’s wide open, just depends on your financials, or what’s the general range?
Alexandra:
So I would say our starting range is about $25,000 or pounds because we can lend in pounds as well. And we go all the way up to $5 million. We’ve had a couple of exceptions here and there where we can go a little bit higher, but our current range is between 25,000 and 5 million pounds or dollars. And it’s not limited to only US businesses. So we can work with US-based businesses, Canadian-based businesses, and UK businesses. So those are the three countries that right now it doesn’t matter where you live in the world as long as your business is in one of those three countries.
Kevin King:
So I can be a German that has a business that is incorporated as LLC in Wyoming and get a SellersFunding loan, but I’m living in Germany.
Alexandra:
Absolutely. One of the most important things to note is that we don’t do loans for just starting out businesses. We do have to have at least six months of business history on any marketplace. So whether it’s Amazon, Shopify, or eBay, we do require six months for lending.
Kevin King:
That six months of selling history. So it’s not six months when I signed up the turned on the account, it’s six months of like regular sales. So, So from the first day you launched your product and it started making, even if it’s $10 a day or whatever and built up, it’s from that point forward six months. Correct?
Alexandra:
Yeah, we do require those six months of sales and then for the most recent three months, you have to be selling at least $20,000 in net sales for us to just at least–
Kevin King:
Net Or gross?
Alexandra:
Net sales.
Kevin King:
So after Amazon net. What is defined as net after Amazon fees? What’s being deposited to your account by Amazon?
Alexandra:
The actual amount transferred? Correct.
Kevin King:
Okay. So the actual deposits need to be at least $20,000 per month.
Alexandra:
Now, this is for the loan only. We also have cash flow solutions, so the daily advance that allows us to advance you every single day based on sales from yesterday. So we offer that for Amazon and Walmart exclusively. And basically Amazon, we all know, holds funds for multiple reasons and sometimes just unexplainable reasons. So if you’re, let’s say, expanding into another currency, you know, you’re doing really well in the US wanna expand into the UK and the UK sales still aren’t kind of like, you know, picking up and you need extra cash flow, the daily advance can be a phenomenal solution. We only require three months of sales history there of about $5,000 in net sales. And we can automatically start that for you and basically advance you between 70-90% of yesterday’s sales. So every single day you’ll know that you’re gonna have money deposited into what we call our digital wallet. So it’s like a digital way to receive different types of currencies for free.
Kevin King:
So at what point do I have to start pricking myself in blood and sticking it on the paper and sign over my born child and everything? What amount does that start kicking in?
Alexandra:
So to actually move forward with as you mean, or just like when–
Kevin King:
When you have a hundred thousand dollars at $500,000, when does it start getting a little bit more complicated?
Alexandra:
So I would say anything under a hundred thousand dollars is extremely quick because we have everything we need in the system without any additional documentation other than proof of address and proof of id. Very basic information about the business. Anything over $500,000 and above, just because of the nature of the amount we do require a little more information, but it’s still not complicated. So it still can take just a few days for an offer as long as you have everything in place. And when I say everything in place having financials is extremely important and not just for SellersFunding, but as an entrepreneur, everybody should have their financials and if it’s not you handling them, outsource it, that’s okay. We know that not all entrepreneurs can be phenomenal at every part of the business. So we have a lot of people that outsource it and as long as you can submit financials for the previous year and for whatever you have up to this year that’s all we’re gonna need. So we have almost everyone that we work with typically has their financials completed and ready. We do on occasion come across some sellers that don’t have it until right when they need to submit it. But that’s one of the most essential things and we can get an offer within a few days.
Kevin King:
Is there a high default rate in this or is your algorithm so good that it just weeds out? But you’re always gonna have somebody that just gets their pants in a wad, man’s not their fault, you know, it’s supply chain issue or Amazon issue, or they just, they had shown some good numbers, but they’re really not that good at the numbers or bit off more than they can choose. So is default rates pretty low or do you just work with people to avoid that? Or have you had to go out and sue anybody to try to get their inventory or anything like that?
Alexandra:
Yeah, we actually have a default rate. I wanna say it’s about two and a half percent or less. I think it’s a mix of everything. We have an unbelievable proprietary algorithm, which is still fact check basically with our underwriters because again, we don’t just let that send a proposal. We have a lot of extra hands in it because sometimes you’re also selling on something that we don’t have an API connection with and we’re looking at financials at your business bank statements and things of that nature. It’s also a mix of that, the personal touch that we get to understand and even meet the sellers in some of these businesses and sit down and say, “Oh wait, explain to me what exactly you’re looking for.” “How much let me see how I can help you.” But we also don’t wanna overextend you. So having that conversation and, and understanding that we’re not here to just like throw out money and hope for the best. Sometimes it’s just really all the sellers need cuz they’re like, I need this amount, I need this amount, but they’re just not eligible. Their cash flow will not support it. So we wanna be able to help them as much as we can, but we also don’t wanna, again, put ’em in a chokehold and have them bite more than they can chew.
Kevin King:
I mean, lending depends on the rate, I know it’s so many variables about the length of time and how much, but just as off the cuff if is 10% a fair number just to assume before I contact you, I’m doing some math, I’m like, okay, my product costs me $5 and then with costs it’s $8. I’m selling it for 20, Amazon fees are four bucks. My, ACoS is 10%, so I have about a, I don’t know, a $3 profit margin. I’m just making these up. If I go and I borrow a hundred thousand dollars and I gotta pay, do you know, to buy this inventory that’s gonna add and I gotta pay back let’s say a 10% interest rate that’s gonna cost me another 10 grand and this is I don’t know, these are it’s another dollar a unit. So now my profit’s down to a dollar or $2 a unit. If I’m just running some rough math like that before I actually go through. What should I expect a loan to maybe be in the ballpark of costing me?
Alexandra:
So for our APR product, it starts at about 12% and can go all the way up to 16-17%. I would say our average right now is about 15% to 16% of APR. However, remember that we offer up to six months of interest only. So let’s say you’re gearing up for a quarter four, and you need to make a humongous payment to the inventory. You don’t have that inventory yet. We all know the supply chain and logistics and how long things are taking. So we don’t want you to take a loan and automatically tomorrow is your first payment. We know a lot of competitors that do that, or maybe next week is gonna be your first payment, however, you’re taking this loan to be able to add to your inventory, right? So what we’ve done, and this came up literally from events and talking to sellers, is that if we could basically extend that time when they have to actually start making large sums of payments, it would be extremely beneficial cuz then by then they get the merchandise they’re selling and they have the money to pay it back.
Alexandra:
So we offer between one to six months of interest only period. So you’re only paying that interest and it makes payments unbelievably manageable. They’re very, very small and you don’t have to use them all six months. You get to choose. That’s part of the flexible options. And then again, you can pay off at any time with no prepayment penalty and that’ll also save you some interest. So if you take it for 24 months at six months interest only and you decided at 18 months that you wanted to pay it off, you can go ahead and do so.
Kevin King:
So just so I can walk people through their listening. A hypothetical example, is if I took a hundred thousand dollars loan from SellersFunding to pay for my inventory or whatever I need to pay for, but let’s say it’s for inventory, I did a, I could do a six month only interest payments. My rate may vary, but just, let’s just assume it’s a 15% APR, which means if I kept that loan out for a year, it’s with compounding and stuff, it’s a little bit different, but it’s roughly $15,000 and that’s a flat interest rate, but it would be around that roughly $15,000 in interest for the year. So those first six months I’m gonna be paying basically around 1200 bucks a month in interest.
Kevin King:
Something gives or takes something around that cuz 15,000 divided by 12, cause I took out a 12-month loan is somewhere around 1200 bucks if I’m doing the math in my head, right? So I’m paying for those first six months, I’m paying $1,200 every month or $600 every two weeks or however it’s set up. And so I’m paying six times, so I’m paying 7,200 bucks, and then hopefully in that time I’ve gotten my inventory and it’s only taking three months to get my inventory. Hopefully, maybe there are some delays. But then, and hopefully, I’ve sold through it. If I do my math right, I’ve sold through it by the end of the six months. So then I just decide, you know, after I make that last interest-only payment, you know what, I’m just gonna pay this whole thing off. I’m gonna pay off the whole a hundred grand.
Kevin King:
It’s, so the 7,200 is gone. That was interest, but now I’m just gonna pay off the remaining principal, which is somewhere around a hundred grand because I already got paid from Amazon. And so my interest rate really then was not 15% because I was able to pay this off sooner. Let’s say I did in six months, my interest rate was more like 7.2%. So if you think about this in cash flow and do your cash flow correctly, don’t be scared by a high-interest rate if you have other ways to do this is, I guess is what I’m saying. You gotta think about the whole big picture, not just look at some number and go, that’s too high. My SBA loan is 2% so there’s no way I’m gonna do that or, or something like that. So am I correct in that thought process?
Alexandra:
Yeah, and again, those numbers of course are rough numbers, but it’s, it’s a good representation of understanding that you do have the different options and the different ways to be able to do the same thing. So you’re still investing the same amount of money and then just using it in different ways. So as long as it’s after three months, there’s no prepayment penalty and you’ll pay less as you describe. And then we have also a revenue advance. So for those seasonal sellers and just for a lot of types of sellers, but I know seasonal comes to mind, they don’t like to usually have variable amounts to pay. So with an APR of course the amount will be variable, but with revenue advance, we can offer a percentage upfront. So it’s just like an upfront fee and that could be like a fee as little as five or 6% that we just take upfront before we deposit the money. And then you’re gonna have the exact same payments every two weeks. So you don’t have to worry about variable costs or us taking a percentage of your sales over time because we don’t do that part either. It’s whatever we took up front, that was it. So in that one, you actually already know how much you’re paying in a fee and you can schedule accordingly or like the next 12 months or 24 months, you know exactly how much you’ll be paying.
Kevin King:
So just before we wrap up Alexandra, what are some things that you see some big glaring things that sellers need to pay attention to when it comes to cash flow or to getting money for inventory to grow their business? If they would just do these three things, their life would be so much easier.
Alexandra:
I think having projections is one of the biggest mistakes I see people not having even if they’re rough numbers and you wanna go back every three months and readjust what your projections are gonna look like. You need to have a plan not only for investing money, but overall like how the moving parts that you currently have, how you think they’re going to behave. And not having those projections has been very, very hard on some of these sellers because they ask for a certain amount, but they don’t really know why. And that’s when we see a lot of these defaults. I don’t know what happened to it, you know, I don’t know where it went. So I think understanding what your projected value and what your projected everything really revenue is gonna be is essential. The other thing that is super important is also having your financials together, which we mentioned.
Alexandra:
So in addition to having those future projections, knowing how the past has behaved and not waiting until the moment you run out of inventory, has to be by far the biggest mistake. That’s usually the worst part for not only startups, but pretty much every business is running out of capital right at the wrong time. So you don’t wanna wait until the absolute moment when you ran out of inventory and say, “I need more inventory, but I don’t have the money. How do I do now?” So with us, as we mentioned earlier, you know, if you apply, you get an offer, it’s there for you, you get to know what the rate is, how much you got. Let’s say you didn’t use it for a month or two, you can always go back into the system, You can reach out to your account manager and say, “Hey, the past two months have been unbelievable. Can you see if you can increase my line? Because I wanna make a draw this week.” But it’s already there and that can take just a matter of hours rather than waiting until the absolute last minute and then, you’re basically like turning your wheels over and over again. So the biggest mistake we always see is somebody coming to us in a moment of panic.
Kevin King:
So it’s always easier to get money when you really don’t need it right then than when you actually need it.
Alexandra:
Absolutely, when you’re in a better position, you know, cash flow wise or performance wise, you’re gonna get a better rate, you’re gonna get a better offer and everything all around is gonna be better. Rather when you’re coming and your business is not doing phenomenal, your cash flow is just not there, profitability isn’t there, and it’s gonna be very hard to get a rate that you might be envisioning in your mind.
Kevin King:
Now SellersFunding is actually an endorsed partner from Helium 10. They’re in the partner directory and everything. So if you wanna check them out go into the Helium 10 partner directory and you can actually see that SellersFunding has been vetted by Helium 10 and everything is good to go. Well, Alexandra, I appreciate you taking the time today to explain all this. It’s a complicated subject for a lot of people they don’t understand and they don’t understand how much this is actually needed as you scale and as you grow. I mean, there are lots of options out there, but I think SellersFunding is one of the best as, as you’ve hopefully learned in this, and someone that I hope you would consider if that need arises in your business cuz they can really, really help you grow in times when you might not have any other options or might be difficult.
Alexandra:
Yeah, and if anybody has any questions, you know, I’d be happy to answer or set up a meeting just to walk you through it and introduce you to anybody on our sales team. So I’m sure Kevin, you can share that later, but it’s [email protected].
Kevin King:
Awesome. Thanks so much for coming on today.
Alexandra:
Awesome. Thank you so much, Kevin. It was been awesome.
Kevin King:
Well, I hope you have a better understanding now of what it takes to actually get to funding to grow your business, to get that inventory you need, or to get prepared for the fourth quarter or that big summer that’s coming up next year. I am a big proponent of using outside money and outside financing when it makes sense to grow your business. I think SellersFunding is one of the companies you should consider and take a look at when that need arises in your business. I hope this has given you a much better understanding of that. Now, just before we go, I wanna leave you with our golden nugget for this week has to do with money. “To turn a hundred dollars into $110 is real work, but to turn a hundred million dollars into $110 million is basically inevitable.” Remember, “wealth comes from capital not from labor.” So once again, “to turn a hundred dollars into $110 is work, but to turn a hundred million into 110 million is pretty much inevitable.” “Wealth comes from capital, not labor.” See you again next week. Take care.
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