Business Funding Myths Exposed: How to Get Capital the Right Way

Sam Kaye (00:00)
We hear this all the time but they’re business owners that, you know, that were promised an enormous line of credit or conventional loan take this 10K funding, this advance with a super high rate and super short term.
And if you pay it off within a week, I’m going to give you 700,000 as a line of credit.

It’s just so too good to be true. ⁓ You know, it doesn’t make sense.

I always say if a company hasn’t asked you for your tax returns, they really shouldn’t be talking about, know, yearly terms or, you know, SBA type rates.

Michelle Kesil (02:02)
Hey everyone, welcome to the Investor Fuel Podcast. I’m your host, Michelle Kesil. And today I’m joined by someone I’m looking forward to chatting with, Sam Kaye., who’s been making serious moves in the funding and loan space, as well as sales training space. So excited to have you here with us today, Sam. I really think the listeners are going to take something away.

Sam Kaye (02:05)
Okay.

Michelle Kesil (02:31)
from how you’re

approaching business funding, finance, and sales. So excited to dive into those topics with you.

Sam Kaye (02:41)
Absolutely, Michelle. Thank you so much for having me.

Michelle Kesil (02:44)
Yes,

my pleasure. So first off, for people who may not be familiar with you and your world, can you just give the short version of what is your main focus these days?

Sam Kaye (02:58)
Sure, so the main focus is I’m with Superior Capital and we fund to small and medium sized businesses and we help business owners get access to capital when they otherwise wouldn’t and then also help them along the way and kind of hold their hand to get ⁓ ready for some of the better funding products. So these might be construction companies, restaurants, ⁓ we have a lot of property managers.

that need bridge funding to get them by for certain projects. And then we come in and we help them kind of package their business to get them more the long-term conventional ⁓ type products. And also we train new reps and we train brokers and shop owners because there’s a lot of, know, miseducation in the finance and the funding space where people just, you know, don’t understand what truly qualifies a business owner, what doesn’t.

There’s a lot of lies and BS when it comes to funding. So we help educate and also ⁓ we have a lot of fun doing it.

Michelle Kesil (04:02)
Amazing, that is so important. Yeah, I’d be curious, what are some of those lies? Can you debunk some of those for us?

Sam Kaye (04:11)
Yeah, sure. So, you know,

hear this all the

where and, you know, we’re kind of tasked to clean house when we get

but they’re business owners that, you know, that were promised an enormous line of credit or conventional loan

exchange for them taking something really bad in the beginning. So like they’ll be told,

take this 10K funding, this advance with a super high rate and super short term. And if you pay it off within a week, I’m going to give you 700,000 as a line of credit.

Now, to the lay person,

it’s just so too good to be true. ⁓ You know, it doesn’t make sense.

when you’re a business owner and you’re desperate, ⁓ you know, you’re going to do anything you can. And so you’ll fall prey to these because you’re hoping for that thing that’s coming up. So what I always say is, look,

don’t ever take a funding in exchange for something in the future. ⁓ And if a company hasn’t properly vetted you and looked at your financials, like a lot of the short term funding

is based off of bank statements. So it’s revenue-based financing. ⁓ So if we’re gonna look at anything more traditional or conventional, it’s gonna need to show your financials, your tax returns. So

I always say if a company hasn’t asked you for your tax returns, they really shouldn’t be talking about, know, yearly terms or, you know, SBA type rates.

Michelle Kesil (06:17)
Awesome, thank you for sharing all of that. And what markets do you operate in? Are you national around the US?

Sam Kaye (06:26)
Yeah, we’re pretty much nationwide. ⁓ There are some strict regulations popping up here or there, New York, Texas, but we’re nationwide. A big chunk of our business is ⁓ some of the Midwest. also get a lot of California. We do a lot of Texas, ⁓ a lot of businesses in Florida. So it’s pretty much nationwide. I always say that around 80 % of people will not get approved by traditional

⁓ metrics. So they’re not going to have the perfect credit score. They’re not going to have the time in business. They might have high debt on the business. And this is where we kind of come in and we help them access capital ⁓ if it makes sense for them. If you’re just going to get the money and just sit on it, it’s not going to make sense. It’s going to clobber you. But if, let’s say, you’re a construction company and you need to buy, let’s say, 40,000 worth of material to do a job that’s going to pay you 100,000,

Now we’re now we’re kind of talking.

Michelle Kesil (07:28)
Cool, yeah, that is interesting. So a lot of the listeners to this show are people in the investing space, whether they’re new investors or seasoned investors. And yeah, I think they could benefit from knowing how these financial options could support them.

Sam Kaye (07:52)
Sure, yeah, yeah. look, lot of, this is pretty much private equity money. It’s hedge fund money, it’s people that do hard money loans and they have private money. They also lend and fund in revenue-based funding because the returns are so high. Obviously it’s a lot riskier, but with the right funding company, it’s a really great place to park your money. And look, if you…

You know, we have a lot of property managers that have rent rolls and you know, they’re waiting to get paid on rents they have solid accounts receivable and ⁓ you know, it’s a good option for them. That’s pretty much what this is if you boil it down. It’s a purchase of your future receivables. So it’s not a loan that’s gonna fluctuate, you know, with prime rate. It’s gonna be a rate that, you know, we’re buying your future business, you know, in exchange for a higher rate. And so if let’s say you’ve got tons of, you know, rents and

know, fees or however it is, and you know on the balance sheet that that’s coming up, you can sort of navigate and crunch numbers based on that to see if a funding would make sense. So, yeah, if any business owner is looking for capital, we do everything. We have so many different funding programs, whether it’s lines of credit, SBA loans, bridge fundings, you know, it’s, ⁓ you want to work with someone experienced. Like I’ll give you an example.

If you work with, let’s say you need capital and you work with someone that only does one avenue of funding, what’s that saying like, if you have a hammer, everything looks like a nail. They’re gonna try to fit you into a specific box that fits their criteria of what they do. Whereas us, we have so many different programs and we have so many different partners where if you come to me and your credit score is perfect and you have time in business, you have good financials,

I’m not going to recommend bridge funding. I’m going to say, let’s get you something more conventional, more long-term.

Michelle Kesil (09:45)
Amazing. Yeah, thank you for sharing that. So what do you feel has been the key to keeping your business running smoothly with all of these moving parts?

Sam Kaye (10:34)
⁓ I would ⁓ think to just stay on top of regulations and kind of keep your finger on the pulse of what’s working, what’s not. Just recently, Texas, they signed into law some types of regulations for my industry. And so a lot of the funders kind of are thinking on their feet and they’re not funding in it or they’re finding ways around it. ⁓ Constantly staying on top of data sets and marketing and making sure you’re getting people that are qualified. ⁓

you know, being aggressive and being competitive, you know, there’s every single day, there’s so many new funding companies that are starting because people see the, you know, the upside in it, the profitability and you know, any little thing you can do to help the business owner really gives you an edge. Like I speak to business owners all the time that, you know, just because their scores are low, that’s why they’re not able to qualify from the bank. And we just look at their credit and we see their, utilizations are high.

which is such a quick fix. We just pay down some cards, their utilizations go down, now we can get them something amazing. And Michelle, that’s the difference between something like maybe a six month term or a 10 year term. So you can imagine how different, how much pressure that’s gonna put on your cashflow if you have something that needs to get paid back in six months versus 10 years. Obviously, the 10 years is gonna be way better, right? And sometimes it’s a tiny little tweak that does that. So.

We like to stay on our finger on the pulse of regulations and qualifications and the different parameters that a lot of the funders and lending companies kind of put out.

Michelle Kesil (12:10)
Yeah, absolutely. That’s so important. Now, every operator I know has a moment in business where things more or less get real. Maybe a deal went sideways or you had to make a fast pivot. Would you mind sharing one of those moments for you?

Sam Kaye (12:31)
Yeah, I’d say one comes to mind and it’s so funny how, you know, looking in reverse, it all makes sense. And look, thank God it happened like this, you know. ⁓ We had a deal, it was a half a million dollar SBA, which isn’t crazy, but it’s a decent size. And we are, you know, we only get paid on the back end. We don’t charge you a penny until it gets funded. We’re contingent upon funding. A lot of places are gonna charge you big upfront fees. ⁓ We get paid once you get paid, right? So with this specific business owner,

Michelle Kesil (12:37)
Yeah.

Sam Kaye (13:00)
We agreed to it verbally and you know when it came down time for funding she fought us on it and you know she didn’t want to pay us our commission and ⁓ you know she was actually a broker herself so she kind of knew some ways around it and we just didn’t get anything in writing because we always kind of just had a lot of trust and it was a lot of handshake stuff and so it came down to time of funding. We ended up getting a very smaller commission, not what we usually get and it you know it really.

That was a moment where I was thinking about it at night. We put a lot of work into this business owner, helped her tremendously. This woman was paying like, must have been 60 or 70,000, something like that per week ⁓ in merchant cash advances. And we refinanced all of them into a 10 year loan and we got hosed at the end. so, but the silver lining is that now we don’t even submit the file to the bank until we have an authorized signature that we’re gonna get paid.

you on the back end and you know, so now we never have to worry about that again. And I kind of look at that as the cost of doing business and you you live and you learn and I’m happy to happen because now, you know, maybe it’s not going to happen on one that’s a $10 million deal, you know.

Michelle Kesil (14:14)
Yeah, absolutely. And you mentioned, like, looking back, you can see how this was a blessing. Like, what is kind of like the lesson that you extracted from this?

Sam Kaye (14:22)
Thanks.

Yeah, the lesson I would say is always put it in writing.

Michelle Kesil (14:30)
Yeah,

it’s like one of those small things that’s so important. Amazing. Thank you for sharing. Yeah, those are those moments that people don’t talk about enough.

Sam Kaye (14:36)
Yeah, yeah, yeah.

Yeah. Yeah.

Michelle Kesil (14:46)
So let me ask you this, what are you most focused on solving next?

Sam Kaye (14:53)
think next what we want to do is we want ⁓

have a main hub of training for brokers ⁓ because unfortunately a lot of shops don’t have the resources to train their reps right. They give them a script, they sit them down and they give them some leads and it’s kind of figured out on your own. And what I’ve noticed is even just having one hour with a new rep really makes all of a difference. To really educate them on the products.

You know, for myself, think I was like three months into it and I didn’t understand what I was selling. was just kind of talking and, ⁓ which, know, the whole fake it till you make it thing. But if I really understood the product more and learned what I’m offering and what the purpose is, I think people will have a lot better time. So one of our goals, it’s, the business is cash advanced training is to have, ⁓ you know, like weekly sales training sessions where shops kind of bring us their, their new people. And we’re like an onboarding consultant to, ⁓

to offload some of ⁓ the responsibilities of training. And just to have a main, maybe even certifications where people are certified to get on the phone. Because we’re talking about business owners, their business and their livelihood. They should be educated.

Michelle Kesil (16:48)
Yeah, absolutely. think education is so important and yeah, there’s so many things that we have to be self-taught in. So it’s helpful when there’s those resources for support.

What would you say are some of those like educational gaps that people often are missing?

Sam Kaye (17:15)
think that there’s two sides to that corn. think one is the qualifications of who could use this product, like let’s say a bridge funding. And on the second side is actual just old school, just sales training. I had a broker ask me the other day, I speak to the business owner, they confirm they want the funding, I send them the contracts and then I never hear from them again. And my immediate thought was, you need to…

smoke out the actual true objection. It’s human psychology. People just want to yes you and get you off the phone. Whereas we train finding out what the actual objection is. So something we’ll say is like, ⁓ so Mr. Mrs. business owner, ⁓ if I get you this amount for this term, are you ready to move forward now? And then they’ll usually come back and say what the objection is. If there is one, they’ll say, well, I like it, but the term is too short or well, the amount’s too high.

then you can go back in and kind of reprice out the deal for them. ⁓ And just, I think just qualifications also, some people will not need this product. It’s a very high rates. You’re talking anywhere from 20 to I’ve seen 50 % rates on the money, which is you have to be tactical for this to make sense. Again, if you’re just using it to sit in your bank account, it’s gonna damage you. But if you have a purpose, and that’s what we want people to learn about is finding the purpose of the capital.

⁓ to see if it even makes sense for the business owner.

Michelle Kesil (18:42)
Yeah, absolutely. That’s very good advice. So what would you say is the next big goal for you?

Sam Kaye (18:54)
The next big goal, I think, is we’re kind of experimenting with some data sets to try to possibly just do a lot more funding and do a lot more funding of maybe smaller deals. We’re noticing we were just at the Affiliate East Summit, which is a huge affiliate conference in New York. A lot of consumer loans, that’s a big thing that’s happening now, where it used to be just businesses. So we’re thinking of expanding into that space.

and possibly also micro advances to help the business owners that might not have the high revenue get something, get their foot in the door, build a positive pay history and then move on to bigger fundings.

Michelle Kesil (19:33)
Yeah, that’s big. Awesome. So like I mentioned that a lot of people listening to this show are either earlier on in their investing real estate journey or potentially looking to level up. And I think they could benefit from hearing this when it comes to building relationships and growing your network. What do you feel has made the biggest difference for you?

Sam Kaye (20:04)
The biggest difference for network is, I think it’s so old school, going to events, ⁓ the more hands you shake, the more money you make. think Patrick Bette-David said that, or someone said it was good advice. There’s a lot of times where people advance in business not off their brains. It’s not because of how good they are, it’s because of who they know and their likability. I have some social anxiety sometimes.

And I might not look at through the video and stuff, in crowds of people, sometimes I’m a little shy and I might know a thousand times more than the next guy or girl, but because they have social, they’re a social butterfly, they’re gonna make more connections and they might meet that one connection that really just 10X is their business. So I think working on the personal side, that’s something that I work on to not just the business, but also just be friendly and be talkative and…

genuinely make human connection. think if you can do that and you even have just a little bit of ⁓ a good product or a good idea, you can go a long way.

Michelle Kesil (21:09)
Yeah,

absolutely. Relationships are everything in this space.

awesome. So when it comes to the funding and the loans and yeah, just this financial side of things, like what are some common strategies that people can implement? ⁓

Sam Kaye (21:38)
So usually when people come to us, they’re in a situation where they need money fast and they can’t wait. So there’s obviously pros and cons. If you’re getting money quicker with less underwriting, it’s going to cost more. ⁓ So what I would say is usually is, let’s solve the problem. Let’s fix whatever it is you need to fix, whether it be working capital, payroll, you want to expand, your oven went down to your pizza shop, your lift went down to your mechanic shop, something that’s really going to damage your business unless you get it back up.

let’s fix that problem and then let’s go into getting you ready for something better. Cause in my experience, usually look, there’s a lot of companies that don’t need fundings and don’t need loans. And, um, but the ones that need bridge fundings usually could, you know, they, their business needs it, you know, to, do you have to spend money to make money? And if you want to constantly expand, you need a finance partner. So, so, so I would work with a finance partner, get the funding you need, and then really look at backend, look at some of the stuff that might prevent you from the better products.

I’ll give you an example. There was a construction company we’re working with and man, Michelle, his tax returns, I mean, he was a killer. mean, such good revenue, ⁓ but he showed a loss. And the reason for that is, as we all know, and the accountant is doing his, their job is to pay less. You know, don’t want to pay on those taxes, but if he were to show what he actually made, he would have gotten approved for one of the best types of loans, prime rate, 10 year terms.

but he just wasn’t educated and he didn’t really know that was his goal. So the example is now we’re gonna be in lockstep and when he does his P &Ls and his balance sheets, I’m gonna be in communication, show him what we want it to show. We don’t wanna have to do a lot of ad backs later, we wanna show profitability on the business, which again, he already had, but didn’t really know that’s what he needed to show and he should be able to get something very nice.

So have a finance partner, someone that knows, because you might be ready to file your taxes and just one little tweak might make you ready for a better type of product that you might not know about.

Michelle Kesil (23:40)
Yeah, that’s really good advice. Thank you for sharing all of that. So before we wrap up here, if someone wants to reach out, connect, learn more about what you’re doing, what’s the best way for them to reach you?

Sam Kaye (23:55)
Sure, so the best would be, you know, we have the Instagram which is Sam Kaye. Sells, S-A-M-K, and then Sells. Also, you know, for funding, superiorcapital.net. My email is sam at superiorcapital.net. know, if you look up Superior Capital, you should be able to find us. And then if, you know, if this is something that could help you or you just want to, like a free consultation where we just go over, you know, what your business is and what it could use with no obligation.

Absolutely shoot me an email, drop me a line, [email protected].

Michelle Kesil (24:27)
Well, I appreciate your time, your story and perspective. We need more people in this space who are doing things in this right way. So thank you for being here.

Sam Kaye (24:39)
Thank you so much, Michelle. Thanks for having me. I really appreciate it.

Michelle Kesil (24:41)
Of course.

And for those of you that are tuning in, if you got value from this, make sure you’ve subscribed. We have more conversations coming with operators just like Sam, who are building real businesses. And we’ll see you all on the next episode.