What is the SBA 7a Loan with Ray Drew

 Josh
 Good day fellow dealmakers. Welcome to the deal scout. My name's Josh fellow. Deal-maker all right. I use the show. The mission and purpose of the show is to put deals in deal makers together. What I do is I interview them, hear the stories, hear how they got started, share some advice for you, but at the end of the day, I want you to listen in and find the kind of deals that you want to be involved in, and then go to the show notes, find their contact information, connect with them and do a deal mission and purpose of the show. So let's dive in with Mr. Ray drew. Ray, welcome to the show. 

 Ray
 Thanks for having me. 

 Josh
 All right. Ray, who are you and what the heck do you do? 

 Ray
 I am an SBA lender. I've been doing it now for 11 years, working with entrepreneurs who want to start, grow and expand their business using the SBA seven eight program. I've mainly done it at non-bank lenders, which is unique of a situation, but I been doing it now for over a decade and I love it. I couldn't ask for anything better to do with my life. 

 Josh
 Oh, cool. All right. How did you get started in this business? We'll get into the tactical who, who does this work really well for and how to go about doing it, but let's go back to your origin story. How did you get started in this game? 

 Ray
 Well, I kind of fell into it, which is very common in our industry because no one really grows up wanting to be an SBA lender. You know, it's always doctor or lawyer. I just knew I had to go to college. That's what my family was pushing. I went to a university here in Florida UCF and I majored in marketing because I had one older friend and I said, what's the easiest major. And she said marketing. So I did that. I took a internship with a company. I did it for four months, stuffing envelopes, just doing all sorts of different menial tasks. And then I left. I had no idea what the company did. They called me about a month later. Cause I had just graduated is like 2011 and economy kind of sucked at this point, but they offered me a full-time position. And I liked to work in there. 

 Ray
 It was about 25 people. It was a small, much different than the other internship I had done at Lockheed Martin, which was just a huge company. I liked the vibe and I was like, hell yeah, I'll do it. It turns out they were an SBA lender. I started there basically, my goal was to make a hundred cold calls a day to commercial real estate brokers, trying to pitch 5 0 4 loans, which is an SBA program now having not ever done one or really knowing how to do one, I just was trying to make calls and kind of cut my teeth that way. 

 Josh
 Wow, cool. Yeah. I, I was in an industry where I had to make a hundred calls a day, pretty much here's the phone book go. Right. They monitor their calls and such like that. Do you still remember your pitch that you would do? Like, is it like engraved in your brain? 

 Ray
 I paid a lot of attention to it. I was very mindful of making sure I sounded not like a 22 year old that didn't know anything. I'd always make my voice nice and deep, and just, I would just try to make it sound, not like a script, even though I had a script and I made the script myself and I just kept it short and it was warm calling cause they were kind of folks that were in our network. They had been at a show with us or we've spoken with them before. I would just try to make it seem like I was their buddy checking in. 

 Josh
 Awesome. All right. Give us an idea of what did you learn making a hundred phone calls a day, outbound calls a day because to some people that terrifies them, they would rather, be stuck in a cave underground underwater than making a hundred calls a day. Like what is something that you learned from that experience? 

 Ray
 I loved it. I mean, there's a lot of highs and lows with it. You'll get hung up on, but you'll also get business from it. There's really no worse or better feeling than those two things. That's one of the things I learned. The other thing I was doing was I was, there would be people that would call the company, wanting the business to do business with us. I would also be the sole person talking to them and sometimes they would be like a mortgage broker and sometimes they're kind of amateurish, but sometimes they actually knew what they were doing. I remember early on, I basically learned not to BS my way through a conversation, the hard way, because this broker who actually knew what he was doing was asking me questions and I was just making up answers. Cause I didn't know them. I didn't know at that point to say, what? 

 Ray
 I don't know, let me get back to you with the right answer. He hung up with me and then like about an hour later, my boss who was the CEO called me into his office and he was a nice guy and he was very, he was like a good mentor and, but he sat me down and played a voicemail for me. It was this broker just laying into me in my boss's voicemail about, I remembered that like it was yesterday, he was like call, he called me a clown. That I basically, I didn't know what I was doing. And he, and he was right. 

 Josh
 Yeah. What great. So during it, right, it's tough. It's embarrassing. It's just like the learning lesson from that like 22 year old. We don't, I don't, I didn't know anything in my twenties or thirties. Right. I'm in my forties now and I'm just starting to figure life out and figure out business. Like we think that if we're selling something, we need to be the expert on it and we have to be, have answer for everything. What that does is it makes us look like a clown. How do you approach it differently as you gotten older now and more experienced than doing this for 10 years? 

 Ray
 Yeah. My, my approach has completely changed. I started focusing more on marketing and pulling folks into my orbit and now I don't really do any outbound kind of outreach at all. I'm, very high producer in the SBA world and in my company, top producer, many of the years. I, I do it in a way that's very unique compared to the way my other colleagues in the industry do it because there are many ways to get here. The way I have done it is one, I started a podcast. Okay. That is a really good way to position your I'm not preaching to the choir here. I'm sure. I've, I started getting very active on LinkedIn content marketing in 2015, which not a lot of people were doing in my industry at the time. I started an email blast that at my bank in 2013, which they, spoiler alert, I was doing it without their permission because they wouldn't let me, they didn't believe in him. 

 Ray
 I was like, I'm not gonna not send email blasts because the bank doesn't believe in them. I got my boss's blessing and I probably shouldn't be saying any of this stuff, but he's like, just do it. Just don't get caught. It was one of the most fruitful things because none of my Hollings were doing email blast at the time in 20 12, 20 13, because everyone worked at a bank and everyone was afraid of liability and it was just new and now everyone does it. At the time I knew I can hit send on my database with a nice curated email specifically meant for that audience with a catchy headline. And I would get business consistently. If I needed a deals, I would just hit click the button and the deals would come and that helped propel my career. 

 Josh
 Yeah. Yeah. I think, I've worked at banks, I've worked in corporate America and I've worked with large organizations where it's like compliance is like ridiculous. If I want to send an email to my mom through my work email, like I had to like get 13 people's permission and a VP to sign it off somewhere. But, I took a similar approach. I'm like, listen, if I'm, if you guys want me to be successful, I can't follow the ways you guys have done it and have always done it because it's no longer working. I have to figure out my own ways and it's worked out well, but there's some risk as you're approaching, like, as you were doing that, you were weighing the rewards and the risk and how'd you decide to go, Nope, I got to do it myself. Hit send what pushed you over the edge to say yes. 

 Ray
 Well, I mean, I, I wouldn't, I had a really good boss at the time. I actually had to, while I was there both ended up being two huge mentors for me and they knew it was ridiculous, this one of the two and he's like, you're fine. You're not going to say anything. That's gonna get us in trouble. So, and it's really like, I'm just saying the same things I would say to you, if I was in a room with you, I'm just putting it in writing and sending it through an email blast, through constant contact or whatever. It's just like what I'm doing with the podcast. Like I work for a non-bank lenders because they are more understanding of how I go to market. There is, versus at a bank where I could barely get a guest on my podcast and give them free exposure. 

 Ray
 Cause their bank says, no. 

 Josh
 Yeah. 

 Ray
 So I experienced. 

 Josh
 That. 

 Ray
 So yeah. The boss, my boss, basically, I wouldn't have done it behind his back. So he said it was fine. I just knew I had to do it because I knew that was where things were going. This is, I'm not talking about 1999. I'm like things were already there. It was 2013. I'm just like, we have to be doing this. 

 Josh
 Yeah. Hey, don't worry that we're recording this in 2022 statute of limitations has passed my friend. All right. So I, I think I'm not in. 

 Ray
 The bank doesn't exist anymore. So I think. 

 Josh
 Because you sent all those emails. No, I'm just kidding. It was you. Let's ask this question because I think a lot of times business, the business lenders and financial, advisors and stuff in the industry, have a hard time marketing themselves because they then they themselves view their product as not the most exciting thing. You said, I used to send catchy emails with catchy headlines, with a conversation just like I would be having face-to-face with you. Give us some tips or maybe some examples of things that you did that got people's attention via email. 

 Ray
 Yeah. Well first they have to open it. Right. So, I, one of these books back here is about copy, email copy, and the book says, and it's, I can probably get it to you later. Probably like the art of, email copy or something like that. It's, they recommend keep the subject line to five words. They, I would do something like this, what not to do when applying for an SBA loan, right. It just piques some interest. You're like, well, I want to know what that is. If it is something negative versus positive, there is more inclination to say, what's this drama about? They even did a test, a study or a test where they made the subject line, just one word and it got some of the best results. There's a couple of things you can do just to switch it up. What I started doing, which turned out to be less effective was basically using the subject line to kind of title or summarize the email versus my intent to actually spark some interest and get them to click it. 

 Josh
 Yeah. Yeah. I did marketing. I worked at a company that did marketing research and we tested subject lines. We tested emails, right. The purpose of a subject line is to get an open. The purpose of the message is to get it, click the person, like, so it's like takes you through this process of micro yeses to get to the big yes. Right, exactly. So I, I love this conversation. You and I could probably nerd out about it, especially because you have a book about email, right. Email, copy you. I could probably hang out where are you located? You mentioned UCF and Orlando. 

 Ray
 I'm in Delray beach, Florida. 

 Josh
 Okay. We're in Ocala, which is not too far. I think it's like two hours or something like that. 

 Ray
 Yeah. That was my first deal was in Ocala. This was crazy because I was 23. I, the bank made you wear a suit and tie and I think this was maybe my first or second loan, I think. No, it was my second loan and it was 2.3 million and industrial building purchase and a renovation. It was actually a bank owned building and the buyer was a fabrication company. They basically fabricated the firetruck. 

 Josh
 Yeah. 

 Ray
 No. 

 Josh
 Okay. 

 Ray
 Anyway, I mean, and yeah, the guy was great, but he needed to close in 30 days and on an SBA deal at that point in time, that was like impossible. But we said, you know what? We can do it. And so we beat out Wells Fargo. I was literally driving to Ocala. I mean, every week. Cause I was like, I have a term sheet for you, but I'm going to give it to you in person. I'm going to collect the signature while I'm there and I'm going to take it back to my bank. I did the same thing with the commitment letter and we closed it on, I think the 29th or 30th day, but I just remembered showing up there with a loose fitting suit and I couldn't tie the tie and I got to sit in front of this 50 year old guy and he went with me and it worked, it paid off for both of us. 

 Josh
 Yeah. Super cool man. Good job. The first deal you did my hometown Ocala. I done, 

 Ray
 I did a couple up there. Yeah. 

 Josh
 Okay. That's a great place. Great country of Ocala. As you're, working for non-bank, lenders and moving into your organization now, what does over the past 10 years, what did your progression of your career look like? What have you learned? What, in terms of as a deal-maker, how have you evolved. 

 Ray
 A ton? Yeah, it's a great question. When I went, when I left that bank and I left because it was like just brutal. It was old school, getting a deal approved was like impossible. My boss had left few months prior to go up, go and start a new non-bank lender. That sounded intriguing to me, startup, building something. I was, he, his, I was his first hire. Actually. He had two hires, day one. It was me and the other guy was the guy I beat out at Wells Fargo on that other deal. I just don't give out. So we start together. He lasted about nine months and then, and then it was me and we just kept building, building. Over six years, that is where I really learned it because that shop was basically built on the infrastructure of a company called CIT, which was a bohemoth SBA lender before 2008 and their credit people were just super smart. 

 Ray
 I just absorbed things like a sponge. Honestly, that's just where I learned everything about deal, making the sales folks, the man sales managers, the, the whole team taught me so much. One of the main lessons I learned probably in my fourth or fifth year, there was about just the art of selling the proposal. Like a lot of SBA lenders would just rush to a proposal and send out the proposal. A couple of days would go by and they'd be like, Hey, following up on my proposal, ? You're chasing down someone with your proposal. You have no idea. If they're talking to other lenders, you have no idea if this is the right fit for them. No idea. Drilling deep and uncovering the hurdles upfront and establishing yourself as an expert and asking the tough questions upfront, gaining, like pre-selling the terms basically to say like, I'm crafting this proposal for you. 

 Ray
 It's based on our conversation. Exactly what you want. I'm going to assume you're going to just accept it. If not, let me know why you wouldn't and try to figure that out in front and let's handle it there so that he doesn't take my proposal and go, shop at all around town. Because that is something that helped me increase my conversion rate a lot. 

 Josh
 Yeah. Versus people who, maybe just looking at it as a numbers game, let me get a proposal out to as many people as possible. You're like, let me get the right proposal to the right person crafted in a way, pre-selling it pre, assumptive closings. If I get this, will you say yes, kind of thing, because of that, you said you hit, top of production for your company for multiple of years. How are other people, what are other ways that people other dealmakers are doing incorrectly? You mentioned the proposal, the spray-and-pray right. What other, what other ways are other lenders or other dealmakers doing it incorrectly in your opinion? 

 Ray
 Well, when I issue a proposal and this is how this is there's two schools of thought on this, we issue a proposal because we have a very high confidence that we can execute, get a final approval and get this thing closed. Okay. That's one school of thought where your proposal carries that weight. That's how I do it. The other school of thought is let's just reel this guy in, right? Let's just put out our proposal, let's get them off the street. Let's bring them in, let's collect the deposit. And then let's see what happens. I'm very surprised how many people still do that. And I run into it every day. They also sweep some of the issues up under the rug and because they don't want to scare off the bar. They don't want to tell them that, no, this that's not going to fly. 

 Ray
 I mean, I'll give you an example. I was working on a business acquisition for someone. They went with another lender based on their term sheet. A couple days later, they're in underwriting. The underwriter's like, oh, by the way, these guys are going to have to guarantee a loan. Okay, well, that's not gonna fly. So now I'm back to square one. Then they came back to us. I can, I have countless examples of that, but it's like I said, lenders don't want to rip the bandaid off and tell them what they don't want to hear. You're going to put a second lien on your house. If you have equity in your house, the interest rate is variable. That's how it is. If you are upfront with them you're and if they're ultimately not comfortable with it, then you're going to save a lot of time. People are just afraid to rip the band-aid off. 

 Josh
 Well, they're afraid of a no, they're afraid of not, not telling the person what they want to hear versus telling the person what they need to hear. Right. I think, I think that gets us into trouble as salespeople. We're like, oh yeah, we can make this work we can make. And then it gets down to it. You're like we couldn't make it work because it's unrealistic terms or whatever the case may be. Super awesome. Awesome work. Ma'am I think I'd like to hear, about why you started your podcast and the direction you took in the industry of SBA lending. Is there a great interest? There, is there a lot of traction? Is there a lot of movement? You know, how are they applied? So give us a thing. Could behind the podcast itself. 

 Ray
 I mean, you got some great questions. I gotta hand it to you. I can see why you've been so successful in the podcast game. I'm going to steal some. 

 Josh
 My best buddy. Thank you. Awesome. 

 Ray
 I started the podcast for two main reasons. One, I was looking for the content myself. I am obsessed with SBA lending. I am obsessed with it. It's what I think about. It's actually, it's like a sickness because I can't stop thinking about it. It's it's really, it's a problem I've thought of, seeking out help for it. But I love it. I think about it, even when I'm sleeping, I considered a tattoo at one point, but I don't have any tattoos, but anyway, so I feel very blessed to be in the industry and have fallen into this career. I mean, truly I say this all the time and I was seeking content to better at my job, even though I was already decent. I wanted to just keep consuming content as a millennial, likes to do online. It wasn't there was no traces of SBA anywhere it's like crazy. 

 Ray
 So I was like, you know what? I'll just build. I had it on my to-do list for probably at least nine months to a year, like start a podcast. I would always get the to-do list down to everything except for that. One day I'm just like, let's just do it. We started the podcast and it's a way for me to give back to the industry. That's given me everything. I literally give all of my secrets away to the industry. I started interviewing a high performers in the industry to kind of tap into their minds and just get the content out there because just no one else was doing it. 

 Josh
 Yeah. By the way, give a shout out to your podcast. What's your podcast name? 

 Ray
 The art of SBA lending, the. 

 Josh
 Art of SBA lending. Now I'm looking at the featured image. You're wearing a fitted suit. Dude, you look sharp. 

 Ray
 That's off the rack. 

 Josh
 Okay. Because back in the day, you, you couldn't tie and drove back and forth from Delray tow Calla. He looks sharp, dude, to come a long way. 

 Ray
 Now you're sucking up to me. Yeah, 

 Josh
 Yeah, yeah. That's how this works. You give me a compliment. I give you a compliment. So, so you started this podcast 2019 and you started interviewing other industry experts. Have you, have you found that some people are super open to kind of open kimono and share the secrets of becoming an SBA lender success versus some people who are more hidden and like, no, I don't share it. I don't want to share this with the competition. What if they copy me? That kind of stuff? What have you experienced. 

 Ray
 Chorus? Overwhelmingly people are willing to give it away. The people in our industry I'm telling you are special. Maybe everyone says that in every industry, but everyone in our industry loves our industry. No one like leaves it's. We love the P everyone knows each other. Everyone's connected by two or three degrees of separation to very small industry. No overwhelmingly people are willing to share the part that's a little trickier. It's just like, bankers are not used to getting on a podcast and talking and, and so getting people comfortable like you do with your guests so well, and willing to share has just, that's been my hardest part because they're just not giving you the same transparency as if you're just in private conversation, obviously. But like it's even more. I feel like, because they're like really in like interview mode and it's just different. I want to, I really want to try to get better at getting people to just open up but then, I, and get them. 

 Ray
 Cause they're like, oh, the bank is going to be watching this. I don't know what I should say and not say, but it's a friendly thing. I just want to try and get better at getting on the more personal side. That's why I'm taking notes from you. 

 Josh
 Well, I appreciate that. There you go again. How many episodes have you done since she thinks she, since you did your first launch. 

 Ray
 80? I just, yeah, I just recorded my ADF today and it was not extremely consistent at first. It was, if I had time on the weekend, I'd do an episode, but I think the last, I mean maybe 40 or so episodes have been weekly. I brought in a producer to help me and that has kept me on track. 

 Josh
 Yeah. Super cool. Yeah. It's so good to get help. You can focus on your art and then have other people that help you with hers. What was the funnest or most memorable moment in your podcasting career? 

 Ray
 I don't know. I mean, the podcasts have been pretty tame. I mean, I would say this because the industry is really small. When I, when I go places now everyone knows who I am and I don't always know who they are and it's like a weird feeling, but yeah, I that's. That's like, I like the other day, actually. I, the feedback I've gotten has been by far the most moving part of this, like I said, I was at a SBA conference a couple of weeks ago and somebody, is pulling me, hell, you have to meet this person. And, and they're like, oh yeah, this person at the bank is doing your first 90 day plan that you told us in the episode. These are people I've never met and they're taking what I'm saying to heart and implementing in their day to day. And, and that feeling is amazing. 

 Josh
 Yeah. Super cool. During your, I'm going to ask you a bunch of podcast questions, do you have a mobile kit? You have a great shore mic, just like Joe Rogan. Great setup. For you guys listening to let me like paint the picture, dude looks great. He has his boom arm with a nicer mic in the background. He has, his pictures of something behind him. I can't really see, but there's some lights and bookshelf looks great, dude. You're, you're absolutely crushing it. Do you have a mobile kit? You go to these conferences, you're interviewing people in such like that. 

 Ray
 Yeah. I just did my first ever in-person interviews at that conference. Actually, I got a nice suite upstairs and I set it up and I'm going to be doing a lot more of that over the summer. I am going to Tampa to do a couple and I've got a, they actually opened a podcast studio down here in south Florida. That looks really good. You can rent it by the hour or, a monthly subscription. And it looks very nice. Three, they have three, I think, three cameras, four mikes. 

 Josh
 Yeah. 

 Ray
 I'm gonna also schedule some interviews there. I I'm taking the summer off and I'm going to launch relaunch in the fall with a string of probably like, eight in person interviews, 

 Josh
 Super cool. What's one piece of equipment or like gear or something that you're like, man, as soon as we hit this next big business goal, I'm buying that like, what do you have on your horizon? 

 Ray
 The camera, I have a Sony Z V one vlogging camera. 

 Josh
 Yeah. You want to get something bigger, better? 

 Ray
 I think I want to get something better. Yes. Or I think, I, I'm not sure. I w I want, cause like when we did the, we did a three camera set up and so we used an, a phone does Sony and then a really nice camera that my producer has. It was on me, I looked great. Everyone will kind of look normal, like with the other cameras. I think we have to kind of upgrade one of the cameras or downgrade one in the cameras. So it's more consistent. 

 Josh
 Yeah. Super cool. All right. I'd nerded out for a minute, man. I love this stuff. I've been doing it for a while and it's just so fun, man. You get to meet cool people, cool experience. Like you said, man, you walk around in an event and people are like, Hey, you're the guy from your podcast or LinkedIn. And you're like, yeah, it just it's. It's. It's cool, man. It's fun. Isn't it. Talk to us about the first time you hit publish, right? You did your intro or you did a recording and the first one was what was going through your head? What fears did you have or what hesitancy or did you just record it? Let it rip and roll. 

 Ray
 I didn't have any thoughts, but now I'm second guessing myself. Maybe I should have, but I, I have uploaded the raw content twice and I do a script. Sometimes I do like a scripted monologue and it's just really ugly. I'm like silly and I'm like, I'll edit this later. So, but when that raw footage sees the light of day and people just knew it, that is the most cringe moment. This is part of the reason I got the producer and she uploads it. Now. 

 Josh
 I, so as a podcast and I've done this a thousand times, I can't go back and listen to myself. Like, I'm like, Ooh, I start critiquing myself. And I'm like, I should've done this. I should've said that should have asked that. Do you, do you go through that? Or do you go back and listen to your, 

 Ray
 This is going to sound, it's going to sound weird. I listened to the monologue episodes where I like am like, giving my advice and I'm like, this guy is smart. He's awesome. He knows. Yeah. That's a good, I forgot about that. Yeah, no, that's good. Yeah. I do listen to my own podcast. 

 Josh
 That's good. That's good. My mom probably listened to mine. I don't even know. As you're building this out, I love this man. Thanks for chatting with me about that. I don't get to talk to many, experienced podcast hosts, but you started and you said I'm obsessed with SBA. Like if there was an SBA anonymous, like you would go and you're like, I wouldn't even get an SBA tattoo. What would, this is a funny deal question. What kind of deal would be necessary for you and I to go get an SBA? I'm not going to get SBA tattoo, but I'll get another tattoo. For you to get one, what size deal do we need to do to make that? 

 Ray
 Yeah, there's no deal. I mean, I can only go up to 5 million and a $5 million deal would not get me there. So I'm sorry. You're on your own on that one. 

 Josh
 Okay. Well, I'm getting an SBA lending tattoo. When I do a $5 million deal. To your business, let's talk in the details about SBA, right? For SBA lending. What can you use this for? Who is SBA lending for who needs this? 

 Ray
 The SBA seven, a program, that's the flagship. That is a program that's been around a while. It was really created to ensure that small business owners had access to capital on reasonable terms. The idea is you go to your bank. They say, no, you don't have enough collateral or this or that. Or you don't have enough money for a down payment. Let's have this program here to help those entrepreneurs get the financing. It's really, it's a job creation program. That's why the government put it together. It's a public private partnership, probably one of the only ones that actually works. They partner with private institutions, mostly banks, and then also 14 non-bank lenders to provide these funds to small business owners. It's up to $5 million. Behind each loan is an SBA guarantee where the SBA is saying, we're going to take on 75% of the risk, usually in the case of a default essentially. 

 Ray
 Small business owners can use this program for a variety of things. Pretty much anyone who owns a privately owned business is going to be eligible. It's, you can't be a nonprofit. There's some things that disqualify you can't be for investor real estate. It can't be, a church, it's gotta be a privately owned for-profit business, but 99% of them are going to be eligible prop, 99.9, maybe, I've done a company that had a hundred million dollars of revenue and they're getting a small business loan. It's based on certain things, but most of them will qualify and you can then use it to start grow, expand, buy a business. Most right now, the SBA 70 program, majority based on what I heard at this conference is being used to buy real estate for your built for your business. You own a business you're renting. You want to buy the building or buy a bigger building to grow into you're using the SBA loan and then also business acquisition. 

 Ray
 Those are those two things. According to the SBA at this conference represent 75 of the overall program, which is a $24 billion a year program. So it's very huge. That just tells me business acquisitions are off the charts right now, which is no surprise because baby boomers are now at retirement age. A lot of them own businesses. When you go to retire and you own a business, you sell the business. The SBA is the main financing vehicle to get a buyer to purchase the business in that kind of under $6 million price range. 

 Josh
 Okay. In the mechanics of that, what does it typically look like? All right. I have a small business and I want to get an SBA loan to buy the building that I'm working in. Kind of walk me through high level. What are some of the, how do I know it's a fit for me or not a fit for me? 

 Ray
 You're buying a church. All right. Let's say if you're buying a building for your business, you could go conventional, okay, you go to your bank and you put usually 20% down plus cover the closing costs. You're getting alone with, maybe a 20 year am, maybe it's a five or seven year balloon. There might be some loan covenants in there, like certain debt service coverage ratios that you have to maintain. You're going to get a nice, low fixed interest rate probably. And, and so that is one option. Then there's the SBA. The SBA has two programs that would allow for this, the 5 0 4 and the seven a I focus on the seven, a, the 5 0 4 is also a good option to consider, but the folks I work with, like the seven eight, because you can finance up to 100% plus access additional funds to grow. 

 Ray
 It's a very enticing program for businesses that are in growth mode. They don't tying up 10% even is going to set them back in their growth plans. Not only that, maybe they can get some working capital in addition to the purchase to even add some fuel to the fire for that growth. Those are the folks I work with for the seven, eight. 

 Josh
 Cool. Super cool. When it comes to, how do I know I'm meeting the requirements? Could you walk us through some of those, what those look like in terms of maybe how long the business has been established, what kind of revenue targets am I looking at? Based on the size of the loan, maybe what I'm an entrepreneur through and through. I've had some ups and downs in my credit. What does that look like? You know, those kinds of things. 

 Ray
 Yeah. And the SBA. Yeah. They keep it pretty simple and they have a SOP standard operating procedures and it kind of gives you the minimum of what you need to do. Most lenders have an overlay of what they require on top of that. Every important to note, every lender is going to look at things differently. It's not a cookie cutter program. The credit appetites are going to be different from institution to institution, how they structure the loans will be different. The types of deals they want to do. They're processed all are going to be very different lender to lender. That's why it's important to partner with the right person. Who's a good fit for what you're trying to do. All those things are looked at cashflow is king and SBA. They, we look at debt service coverage. So that's first and foremost. If it's an existing business buying real estate refinancing debt, or you're buying a business, we're looking at historical financials and that's where the crux of SBA lending is. 

 Ray
 You're looking at three years tax returns year to date financials. We're trying to basically crunch the debt service coverage and understand how much cashflow is available to service the debt based on these historical financials, particularly in the last year. So that's one you're looking at credit. Okay. We do, you do look at personal credit, basically assessing character issues. What you said, if there's a bump in the road, and you've recovered and it's an isolated incident, and there's a story. Even if the bankruptcy, there are lenders that will, can still consider that as it's not a character issue, it's not like you're just late on your mortgage every three months, that's different. Those are some of the qualifying factors, but it's really like a lender looking at the deal in its entirety. What's the collateral, what's the cashflow, what's the credit, what's the cash. And what's the industry. 

 Ray
 They're trying to weigh the pros and cons and try to make an overall credit decision based on everything. 

 Josh
 That's cool, man. To be a top producer and the SBA seven day world, right? Small circle for you guys, and gals who are doing these kinds of deals, what's it take? Like what kind of volume does it take to be a top producer? What kind of numbers do you put up on the charts to get people to start paying attention? 

 Ray
 Most it's gone up in recent years because it used to be like, eight to 12 would make you just a solid BDL, right? Eight to $12 million in annual production. Now I think probably 12 million is what people would consider solid annual production. If you're over 20, your, a high producer, you're, you're just going to be a high producer at your shop. If you're over 30 you're like, you're, you're really now you're in some rare territory. There's people that do 50 and there was even one person on my podcast that did a hundred there's somebody that I know that also did like 150. Wow. Last year I did 45 million this year. I'm probably on track to exceed that by, a few million probably. I think to put it into context, like if you look at, some of these, that's more production than probably 50 million would probably be more personal production than probably 80% of SBA lenders, like entire production. 

 Ray
 Like if you're doing a 200 million a year as an SBA lender, you're one that's, that means you're probably maybe top 25 in the country as a shop doing 200 million. So just to put it into context. If you had, and those that's usually a sales team of 10 people. So, you have 10 people doing 20 million, that's an ideal situation for a lender. If you're, if you see somebody doing, 40, 50 million plus their top 1%. 

 Josh
 Nice. Nice. As you're doing this, what's the future of your career look like? Like what do you as a deal-maker what kind of goals are you working towards? You know, personally, 

 Ray
 Right now, I just transitioned into a player coach role at my company fund decks, which is it's a non-bank SBA seven, eight lender. I've hired two DDoS business development officers, and I'm going to be hiring one more and then I'll have that. That'll be my team. Player coach means I'm producing and I'm also managing, and this is kind of my first foray for a, I don't know, I decided to use that word. I never used that word. 

 Josh
 For a. 

 Ray
 Four and into kind of management, even though everyone told me not to, everyone said, you're living the life as a BDO, man. You you're your own boss. Basically. You just do what you do. And it's just a great life. And, I, I agree with that, but for where I want to go, you're going to have to accumulate different types of skills and management is one of them. I'm kind of figuring that out now, I'm 33, so I'm still fairly young in the industry. I think ultimately I do want to build a shop and, just keep growing professionally, see how far I can go. 

 Josh
 What is a perfect deal? You and I are hanging out in a coffee shop in Del Ray, right. Someone walks around the corner and they're like, Hey, I got the perfect deal for you. And they laid on the table. What's it look like? 

 Ray
 With the seven eight program, you can do a lot of things. You can do a startup franchise, you can do a commercial real estate purchase partner, buyout, business, acquisition equipment, purchased debt refinance, open a second location of a restaurant. There's construction, there's all these different things. What I've done over the years and I've continued to do is make my box more and more narrow to focus on just what I want to do and what I'm good at. I'm right now, I'm down to three kind of sub-products within the seven a where I'm doing business. So it's all the same customer. Somebody that buys the business and maybe they buy it. Maybe they buy it or start it. And they have partners. Eventually, maybe they want to buy out a partner. So then that's another loan. I'm doing, you can do a business acquisition partner buyout. 

 Ray
 When they're building, when they want to buy their building, I'll do the building. Those are my three things, but mostly focused on business acquisition right now, because it's just blowing up and we're really good at it. Cause in the SBA world, when we're, there's very few lenders that will do a business acquisition, when you get up to the 2, 3, 4, $5 million range and there's no collateral insight, 90% of these SBA lenders just will get squeamish. Like most SBA lenders will have an artificial cap on the amount of unsecured loan exposure that they'll finance. Anything after that point, whether it's a million and a half or whatever, it's just an automatic. No. We're one of the few lenders that is collateral neutral and cashflow focused. I know I've got the best product for most of these folks, buying a business execution is always very key for them, speed certainty, and just being able to get it done. 

 Ray
 And so that's what we deliver. Of course I want to work with the folks that need me the most. Anything in the one to $6 million range, that's a business acquisition. Just about every industry is something I'm interested in. 

 Josh
 Super cool. Super cool. Let's do a little plug here for people who want to connect with you, do a deal, especially if they're looking for, you mentioned three and I missed one of them business acquisition, commercial real estate. And there was another. 

 Ray
 Partner buyout. 

 Josh
 Partner buyouts. Cool. Say, if you don't like your partner and you might want to get an SBA partner with SBAC, 

 Ray
 If you don't like them, but yeah, you get the idea. 

 Josh
 Yeah. Partner buyouts. Now someone's getting older. They want to move on. They want to focus on some other part. They're moving their spouse, moving, whatever the case may be. I'm just kidding. Where's a good place for people to plug in with you and do a deal. 

 Ray
 Yeah. Well, first I just want to met since you're allowing me to plug. I, I was on YouTube the other day and I was searching for SBA and I saw a ton of misinformation and about SBA lending and mostly done by brokers, intermediaries who are good at creating content, but the information is not always perfect. I am trying to grow my YouTube channel. It'd be really cool if you can go to SBA Ray and subscribe to that and get some more information that way. For my D my day job, which is an SBA lender, you can reach out to me by email, which is R drew@fundxsolutions.com. 

 Josh
 SBA, Ray, I'm going to look you up right now. Hey, there he is. Awesome job with a nice suit. Talking about. 

 Ray
 The suit there, 

 Josh
 His, his massive, what did you call it? You're not a D you're obsessed with SBA, dude. That is so cool that you found a industry that you love serving people you love and doing that as you're going along, and we're doing this interview, what questions should I've asked you that I completely screwed up and did not ask you? 

 Ray
 Well, I'm guessing there's folks here that might be interested in doing a deal. They're probably thinking, can I get one of these to buy a business? If you're, if you're thinking, can I do this? I mean, I'll tell you from the buyer standpoint, you need three things. In my opinion, one is decent credit, anything over 700, you're fine. If it's like six 50 to 700, and there's a story, we'll listen to that too cash. The SBA does require a 10% equity injection. You gotta have enough cash to put into the deal. Plus have of post-close liquidity, with no one wants to drain you to zero with the down payment. So cash is important. And then the third thing is experience. This is the most important thing, because this isn't real estate, right? This is, this is buying a business. They trade at these multiples for a reason, three X, on, on average, let's say, and that's because there's a lot of operational risks. 

 Ray
 You need to have the type of background that makes you well-suited to operate the type of business that you're buying. If you have those three things and you find a business that's, financeable through SBA, then yes, this is for you. 

 Josh
 Super cool. Fellow deal-makers as always reach out to our guests, say, thanks for being on the show. If you're looking to buy a business, buy the commercial real estate or partner buyout, this is the guy you want to chat with. His contact information will be in the little show notes below. If you're jogging, walking, driving a car, you can always come back and connect with our guests. If you are working on a deal or looking for a deal, and you want to talk about it here on the deal scout, head on over to the deal, scout.com for a lot of quick form, maybe gets you on the show next till then talk to you all on the next step. So see you guys.