This is a webinar replay of a webinar that was a live broadcast originally on August 6, 2021. You can watch the full episode at: https://bigskyfranchiseteam.com/alternative-small-business-funding/
We interview Craig Johnson and Grant Ferguson from Unsecured Funding Source. You can learn more about their company at their website: https://unsecuredfundingsource.com/
Unsecured loans are a viable alternative and can also complement the SBA & ROBS programs that many brokers and franchisees currently rely on.
Here are a few criteria that you may not know about with these types of loans:
– They require no collateral
– They are based on the credit qualifications of the borrower (not the business)
– Loan amounts up to $350k
– Rates as low as 5.99%
– 5-7 year terms
Sounds attractive, right? Listen in for more information and be able to ask questions regarding unsecured funding options.
Sponsor
This episode is powered by Big Sky Franchise Team. If you are ready to talk about franchising your business you can schedule your free, no-obligation, franchise consultation online at: https://bigskyfranchiseteam.com/ or by calling Big Sky Franchise Team at: 855-824-4759.
Transcription
Tom DuFore, Big Sky Franchise Team (00:00):
If you’ve been wondering how to franchise your business, or how to take your franchise company to the next level, then this podcast is for you. I’m your host, Tom DuFore, CEO of Big Sky Franchise Team. And on our episode today, we are going to do a webinar replay that originally we had a live webinar on August 6th, 2021. And we interviewed Grant Ferguson and then Craig Johnson joined us a little later, he actually had some technical difficulties of joining us. And they work for a company that provides unsecured loans, it’s called the Unsecured Funding Source. And I was really interested to have them on the show because it provides options to prospective franchisees, or maybe for you in franchising your business, or getting some, maybe marketing funds, or whatever you might be looking to do with the cash to help grow your business. And it’s all unsecured.
Tom DuFore, Big Sky Franchise Team (00:56):
They’ve got this whole system in place, and I thought it was really interesting because it’s a great additional alternative to consider lieu of, or in addition to, I should say, maybe the SBA, a conventional loan, partners, or a retirement rollover. So let’s go ahead and jump right into the webinar for you to go ahead and listen to it here.
Grant Ferguson, Unsecured Funding Source (01:19):
Thank you very much for having me, hopefully having us, again, Craig, hopefully will be joining us shortly, but yeah, Grant Ferguson is my name. I’m the CEO with Unsecured Funding Source, or UFS if you’re short on time and you want to say it quickly. And Tom, I’ve been with UFS about eight months actually, I joined late last year. I’ve got a long career in banking and financial services and consulting. I actually ran marketing at JPMorgan Chase’s mortgage division for a while, and I’ve done a lot of consulting with Wells Fargo, B of A, and regional banks and credit unions and so forth. And I was just looking for an opportunity to join a niche lender that I thought had a lot of great growth prospects, and just a lot of great products and services that met needs and gaps in the market.
Grant Ferguson, Unsecured Funding Source (02:12):
And I just felt UFS really fit the bill because we’re very, very focused, almost exclusively focused on the business startup, franchise purchase and business acquisition market, and increasingly helping individuals to find creative ways to get money to purchase a franchise and to go through in many ways a life transforming event is really what we live for. And as you had mentioned, we do offer some alternatives to SBA loans and rollover business startup programs and other programs that we think are very, very attractive. So that’s a little bit of my background, but excited to be here with you today and thanks for asking us to join.
Tom DuFore, Big Sky Franchise Team (02:57):
Yeah, no, I appreciate it. Thank you so much, Grant. And what I’d like to do, the audience and I’ve just looked through some of the attendees that are on here. I’d like for us to look at this from three different vantage points for folks who are attending, and just clients and people we work with. Vantage point number one is that business owner that’s franchising their business and is looking to say, is looking maybe for some operating capital, maybe to invest in marketing, maybe to fund some other part of their early on franchise venture. Perspective number two is for the franchisor that’s maybe looking for additional funding to say, hey, I have franchisees that maybe would have bought into the system at some point, but I just didn’t have that in place. And then perspective number three is the franchisee’s perspective.
Tom DuFore, Big Sky Franchise Team (04:00):
We just had Ali comment, I’m launching a brand new product or service franchise. Right? So, probably those first two are audiences that either emerging brand entrepreneur that’s starting to franchise their company, or that franchisor that’s maybe looking for a little funding to get things going. So I’d love for you to maybe talk through from those perspectives here. Hey there, Craig [crosstalk 00:04:28].
Craig Johnson, Unsecured Funding Source (04:28):
Hey, sorry [crosstalk 00:04:29].
Tom DuFore, Big Sky Franchise Team (04:29):
… glad you could [crosstalk 00:04:29].
Craig Johnson, Unsecured Funding Source (04:29):
… background.
Tom DuFore, Big Sky Franchise Team (04:31):
Yeah. Well, so Craig, we’re just jumping into this here asking Grant to fill you in that we’re looking at this really from two primary vantage points for you to talk through. Vantage point number one is the franchisor, excuse me, the new franchisor. So an entrepreneur, a business owner that’s starting to franchise their business and is looking for funding to maybe grow their franchise system. And then the second perspective is from the franchisor that is looking to either bring on some franchisees that their franchisees need some funding, or maybe just a franchisee in the network is looking to expand and need some extra working capital. So I’d love for you to talk through it from one or both of those perspectives before we go today.
Craig Johnson, Unsecured Funding Source (05:19):
Yeah. So I think Grant probably is best for this type of thing. And then I’ll handle a Q&A, if that works okay.
Tom DuFore, Big Sky Franchise Team (05:26):
Sure.
Grant Ferguson, Unsecured Funding Source (05:27):
Sounds good. Good to see you, Craig.
Craig Johnson, Unsecured Funding Source (05:29):
Yeah, you too. Thanks Grant.
Grant Ferguson, Unsecured Funding Source (05:31):
So we work with both of those audiences, Tom, pretty regularly. And then also the third one that you indicated, emerging franchise brands and working maybe strategically with a company that wants to begin to roll out a brand without a lot of potential track record and so forth. But in talking to franchisees taking the first audience, what we find is that many of them are disappointed, or frustrated, or have had some of their attempts to get financing from other sources foiled. And we’re not here in any way to, although the title of the webinar’s Alternatives to SBA or ROBS.
Grant Ferguson, Unsecured Funding Source (06:18):
We’re not here in any way to say anything negative about those programs, but what we do find is often a franchisee will, as you well know, have a number of elements that are required in order to get going and get started. There’s a franchise fee that needs to be paid. There’s often the cost of capital once you, the cost of equipment, and maybe there’s an equipment lease that needs to come into play. And then there might also be a need for working capital, for fixtures and fittings, and also just to get things going and to pay salary and to have expense ahead of revenue, as well as to cover your own personal burn rate. And so there’s a lot of things that franchisees are looking for to get the comfort level to make the leap. And we may work with multiunit folks, but we’re primarily talking here about an individual that is either expanding or starting afresh.
Grant Ferguson, Unsecured Funding Source (07:14):
So we’re finding folks that have gone maybe a ways down the road with some alternatives around funding, secured and collateralized forms of funding, and maybe have hit a dead end. Maybe there’ve been some changes in guidelines, regulations, maybe the bank they’re working with is not, perhaps doesn’t have a large volume of SBA and then maybe isn’t fully familiar and hasn’t briefed them appropriately as to some of the things that they’re going to need. And they discover this much further down the road, and they’re looking for some alternatives. And that’s where we really shine. And we’ve had many opportunities to come in and really frankly save deals and help people get that money.
Grant Ferguson, Unsecured Funding Source (08:00):
The other thing that we find is that maybe they have taken advantage of a ROBS program and they’ve tapped out their 401(k), or they’ve done a rollover, and yet they still need some additional funds, right? And for the same reasons, they might still need funds for the actual buy-in, or they might just need funds to really get the business up and running. And so we can be very complimentary in that sense where, maybe it wasn’t enough, or there wasn’t the comfort level to fully drain the retirement savings. And so, they’re looking to take some loans and looking for some alternate forms of capital. So in any of those instances, we feel we’re really offering a great alternative and we’re able to get people moving forward. In terms of working with the franchisors, or the zors, if you want to be hip about it. We will work directly with brands and be very much a part of their packages and their program, and be presented as a preferred lender.
Grant Ferguson, Unsecured Funding Source (09:05):
And in many cases we’re able to help meet all of the needs of the franchisor buy-in, or again, we can work in conjunction. So there’s a fitness franchise that we’re working with right now, where again, we’re not able to, had about, I believe 15 candidates and some issues arose with SBA guidelines and with a particular lender. And they were looking at about 15 entrepreneurs that some of whom were ready to rock and roll, some of whom had a spouse that had quit their job, who were going to be left without a franchise. And so we creatively worked with the brand to find an equipment leasing solution to cover the cost of the fittings and the equipment. And then in conjunction with UFS, we were able to find the rest of the capital for them to buy-in and get moving and rather than stalling that out. So just a couple of examples how we work with both of those audiences you outlined.
Tom DuFore, Big Sky Franchise Team (10:10):
Sure. Great. And thank you. And just, how does the process work? We’ve talked to, at a high level, but if I’m, I am listening in, but just for the attendees’ sake here too, because I’ve heard some of the presentation, but how does it work? What’s the next level, some of the detail involved that that does make it a little different and unique to what you’re doing?
Grant Ferguson, Unsecured Funding Source (10:37):
Craig, would you like to take that question?
Craig Johnson, Unsecured Funding Source (10:40):
Sure. No problem. So, the really, the great thing about our process is how simple it is. It’s essentially credit score and income driven. Unsecured credit history too, obviously definitely matters. From an underwriting standpoint, we’re looking at somebody’s credit score. We’re looking at their current highest unsecured limits. We’re looking at what type of unsecured limits have they had in the past? How have they handled those limits? And then we’re looking at their income. What type of loan can their income support? Sometimes that’s going to be about 50% of their annual income. So somebody who makes a hundred thousand, we might be able to get them 50,000, but what we’ll do is we’ll get them three or four chunks. So if they want 200K, we might get them four separate $50,000 loans. That’s really an unknown thing. I find that a lot of clients out there are unaware that they can take more than one option. Once we put together a pre-qualification we present it to our lenders. And usually we can get them approved within about three or four business days, money in their hands, usually about anywhere between one to two weeks later.
Tom DuFore, Big Sky Franchise Team (11:54):
Great. And how does this work in terms of, so it makes me think about the Credit Card Program. Anyone who’s been in franchising for a little while has been presented the idea where you, at some point a franchisee’s considered getting a bunch of credit cards and doing some cash advances for this “unsecured loan.” So is that what we’re talking about with what you’re doing?
Craig Johnson, Unsecured Funding Source (12:18):
No, not at all. What we do is regular loans and lines of credits. We don’t offer credit cards unless it’s a last ditch effort. Somebody who maybe self-employed, they can’t verify their income. Maybe they make 200K a year, but they write that all the way down to 20 or something like that. That type of scenario would be a credit card funding based scenario, but everything else is going to be regular unsecured term loans where they might get a hundred thousand dollars deposited into their account with a five-year term, a fixed interest rate, and have a dependable payback, not a credit card.
Tom DuFore, Big Sky Franchise Team (12:58):
Okay. Okay. That’s great. I think that’s really unique. And what does this look like in terms of, oh, we’ve got some questions coming in. I’ll read through those in a second here, but is there any specific system or program, so for maybe a small business that wants to add this in, do they need to review the business? What’s that review process look like for maybe a non-startup that’s maybe looking for working capital?
Craig Johnson, Unsecured Funding Source (13:28):
Yeah. So it really just depends on their business particulars. You need to have two years in business. So, that is a set in stone minimum term there of time in business. But once you do, we can certainly do business loans, business lines of credit as well. A business needs to have revenue, needs to be profitable, and then also needs to be an industry friendly business. That’s a moving target these days on what’s industry friendly and what’s not. Perfect example though is Forever, and don’t ask me why, but banks have just not liked trucking companies as an example, an industry not friendly business. So in those cases we’ll just get those clients personal loans, as well as lines of credit, but somebody who owns a franchise that, maybe a restaurant, or a carwash, or whatever it is, those are definitely industry friendly and we can grow business as long as their business qualifies.
Tom DuFore, Big Sky Franchise Team (14:27):
Okay, great. And so how then would clients qualify? What’s the process for you guys? What does all that look like?
Craig Johnson, Unsecured Funding Source (14:39):
Once a client applies with us, we do a very quick soft poll on their credit. We get their income figures. If they own a business, we get those financials as well. Oftentimes they can state them to us. We don’t actually need to verify it at that point. They give us the particulars on what they’re looking for, as well as their parameters, their business, how much they make, what type of business and whatnot. Within a matter of hours, we can usually get them a prequalification. And if they like it, we go from there, we go ahead and get applied and get the ball rolling for them.
Tom DuFore, Big Sky Franchise Team (15:12):
Okay. And some questions have come in here from Ali, it sounds like his franchise system is about a 1.25 million investment. He’s got some assets that are part of it. And it sounds like, from some of his comments, he may have be in an industry that would be considered potentially unfriendly, or based on what you’re saying. So is there any way you could share maybe some more detail to see if your program would be a fit for maybe a higher initial investment in the franchise world and what, maybe talk more about being friendly, industry friendly?
Craig Johnson, Unsecured Funding Source (15:54):
Sure. So what our program works the best for, not necessarily those large $1 million businesses, we have a niche below what the SBA will touch usually, anywhere between 350 and below. Keep in mind, these are totally unsecured funds. People are not providing collateral. They’re not putting their house on the line. They’re not putting their 401(k) on the line, no UCC filing on their business assets, nothing. Totally unsecured, because of that though, it’s a more conservative program where we’re not able to get a million dollars as an example. Now, what people will do though, is they will take our money, combine it with some other type of funding to come up with a total of what they’re looking for. Sometimes that’ll be ROBS, sometimes that’d be an SBA loan. Sometimes it’s a real estate where they need 20% down and we can help them with that part.
Craig Johnson, Unsecured Funding Source (16:45):
So in terms of the industry friendly. Again, that’s really a moving target. It’s hard to say, but most franchises are going to be industry friendly, things that aren’t are going to be real estate businesses, trucking companies, restaurants are tough depending on maybe because of COVID. They got really tough there for a while. I think that’ll come back. Any franchise though with a proven model is going to be more industry friendly than one of those other businesses as an example.
Tom DuFore, Big Sky Franchise Team (17:20):
Okay. Okay. That’s fair. That’s fair. So it sounds like what you’re saying is, hey, if you’re really interested and you think your business might be questionable on this industry friendly idea, they need to maybe have a conversation with you guys and you take it from there.
Craig Johnson, Unsecured Funding Source (17:42):
Absolutely. Yeah. We’re happy to just answer questions. Our program, we hope is a fit for everybody, but obviously sometimes it’s not, and we’re happy to help them find solutions. If we’re not the solution we’re, I’ve been doing this 17 years. So have a lot of experience in the industry in general, even if it’s not exactly what we do, I can at least point them in the right direction, maybe come up with a game plan that works for everybody.
Tom DuFore, Big Sky Franchise Team (18:06):
So, one of the questions I always have, guys, this sounds too good to be true, right? It’s like, why isn’t this around? Why isn’t this, which was part of my hesitation when we first met. I’m like, this sounds, so many clients I’ve worked with over the years and currently work with, and I know will work with and prospective franchisees over the years, this is exactly what they’ve described they would ideally like to find. And maybe to your point, it might not fund the whole initial investment, or everything that they’re looking for, but there is a little bit of, is this too good to be true? What’s the catch? So talk, how do you respond to that, if someone asks you?
Craig Johnson, Unsecured Funding Source (18:52):
Yeah. So, there’s no catch, I’ve been doing this 17 years, as I mentioned, it’s been around for 17 years. I’ve never done things like this, these webinars. So basically just gotten out there, but the only catch would be that these are unsecured loans. They’re hard to qualify for, right? So it’s not going to be a fit for everyone. You got to have a minimum 700 credit score. You got to have verifiable income. You need to have a, not illustrious, but a fairly robust credit profile. You need to have those qualifying factors. If it’s a business, it’s got to be industry friendly, you have to have revenue, you have to show profit, can’t have a loss, things like that. So it’s not the easiest thing in the world to qualify for. I guess that would probably be the only catch if you ask for one.
Grant Ferguson, Unsecured Funding Source (19:48):
Tom, just to piggy back on that as well, as I mentioned, I’m fairly new to the company and Craig’s been doing this a lot longer than I have. But when I first started and looked at joining UFS, I thought, well, surely people could just go do this on their own. There’s so many lending options out there today that from the LendingTrees and the LendingClubs of the world. Couldn’t somebody just jump online and do exactly what we’re going to do for them? Well, the short answer I quickly discovered is no, they can’t. So there’s knowing which lenders to go to. There’s knowing how to sequence applications. There’s knowing a lot of ins and outs and depth of expertise around different lenders underwriting criteria and the way they look at borrowers.
Grant Ferguson, Unsecured Funding Source (20:32):
There’s knowing, as Craig had mentioned, the kinds of details around the type of business people are buying, the use of funds, whether they’re personal loans, whether they’re business loans. So it’s that gap in expertise where we bring lot of value and we actually get people 3, 4, 5, or more times the money than they could actually get on their own, and do it without damaging their credit score, and do it in ways that aren’t going to make it difficult for them to get additional financing and funding.
Grant Ferguson, Unsecured Funding Source (21:03):
So I just wanted to add that, that one of the things I think you had mentioned is, we’ve never heard of this before. People are familiar, obviously with unsecured lending and personal loans and business loans, but what’s unique about what we do is the way we package it, the way that we work with our clients and give them very highly customized high touch service. So you might be applying online, but you’re going to be talking to a human being that has been at this for 10, 15 or more years, and really knows what they’re doing and can act as a navigator through the process. That’s a big piece of where we add value.
Tom DuFore, Big Sky Franchise Team (21:40):
And so for things like this then, how do your fees work? How is all of that structured? Is it a fee for service? How does all of that go?
Craig Johnson, Unsecured Funding Source (21:56):
I guess [crosstalk 00:21:57].
Grant Ferguson, Unsecured Funding Source (21:56):
Craig, I gave you an opportunity to take a breath. So you’re up again.
Craig Johnson, Unsecured Funding Source (22:03):
So our fees, we work on strictly a commission basis, our success is our client’s success, or lack of it is the same. So we charge a standard fee of 9.9% of the loan amount, depending on the loan size. Sometimes we will reduce that. If somebody’s looking for 350,000 and we can actually get them that, then obviously we’re going to work with them on the consulting fee. However, our standard fee is 9.9% of the loan amount, only payable once they have funds in their hands. So A, they can use the money that we get them to cover the fee, that way it’s essentially built in. And B, if they don’t like the offers that we get for them, they don’t have to accept them. There owe us absolutely nothing if they don’t.
Craig Johnson, Unsecured Funding Source (22:47):
We’re not like other companies. I know some of the credit card stackers out there. If they get you the card you’re getting billed for it. Even if it’s a $2,000 card at 27% interest, you’re getting billed for it. That’s not at all how we operate. Our loans are always presented to our clients. They get the option, whether or not to accept them. If they don’t like them, they don’t take them. There owe us absolutely nothing.
Tom DuFore, Big Sky Franchise Team (23:11):
Great. Thank you. Thank you for sharing that. And talk about, you mentioned the timeline a little bit there, but you said it’s a week or two to qualify. And how does all of that work again?
Craig Johnson, Unsecured Funding Source (23:23):
Yeah. So not a week or two to qualify. It’s usually we can get them a prequalification, literally in a matter of hours, if you and Tom, come to me and say, hey, I want to borrow 200K. I want to buy a Jimmy John’s franchise. We would get, hey, how much money do you make? How’s your credit? Are there any co-borrowers? We get all the particular information that we need. You don’t even have to verify your income at that point, we can just go off of a stated income. We can get you a prequalification. That’s based on my 17 years of doing this and nothing, but these types of loans. I’ll say, hey, Tom, we can’t get you 200, but we can get you 150 to 175. Does that still work okay for you? Whatever that hell is. And then it’s up to you whether or not you want to move forward. If you like it and you want to move forward, we’ll go ahead and we’ll get you applied through the process. That’s where it takes about a week or two, is to actually get that money in your hands.
Tom DuFore, Big Sky Franchise Team (24:17):
Okay. Interesting. Well, it’s really unique, and I’d love to open things up to the attendees here. If there are any specific questions, and I know Ali you’ve typed a bunch in the chat box. We’ve tried to answer some of them here, but if there is a specific question or comment, I can unmute the group here if you’d like to do that. So just use the hand raise feature, or where it says, raise hand down at the bottom there, just click that and I’ll unmute you so you can ask some questions to Grant and Craig while we have them, or type it in the chat box, whichever you’d prefer. Type it in the chat box or the Q&A, whichever you prefer. Yeah, go ahead.
Grant Ferguson, Unsecured Funding Source (25:04):
Oh, sorry dude. Was somebody asking a question?
Tom DuFore, Big Sky Franchise Team (25:06):
Yeah. Someone was going to ask a question.
Grant Ferguson, Unsecured Funding Source (25:08):
Okay. Sorry about that.
Tom DuFore, Big Sky Franchise Team (25:09):
Yeah, yeah. Go ahead. All right, Ali you’re on air. You’re live.
Ali (25:22):
Hello guys. This is very helpful. A great business. And thank you for all the insights. I’m launching a business in the oil and gas business, and we basically are selling a Batmobile kind of a truck to the franchisee. And we are pretty well-funded as a franchisor. I want to find out how established or mature this business of lending is to the franchisee, because what we want to do is, A, build a model by which the franchisee gets funded easily. So we go to franchisees that can, let’s say put up 250K, and we borrow as much as we can from SBA, say 300K. And the difference we split it with the UFS.
Ali (26:20):
So 350 UFS, and we from our balance sheet can collateralize, or put up the money until the franchisee can pay everybody. And it’s a very, very profitable business. It’s a payback less than a year of their investment and if 50% EBITDA going forward every year. So it’s a cash cow. They can pay. So we’re almost agnostic to the rate on the loan. Given that, what I want to find out is how mature is this industry? If let’s say our franchise gets to a billion dollars of this kind of financing, can we go to Wall Street? They can securitize this, create asset classes for money managers, et cetera?
Craig Johnson, Unsecured Funding Source (27:16):
That’s actually a pretty good question. Honestly, it’s above my pay grade. It’s not really what we do. We act as a arranger of the financing. Once we get somebody that 350K in financing, what they do with those loans from then on is between them and the actual lender. So I’m not sure if those loans get sold, or built into a portfolio, or anything like that. They are unsecured loans. Keep in mind, they’re non-collateralized. So I don’t know that they’re quite as sellable as a mortgage would be. Maybe Grant might be a little better qualified to answer to this type of question. So I’ll let him jump in here.
Grant Ferguson, Unsecured Funding Source (27:58):
Yeah, I think it’s, thanks, Craig. And Ali, I think what you were talking about is really interesting, and I think it represents some of the creative thinking that’s happening in the industry today around financing. It’s very traditionally been franchise brand talks to franchisee, when you get to the conversation around financing, they say, we work with these lenders, go talk to them, right? And so being a little bit more involved as a brand, or as an emerging franchise brand as you are, which sounds really interesting by the way, there are a lot of creative things that I think are happening, including a conversation I had recently around taking warrants, or equity as a lender, almost like a lighter capital, although that’s non-dilutive financing, but being an alternate to VC or an alternate investor and having some asset classes and looking for reinvestment, or looking how to make that a security that can be marketed.
Grant Ferguson, Unsecured Funding Source (29:05):
I think we would be really interested in at least chatting with you and exploring some options. We’re not going to be able to cover that in the next 60 seconds here, or whatever we have left, but perhaps if we could get your contact details through Tom, or if you wanted to email Grant@theufs.com, or Craig@theufs.com, we could pick up and have a more detailed conversation and maybe brainstorm a little bit with you.
Ali (29:29):
Very much so. I will delegate it to Tom, he’ll arrange for it. And yes, I come venture debt business, and I come from Wall Street. So I think it’s a golden goose, or these are breadcrumbs you’re leaving on the table. This can be a total addressable market, several billion dollars. And I know Zurich Re and a bunch of reinsurers are interested about this type.
Grant Ferguson, Unsecured Funding Source (29:54):
Don’t disagree at all. As Craig said, it’s not our traditional model of what we’ve done, but hey, you asked a question I read in the chat about how are you looking to grow, and how are you looking to change in the industry? And actually, these are things, unless you are open to new ideas, then you may not end up changing. Right? So definitely would look forward to a chat with you. And by the way, Craig, sorry, I gave you the wrong email address. CJO@theUFS, but yeah, Tom, if you don’t mind connect us [crosstalk 00:30:23].
Tom DuFore, Big Sky Franchise Team (30:23):
Yeah. We’ll get you guys connected for sure. Yeah, I’m curious too. Ali, you asked some interesting questions. Is there any potential, I don’t know if this would actually make sense, but I’m thinking, Ali, based on your question, if you’re doing enough volume through what you’re doing, I would imagine that, I’ve seen that a lot of franchisors do this as they grow in size. They eventually in-house their own funding for franchisee. So they’ll create their own in-house version. I don’t know if it’s exactly what Craig and Grant, what you guys do, but I’ve seen something like that where the franchisor actually basically becomes the banker. They’re self-funding the franchisees through a loan to the franchisees of some kind, oftentimes unsecured, or the franchisor knows that if for some reason the franchise doesn’t work out, there are some assets that they reclaim, and then they can reuse with other franchisees that join the system. But again, I’ve usually seen that after franchise brands pretty mature, they usually have 200 plus franchises and oftentimes many more than that, once they start going that direction. So, yeah.
Ali (31:43):
You’re absolutely right Tom, and that’s the direction. We will be there in about three to four years. So this is a two, $300 million business, but most franchisors, if they’re smart, they don’t want to be in the banker business. Today money is cheap. You want to bring in insurance and reinsurance guys, venture debt guys. You can do this at team levels, 12 to 18%, you don’t need to deploy your capital in this business. So you’re absolutely right.
Tom DuFore, Big Sky Franchise Team (32:17):
Yeah. Yeah. But in the meantime, while you’re building and initially getting there, it sounds like what USF is doing can be a, this is an option for emerging and growing brands of any size, whether it’s an independent franchisor, franchisees, this is an option for consideration. Right? And Craig, I like how you said that this is something that maybe the franchisees combine with other things. The ROBS program might be utilized, or maybe a conventional loan or an SBA loan. And then this gets coupled with that as part of the process.
Tom DuFore, Big Sky Franchise Team (33:07):
So I like the flexibility that you offer and just again, expanding that option, or maybe for that new franchisor that’s looking to put 30 or $40,000 in use for some marketing to attract prospective franchisees, or something in that regard. Great. Well, do we have other questions for Craig and Grant while we have them on the line? I haven’t seen any other hands raised or anything come up. So while we’re waiting to see if any other questions come up, Craig or Grant, is there anything else you’d like to leave with the audience before we close out for the day?
Craig Johnson, Unsecured Funding Source (33:51):
The only thing I would add in there is just the thing that makes us unique as UFS, in my opinion, and Grant touched on that, but I’ll expand, is when you go on LendingTree, or LendingClub, or Prosper, or Best Egg, or any of these online websites, you’re getting a computer, you’re applying, you’re getting maybe a pre-approval, everything is done electronically. You don’t know if it’s the best option for you. You’re not getting anybody holding your hand throughout the process. You’re not getting an advocate. You’re getting a lender and that’s it. Our service is really, A, obviously we want to get people the money that they need, but B, and almost equally as important is we want to get them the best options. I don’t want to give them an option that’s not, if I know I’ve got 7% from this lender and 10% from that lender, oh, I want to get them the 7%.
Craig Johnson, Unsecured Funding Source (34:49):
So we are their advocate. We’re going to hold their hand, start to finish. We’re going to make sure that they get what they need at a rate that they can afford. And build a relationship with the client as well. We hope to be able to be an information source for them as well. This is the type of loan we do, and I’ve been doing this 17 years, but I’ve got a pretty good level of industry wide experience. Like I said, if I don’t have the answer, if I can’t be the answer, at least I can be an information source and help people come up with a game plan to figure out whatever issue they’re trying to solve. So that’s really the difference between us and just applying online, is you get us, we hold your hand, start to finish. We make sure you get every penny you need at the absolute best possible rates.
Tom DuFore, Big Sky Franchise Team (35:38):
Yeah. Well, great guys. Well, I appreciate it. And part of the reason we wanted to have you on this webinar series, Moving Beyond the Coronavirus Economy, is to let folks know that there are additional options. So if you are a franchisor looking to help your franchisees get funding, this is another arrow to add into your quiver. It’s probably not your only option, nor would we recommend it be the only option. You need to provide franchisees options, or prospective franchisees, or even for your own business and things that you’re doing and growing.
Tom DuFore, Big Sky Franchise Team (36:14):
Craig and Grant, thank you both so much again for being on the show. I greatly appreciate you being a guest on our webinar, what an awesome interview. And if you guys who are listening have any interest in learning more about their company, it’s called Unsecured Funding Source, it’s unsecuredfundingsource.com. And that’s the episode today folks. Please make sure you subscribe to the podcast and give us a review and share this, please. And if you know anyone who might be ready to franchise their business, or you’re ready to talk more about maybe franchising your business, check us out at bigskyfranchiseteam.com. And thanks for tuning in. And we look forward to having you back on the next episode.
