Why Traditional Banks Say No to Equipment Financing with Robert Misheloff

Speaker A: So the big question is, how do entrepreneurs, millionaires and billionaires scale not just their business, but their impact? How do we practice biblical billionaire principles and set God sized goals that are destined to fail without divine intervention? What if you, as an entrepreneur who have poured blood, sweat and tears into growing your business and who refuses to settle for mere financial freedom, and who didn't hire expensive billionaires or elite entrepreneurs to map out a growth strategy, knew their secrets instead of recreating the wheel? Why can't you just model the way they scaled from millions to billions, achieved a life of significance and success, and most importantly, multiplied freedom for the most vulnerable people in this world? What if their secrets weren't complicated at all and all you needed was a guide who's a few steps ahead of you? That is the question and this podcast will give you the answers. My name is Brett Swartz and welcome to the Build it to Billions podcast. Welcome to the Build it to Billions podcast where we guide successful entrepreneurs and investors on their journey from millions to billions. We believe the key to scaling compounding your wealth in life starts every single day with the mindset and practice of stewardship over ownership and applying billionaire biblical principles. Our ultimate goals have you scale and compound your wealth and life so you can give more, all of it away to help MVPs. My name is Brett Swartz. Each and every episode we're joined by the world's top entrepreneurs, millionaires or billionaires, and they share their secrets and insights with us so we can all level up and make a bigger impact. I'm excited about our next guest. He's out of the Las Vegas area. He's has over 20 years of experience in finance, including working as a financial analyst for a business valuation firm and running a marketing company that specializes in marketing financial products. Um, today we're going to be talking about, um, financing and helping your small business with vehicle and equipment financing. So it's kind of a niche thing that, uh, our guest is going to bring to the table. Please welcome to the show with me, Rob Mishloff. Rob, how we doing?

Speaker B: Good. Thanks for having me. M. Brett.

Speaker A: Excellent. For our listeners getting to know you for the first time, would you give us just a little more about your story and your current focus?

Speaker B: Yeah, absolutely. So, uh, I started the company, uh, about a dozen years ago and the reason for that, I was running a direct marketing firm, uh, since from M 2003 to 2013. And our main product was direct mail, which by 2013 was not really a viable product anymore. And uh, uh, we were mostly, uh, marketing for a niche product called reverse mortgages. And a gentleman that had worked for us and had moved on went to go work at an equipment finance company. And he was shooting hoops with someone who was still working for us. And he said, so you're doing this equipment finance thing now. How are you guys getting your leads? He says, well, they're sending out direct mail and people call us. I said, wow, well, maybe I ought to start direct mailing for these equipment finance guys. So we start doing that and I cold call and I get into uh, some of the larger shops. And I realized through that process that. And let me back up for a sec. Because the interesting about the reverse mortgage industry, uh, was there wasn't a lot of scammers. Most of the people, you know, every single business in the world has a few bad apples. But what was unique about the reverse mortgage industry, the vast majority of the people in that industry were good people. They were doing it so they could help people not have to choose between food and medicine and they believed in the product. And I get in to start talking to these guys that are doing small business loans and equipment financing and I find out it's an unregulated market. And a lot of the folks in the market, they weren't being honest with their customers about the rates and the terms and they were actually proud of it. They were bragging to me that you can use smoke and mirrors because, uh, guys that drive trucks and guys that uh, uh, poor asspholt, they're good at what they do. But they don't know anything about finance. They don't know anything about numbers, so you can tell them whatever. And they don't have lawyers, so none of their contracts are reviewed. And there's all these shady things they can do. And I said to myself, you know, there's a lot of ways to make a living. And I'm not going to make a living helping these guys rip off small business owners. It just, just doesn't speak to me. And so I started our website, Smarter FinanceUSA.com and basically told all the shifty things these guys told me and said, these are the things I heard. This is what's going on in the industry. And by the way, um, these are the real rates and this is what you'll actually pay. Not just, you know, and to this day, if you shop online and you're looking up equipment finance, they'll 90 plus percent of the equipment finance calculators on websites out there, they'll show you a, uh, payment or they'll show you a rate, but it's based on a fairy tale. It's either. Sometimes it's a total lie and they'll say you're going to get a 5% rate when you can't even get that on a mortgage. But, uh, when they do have a legitimate rate, most of the time they're imputing, um, something that's very far from the situation of most business owners that are shopping on the Internet to finance equipment for their business, particularly if they're a startup business. In fact, a lot of times the payment quoted, uh, will be half of what someone could reasonably expect if they were in some of the more challenging situations.

Speaker A: Yeah. Okay. Excellent. All right, so Rob Mishloff, uh, everybody, you can learn, um, more about what he's doing by going, uh, to Smarter FinanceUSA.com Smarter Finance USA.com so what, so I think the first, the first part of this conversation is really knowing that there's, there's, you know, better actors and, uh, then there's worse actors in this world. And you want to make sure you're working with somebody who's going to give you an equitable deal on the, on the financing of equipment. And so it sounds like that's where your focus is right now. So what's, if someone's listening to this and they have a business and they're saying, hey, I need to finance my equipment, what is kind of step one or the first, you know, part of wisdom that you would share with them?

Speaker B: So the first step is a lot of times when you're shopping for equipment, um, the first two things you should do if you're looking to finance is not call and not shop on the Internet for financing. Uh, the first thing to do a lot of times the people selling the equipment will have 0% or near 0% deals that your bank or a, uh, private equipment finance broker can't compete with. So that should always be the first step. Uh, it's funny, we'll have people who've gotten, uh, offered close to zero percent from their, uh, uh, seller and they call us to price shop it. And we say, well, we're not going to give you a negative interest rate, so I think you should go with that. But secondly, second step, if, um, they don't have in house finance and you don't qualify, then go to your bank. Um, because that's typically, if you qualify, that's going to be your next cheapest option. And if the bank says no, and they usually do, but you never know. And we sometimes Hear deals where we're like, well that's pretty good and we can't touch that. Um, third, third option is a private lender, uh, like ourselves.

Speaker A: Okay, excellent. So that, that makes sense. So making sure that you understand that most of the time or a lot of the time, if you can buy direct, get financing direct, it's going to be lower than what anyone else can provide. That makes sense. They want to sell their assets. So starting with are there any great deals from direct? And then step two is then finding uh, those who are more competitive like yourself. Is that what you're saying?

Speaker B: Uh, well next you go to your bank, you know, uh, yeah, uh, because you know, folks will sometimes come to us and say, well my bank offered me this and he said that's a pretty good deal, you should take that.

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Speaker B: Yeah, yeah, uh, yeah. And it's very rare that uh, uh, an equipment finance company can, can compete with bank or dealer financing. It's just not our space.

Speaker A: Okay, got it. And um, okay, so now, now someone comes to you, maybe give it. Give us. Give, give a Recent equipment financing, uh, deal that you help someone with. Right. What did it look like, what were they purchasing, you know, and how do they qualify? And, and uh, what was the, what was some of the general rate and term?

Speaker B: Sure. I'll give you a couple of examples. Um, uh, because there's a pretty wide range and uh, um, for example we recently um, dealt with an auto shop owner that needed to purchase a couple of lifts for their garage. And it was a little bit of a tricky deal because they weren't buying from a vendor, they were buying ah, ah, from a private party. Kind of like if you found some equipment on Craigslist or wherever. And that's an inherently risky deal. Um, for a lender. The vast majority of uh, well I wouldn't say the majority but about 45% of equipment defaults are due to breakdown. You know, you can't earn money from the equipment so it becomes difficult to pay the note. Um, and in this case, um, the you know, a couple of lifts, Ah, it took us a few days to find somebody willing to take that deal but fortunately the uh, owner had good credit and a few years in business. So we were able to get a very reasonable rate, very comparable uh, to bank terms, even though it took us a day or two longer than it normally takes us. And that's an interesting thing right there because when for us a long deal takes a few days to get approved, whereas a lot of times you're going to your bank, it could take weeks to just to get a denial. Um, now on the other side, the really challenging deals, for instance, we had someone call in who was a startup, uh, buying a used semi truck with challenged credit. And so that's, you know, in terms of risk you go from well, ah, it's used equipment from a private party to wow, you know, startup business, lousy credit, buying a used semi truck. Um, and so that was one of your more high rate, high down payment kind of things. And it's interesting because ah, a lot of folks in the industry kind of shy away from telling somebody, you know, this is going to be high down payment and this is going to be high rate. So let's think about this. Let's work the numbers. How much money are you going to bring in from this asset? Because I'm going to give you a lousy deal. And the reason why I have to do that is because you represent very, very high risk to the lender. And there's no way to sugarcoat this. This is high rate financing. So let's look at this and make sure it makes sense because I don't want you to come back and say this didn't do a good thing for me, this didn't do a good thing for my business. And that, that's really what's most most important. Um, um, yeah, I think it's important

Speaker A: to take, to take the approach of finding ways to talk people out of the deal if there's any other ways like the bank financing or the financing direct. But in these situations, even like, hey, this is, are you willing to do this? Because it's really got to be an investment and not an expense. And if the interest way exceeds your investment for your business and what this is going to produce in income, yeah, you don't want a 90 days they're knocking on your door, you know, upset, and you're like, well this is what you signed up for. And so I think that's really important for transparency and clarity. We're, uh, speaking with Rob, uh, Mishloff everybody. You can find him by going uh, to his, his website and that's smarter financeusa.com smarterfinanceusa.com if they're looking to expand for equipment financing for your business, you, um, can check them out. Okay, that makes sense. And then, um, you know, I guess it'll depend. So the answer, part of the answer to your question would probably be interest rates it seems like would be based upon your credit worthiness. Right. The equipment you're buying. Right. And your business, you know, track record. Probably those things can all go into play and you're, I don't know if they look at business plan, but that, that, that, that's the general um, way that people, or that banks will or the people that you finance with will finance. But the general terms and the general interest rates or is it just, is it pretty broad or what do you think, Rob, on that?

Speaker B: It's an enormous range. The, the, the, the main things that, that are looked at and we accept in very rare cases we're not looking at business plans. We're usually not looking at financials, uh, if the deal is under a quarter million dollars. Um, but the main things are, uh, how long have you been in business? Um, and two years is ideal, um, to get out of that, that startup range, um, because startup rates are nasty because of the risk. Um, what is your, both your personal and business credit? If you don't have business credit, it defaults to personal and importantly lenders look at, do you have installment history and ideally for your business, if not for your business, have you ever financed A car. Um, and that helps tremendously. Um, and then if the credit's a little challenging, you may be asked for bank statements and lenders are going to look at, um, well, how much, how much cash flow do you have and also how much do you have left over. What are your ending balances in the last three months of your bank account? And importantly are the ending balances enough to make the payment?

Speaker A: Mhm, that makes sense. Okay, perfect. That's the list. Um, right. How long you been in business? Right. What's uh, your personal business credit? Do you have installment history? Have you financed a car? What is your actual net cash flow per month? Right. Just getting a sense for that and making sure that the numbers line up. That's pretty, that makes sense. What other questions or other ways that people could prepare if they wanted to work with you, Rob, that they can be doing?

Speaker B: You know, the best thing is to just call and whether it's us or somebody else, a competent lender can tell in the first five minutes do you have a shot, um, realistically, what's the range going to be and what's going to be needed. And um, there's not really a lot of preparation that has to go into it because it's predicated on what's your credit and how long have you been in business. And then to a lesser extent what are you buying and what's your industry? For example, um, there are some industries that we just can't do. Um, nobody wants to touch them. Uh, uh, startup food trucks. Nobody's going to buy that paper. Um, we get calls from guys that want to do crypto mining. Um, that's not really something lenders want to invest in. Um, marijuana grows, Um, I guess technically we can do them, but they're so challenging. We tell people to go find someone that specializes in and that because it's kind of illegal and no one wants to touch that stuff. Um, but um, real businesses, you know, where there's um, uh, you know, uh, yellow iron construction equipment, a, ah, truck, um, an urgent care clinic, an auto garage, those are going to be much easier than your super high risk industries. Like for instance, a restaurant. Restaurants are challenging. Um, we had one lender tell us that uh, the startup restaurant default rate was on the order of 60%.

Speaker A: Wow.

Speaker B: Yeah. So very, very challenging business. And we get a lot of folks uh, that come to us wanting to start a restaurant and we can almost never, never help them, unfortunately. But someone wants to start a business, um, in you know, construction, auto repair, uh, trucking, um, someone with A medical degree, buying medical equipment. Um, those are all relatively straightforward things to do.

Speaker A: Excellent. We're going to move to lightning around just a second, but I want to just kind of thank our sponsor, Capital Gains Tax Solutions. If you're in a large exit coming up, businesses, Bitcoin, real estate, multiple million dollars of gains and you want to defer capital gains tax, you go to capitalgains taxsolutions.com. um, in fact it's actually my what we specialize in. So it's kind of our commercial for our own podcast here. But yeah, if a large business exit, large real estate, or if you're a, uh, large, large stock position and you want to defer tax, go to capitalgainstaxsolutions.com. you ready for the lightning round?

Speaker B: Sure.

Speaker A: All right. Knowing what you know now, if you can go back to your 20 year old self, what's the one golden nugget make sure to tell yourself to do.

Speaker B: I go into this industry much easier than any other industry I've been in and it's fun.

Speaker A: Cool. I also love it. Uh, question number two. What's the number one book you've recommended the most in the past year?

Speaker B: In the past year? Um, probably Liars, Poker. I love that book.

Speaker A: Excellent. Question number three. What are you most curious about right now?

Speaker B: AI. What's it going to do? Um, how to use it to get an advantage.

Speaker A: Excellent. With uh, that being said, number one AI tool that you're using right now.

Speaker B: Um, just Claude.

Speaker A: Yeah, yeah, it seems to be the uh, the front uh, runner right now.

Speaker B: Next.

Speaker A: Uh, question. Um, number one. Leadership. Quote or theme that you strive to live by?

Speaker B: Leadership, quote or theme. Be. Be fear. Be fearful when others are greedy and be greedy when others are fearful.

Speaker A: With that being said, just maybe a little longer answer for investing. What do you like to invest in and where do you feel there's some opportunity right now?

Speaker B: You know, ah, lately I've been investing in precious metals. Um, that I think is a huge opportunity because the dollar is not getting, I mean in the short term it's getting stronger, but long term the dollar is not going to get stronger. Uh, we are spending. The US is, uh, running was a $2 trillion deficit and the debt is growing. I don't see a way out of this. So, um, cash, I keep telling my wife, cash is trash.

Speaker A: With that being said, precious metals, what's your thoughts on bitcoin?

Speaker B: Um, I don't understand it and I don't invest in things I don't understand. To me it sounds like voodoo But I also know that I don't know everything and I could very well be wrong. So I'm not going to short Bitcoin, but uh, I don't invest in bitcoin.

Speaker A: Got it. For the precious metals, do you have like a precious metal advisor or do you have like a group or a place that you like to use? It seems like it's a little more alternative but what's the best way you found to invest into precious metals?

Speaker B: So what I personally do is, is I use the, the indexes I, I buy, um, paper, silver, paper gold and um, ETFs for the, the mining stocks.

Speaker A: Mhm. I love it. There you go. Yeah, keep it simple. Um, excellent. Uh, last question and we'll kind of wrap it up. After all your success having all the people you help, building the businesses you've built, how do you best keep a mindset of stewardship over ownership?

Speaker B: You know, we've got uh, uh, 20 people and growing that work here for us. And um, we're here for them more than for us. And ultimately um, if you keep your employees happy, they'll keep you happy. And so we, you know, and same with our customers. You treat people right, you'll be treated right. And that's kind of the mantra we use throughout business. Just don't be a jerk.

Speaker A: Love it. Rob. Hey Rob. It's been more than a pleasure having you on the show and thank you for breaking down the commitment, uh, the equipment finance world and, and uh, thank you for helping businesses grow right and invest into their, their companies and, and uh, continue to uh, uh, help the American economy go around and around here. For our listeners who want to get in touch with you one last time, what's the best place to find you, uh, website.

Speaker B: Smarter FinanceUSA.com awesome.

Speaker A: And I also want to thank all of our listeners for listening to another episode of the Build to Buildings podcast. We're also streaming on capital gains tax solutions podcasts and YouTube channels. And we're on this journey with you to scale for millions to billions, uh, to uh, make a huge impact and make a huge difference for MVPs. The most vulnerable people in this world encourage you to take action today. If you have a business and you're looking to finance uh, equipment, reach uh out to Rob. And if you have a large business or real estate or bitcoin or any other asset that's selling it has massive capital gains taxes, it could be gold. And you want to defer that tax, go to capitalgainstaxsolutions.com to build a plan to exit and defer that tax. Diversify the wealth. That's capitalgains taxsolutions.com appreciate everyone listening or watching out there and we'll talk to you again real soon. Bye now. Congratulations. You just enjoyed another insightful episode of the Build of the Billions podcast with Brett Swartz. We hope you found today's show valuable and inspiring. To access the show notes and discover more resources, visit build it to billions.com don't forget to leave a review and join us again next time. More transformative insights.