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Town Haul Podcast / Episode 4

Town Haul Podcast


Welcome to the Town Haul Podcast


Rubicon’s first and only podcast where we share advice for techies, earth lovers and for penny pinchers!


Small Biz Whiz: Christophe Choquart from IOU Financial

Introduction to the Town Haul Rubicon Podcast

[00:00:00.00] Amy: Hello, everyone. And welcome to another episode of The Town Haul. Today I’m joined via Skype by Christophe Choquart, the vice president of Business Development and Strategic Partnerships for Local Atlant IOU Financial. Thank you so much for being here, Christophe.

[00:00:16.03] Christophe: You’re welcome, Amy.

[00:00:18.18] Amy: So I wanted to get started by letting our listeners know a little bit about you and a little bit about your background, and then let’s talk a little bit about IOU Financial.

Christophe Choquart and IOU Financial

[00:00:28.20] Christophe: That sounds good. Well, I have a 20-year diversified experience in finance, working investment banking, banking in Europe and in the United States. And I’ve shown IOU Financial to help them promote their small business loans through partnerships and other development, where I’m trying to be at the forefront of innovation and lending and communicate to small businesses that there are ways for them to access capital when the banks cannot help them.

[00:01:01.05] Amy: So that’s kind of what IOU Financial. So will you break that down a little bit for us?

[00:01:07.23] Christophe: Yes, so IOU Financial is a direct lender, we’re a private lender, and our job is to make the application process for small business owners looking for working capital as convenient as possible, so they can fuel their business and grow going forward.

So we have a very simple online platform through which small business owners can input their information or they can talk to a loan officer, express their needs, and we work with them through their cash flow to find the best loan that fits their needs.

[00:01:42.18] Amy: So you said it’s simple and it’s online, and I know that IOU prides itself on being like a very simple lending option for a small business owner because obviously they have a lot of other things to worry about. But finances are such a complicated space, what other ways do you simplify the process for them?

[00:02:03.53] Christophe: Well, as you said most owners are often pressed by time for time and looking for capitals and the whole process of looking for financing can be overwhelming given the day-to-day routine of those merchants. So we allow the merchants to go through a loan application with very limited documentation, and we also help them understand how that a working capital can be a good tool to use and when to use it.

So with IOU the process is really like not supposed to take more than five minutes to apply, upload their documents, and it’s 100% paperless so it saves a lot of time in getting all the papers ready. And the good thing is when the merchant needs the money they can have it on their bank accounts on the next day after they apply.

[00:02:55.04] Amy: I’m trying … obviously I understand, and I’m trying to break it down for our listeners who there are a lot of small business owners. So let’s say that I’m a small business owner and I own a retail clothing store, and I want to renovate my space and I have a pretty short window to do so. And I think as an amount like maybe $30,000 is what I need, so how would I find … That’s a lot of money, how would I get that so quickly? And can you walk me through what the process looks like from my first phone call or Google search to IOU to my customers coming back in the door?

Small Business Loans

[00:03:41.07] Christophe: Yes, of course. So when a merchant’s looking for a loan to renovate for example their space, that’s a great example. They will find us online or they will call us if they know who we are, who we become. And they will talk to a retail officer, retail loan officer who will promptly ask them some questions about their business, specifically about their revenue trend, how stable is their deposits on their back account.

This process can be done over the phone very quickly, and at the same time the merchants can ask many questions about the loan structure, how does it get paid back, and especially how much they can borrow. And usually you as a small business owner you can borrow up to one month of revenues. It’s like having another month of revenues to you back the next day that you can use for whatever purposes you have, in this case renovation.

The money can be there within 24 hours and the next day. So for renovation project if there’s a window, you need the money the next week, it’s a perfect loan, the size amount is key to have that in mind so that the merchants will call us looking for 30 know that they need to have at least 30 in revenues on a monthly basis to be able to grow.

And it’s amazing how small business owners, how they feel when they know that their business can afford that much. It allows them to plan better and invest and then grow.

[00:05:16.30] Amy: I think that obviously IOU Financial is all about supporting the small business owner, and so clearly you have a lot of experience with small businesses which is a great avenue for us as well. So it’s February, and it’s still the beginning of the year, and correct me if I’m wrong, but small businesses are still kind of tweaking their budgets for the year and working on financial plans if they haven’t done it at the end of the last fiscal year. So I guess my question is what kind of advice or tips maybe a do or a don’t do you have for a small business owner where they’re going through the process of budget creation at the simplest level? I think a lot of people need help with that.

Small Business Budgets

[00:06:00.59] Christophe: Yeah, it’s a good question, Amy. Generally speaking small businesses are often frustrated with finding growth. And it’s most often due to the lack of capital or cash if you will. As we said in this business any small business owner will know cash is king, and it allows profit from opportunities whether it is to renovate or hire or buy equipment, invest in marketing campaigns or do some website development all in the essence of growing.

But small business owners are very busy and they usually run their business in a day to day basis, whether we’re in the new year or the end of last year budget timing is always the last thing you want to do maybe in weekend.

And for us having the ability to look forward and really see how the business uses cash, how seasonal it is, allows small business owners to know when there might be a cash crunch or what’s their different items they really want to invest in their business and come up with an amount, and then try to compare with how the cash balance was for example in their bank. It’s a very basic one, look at the last 12 months, look at my cash balances on average – what did I have? When was the month when I didn’t have as much cash? When was the month I had more cash? And it’s wonderful to project for that.

And so having several scenarios based on past history that can help … the worst and then have the contacts, funding contacts to be able to get the cash that they need whenever the need arise.

[00:07:36.40] Amy: In addition to just budgeting money and resources, and I like what you said about creating several scenarios and really planning and thinking ahead, how do you think that a small business owner should budget their most valuable resource of all which is obviously their time?

Small Business Owners Budgeting Time

[00:07:53.49] Christophe: Yeah, I think when you run out of cash as a business certainly the time stops, and you have to question whether your business can keep going. And so I think the best way to do this is to really think to think forward.

I think small business owners should be ready for uncertainty, unexpected events. They want to make sure they can pay the suppliers; they want to make sure their cash’s really stable. They want to make sure they can pay their employees, and all this is really what makes the business work.

So I think for a small business to really spend some time on a budget … I’m not saying very deep financial projections, but really understanding where their money comes from, who they have to pay, who are the best stakeholders, and stakeholders they’re the clients, they’re the suppliers, and there is may be the investors, the owners themselves who are trying to build equity.

So it’s all about never be at the last minute needing cash to keep the business going and growing, but be more on the forefront of innovation and anticipation on a daily basis. That helps focus more on what they do best which is serve the customers.

[00:09:15.46] Amy: I like what you said about being on the forefront of innovation. And I think that’s one thing that IOU Financial does, kind of Rubicon, is we are disrupting an old industry, we are a new and unique solution to an old problem. And so the same way that you were just talking about I think IOU Financial has great insight into the brick and mortar space and some of those trends, because they’re trend forecasting. So my question is what trends do you see in the brick and mortar small business sector for this coming year?

And on top of that how do you suggest that a small business owner stay current? Because a lot of times they don’t have social media or a lot of times they have a lot of other things to be doing than worrying about some of the ups and downs in the trends of small business ship, but it’s an important thing to talk about.

Staying Current as a Small Business Owner

[00:10:13.12] Christophe: Yeah, so retail is definitely under pressure to reinvent itself due to the advances of competitors like Amazon. Consumers are expecting new products, innovation, convenience of delivery, free returns, they want to buy in the comfort of their home, so you can see the trend where just selling a product within a brick and mortar location is not enough to survive.

There needs to be some kind of service. And the way for the stores to try to reach out merchants through some online presence where they can really promote their products and respond to the consumer needs. For a consumer to come to the shop there has to be some value added that’s not available anywhere else.

Retail has really started to change this, it’s neat I think from selling product to adding services or value-added services, being in place where people can come in relax and learn and stick around because of the service and the warm atmosphere of the people, usually the owner. I think … we think retail is here to stay and we like small business owners running retail places, not only because their cash flow is really a good match for our types of loan, but also because they keep everyone’s lives around talking to each other, meeting each other, and probably by listening to customers be more aware of their needs and provide them.

So for them communication is key to deliver in everybody’s messages, and I know it costs money to do a website and grow online, but there are ways to find, to do a good website and to use internet in an efficient manner without spending too much money. But that’s something that anyone who can learn sales page itself and do something at an affordable cost.

But to your question on budgeting, starting the year of advocating whatever cash on hand to marketing, hiring SEO and operations. It’s the best way to have some kind of peace of mind and forces the owner to really look at its business and find the missing part that can help them go to the next stage.

And overall, small business owners, they have their retail place, their store. They usually rent, they don’t have any hard assets, so the banks will not be there to help them, which is frustrating. At the same time they don’t really know where to turn to look for capital to grow. And without capital they can’t grow and they can’t just implement all the easy things that I mentioned.

So being able to anticipate and be comfortable by the fact that through Rubicon and IOU they can find the capital to grow is one step forward to help them get their business in a good shape for a long time.

[00:13:16.06] Amy: I think you’re absolutely right, and I think you hit on a lot of points. But the overarching theme of our conversation thus far is about how simplicity is key. And I know that IOU Financial has some tools that help make this pretty simple, will you explain to me? I was researching; I look on the website earlier how does the loan calculator work on the website?

Loan Calculator: IOU Financial

[00:13:39.15] Christophe: So it’s a good question. And I was mentioning how much can I borrow, and so I mentioned one month of revenues, so when you have that in mind you go on calculator on IOU Financial, and you select the loan amount that you’re looking for and the term. And the calculator will tell you how much the cost of that loan will be and how many payments you’ll be making to pay it off.

And then there’s also another little tool right below the calculator where you can assess how much savings you can get by paying off your loan early. There’s a hundred percent discount on any interest from the principal … So you’ll get a range of the cost and … payment … and tell you about different variants or optimized loan that should be the best one to go for when needed.

And as I mentioned – convenience is key. So once you’re ready or once you … or if you just want to know how much you can borrow or what your business can afford, I call a lot of you to just get all the answers that you need and be ready for whenever you get that need to know who to call to get your funding.

[00:15:09.47] Amy: I think the way that I learn best and I know a lot of people are the same is through experience, and I don’t know if this is kosher or not, but do you have a customer story that you could share with us about how you help their business? You don’t have to necessarily say who the customers if you can’t, but just kind of walking us through their trials and tribulations and how IOU helped them.

Customer Success Stories

[00:15:35.53] Christophe: Yeah, it always comes back with a project, a growth project, where the owner is … It’s a really good story about moving forward. And the owner needs a small amount of loan, and recently I had a person who owned home owner association in Georgia, and she was looking for about $60,000 to make a few acquisitions of other HOAs to grow her business.

But her business has no collateral, so the bank told her that they couldn’t help the owner. So the owners came to us, it was on a Friday afternoon, and she’s looking for $60,000. It was around 3:00PM I remember, and at 5:00PM I had an offer for $60,000 that she got on the Tuesday of the week after.

With that money she bought the HOA she was looking for, she grew her revenues and since then has been very opportunistic and has renewed along three times to grow her business. That’s the kind of good story we have. We also have like a pizza restaurant looking to expand and renovate one of his stores, and same thing happened, after a few months of business plan, the bank couldn’t get anywhere, they came to us and they have their loan in 24 hours. Did the work and came back three times also.

So it’s really … I mean, it’s really the best scenarios where you use these kind of loan to grow your business. And at your pace with the good advice we can provide you in terms of how much your business can afford.

Conclusion & Goodbye

[00:17:11.19] Amy: Wonderful. Thank you so much for being here, Christophe.

[00:17:14.12] Christophe: You’re very welcome. Thank you, Amy.

[00:17:17.22] Amy: All right, we’ll talk soon. Thank you.

[00:17:18.50] Christophe: Bye-bye.

[00:17:19.37] Amy: Bye-bye.