Allison Zorich from Guidant Financial joins Pete and Nat on the podcast today to discuss the changes to funding franchises in 2021.
They discuss how SBA loans are working now, new government programs, and the ROBS program. Every year the ways to find a franchise and the timeline tweek slightly, and this podcast can update you on all the changes.
We also discover that Pete has finally learned how to set a Zoom background, hear about his rapping, and how Nat has started to lose sight of his 2021 goals.
Here's a Full Transcript of Our Podcast Episode on Franchise Loans, Franchise Financing, and SBA Loans
Pete: Well, Nat, welcome to the podcast.
Nat: Thanks, Pete. Did you have your morning coffee yet?
Pete: I had, I have three coffees, I taped arap, my daughter was going in for surgery today, so I was taping a rap for her and having some fun. So it's been quite a morning already, but yes, I'm on my third cup of coffee.
Nat: Okay. Did you want to run any of that rapping past me?
Pete: No, absolutely not. I have no talent when it comes to that.
Nat: Okay.
Pete: But we did our last podcast, we interviewed Lance Farrell of Farrell Xtreme Body Making, and I committed there to sign up, right? So I signed up for their online training. It's actually pretty cool, right?
Nat: Is it kicking your butt?
Pete: It's kicking my butt, yes. I didn't realize I was in so much, not in shape, right? So it really kind of brought that quickly. But as much about the resistance, the cardio, but also the eating. So kind of that whole, you and I talked about before that body for life mentality, kind of the smaller six meals, and it seems to work pretty good.
Nat: Yes. That is awesome, so you're feeling good?
Pete: Feeling good, well you can see I've got the energy, right? So we're on, we're on to our resolutions for the year. So how are you doing with your resolutions?
Nat: I'm doing okay. I'm not going to lie, Pete; I can't lie. Sales guys are always positive, so I should say great. But I'm making excuses, but I know somebody who doesn't make any excuses, Allison at Guidant.
Pete: Yes. So we've got a really special guest today, why don't we bring her in, and let's talk to her a little bit. Well, welcome Allison,
Nat: Hey, Allison.
Allison: Thank you.
Pete: We're so lucky to have Allison's Zorich with us today from Guidant financial. And Allison, we were having a little bit of fun with the backgrounds. That is a great background.
Allison: I wish I was there right now instead of Seattle.
Pete: Ah yes. So you guys, you get a lot of kind of gloomy and stuff like that. But you probably don't have the great weekend we have ahead of us; we're supposed to get like nine inches of snow.
Allison: Wow, no, not quite that extreme for sure.
Pete: Yes, absolutely. Well, I'm so excited to have you today. Now you're a head of business development for Guidant, and so tell me a little bit. I know Guidant has been ranked like one of the top providers for franchising in terms of funding, so tell me a little bit about that.
Allison: Yes, thanks. Definitely, yes, we were voted number one again. That's the second time in three years. Voted number one in funding for franchise financing, Guidant has been around since 2003. I think people don't really recognize how large we are; we've got about 140 employees that are spread across the United States.
And on a normal year pre-COVID, we're doing about 2,200 transactions a year. And we really pride ourselves on being full suite, so wanting to help customers from cradle to grave no matter where they're at in their journey.
Pete: Oh, that's great. So what makes you guys special? So you've won that award two out of three years, what is your secret recipe?
Allison: Secret sauce, probably the relationship building. Just knowing that our partners, when they send a candidate to us, are going to trust that we're going to get them to the finish line and get them the funding they need.
We're pretty creative at layering solutions, which is pretty key in today's environment with everything changing. So I think our partners have that loyalty because they trust that when their candidate is speaking to us, we're going to do everything in our power to get them that capital.
Pete: Oh, that's awesome. And there's so many different options in today's world, right? People just don't realize you can do the ROBS program; use your retirement dollars in your 401k. And certainly, a lot of money in SBA today, we can use equity in our house.
So, where's your sweet spot? Where do you help people the most? What are the main things you guys help them in terms of funding a business?
Allison: Definitely. That changes pretty much depending on what the environment is doing, especially in a COVID year. But normally, it's definitely the rollover and the SBA program.
So we do; out of our transactions, we'll do a year, probably 70% of those will be a rollover, and then the remaining 30% will be SBA, portfolio loans, unsecured equipment leasing. But typically, right now, in today's environment, because it's quick and easy, people are using retirement funds.
Pete: Got it. And when you say rollover, so that's the ROBS program, right?
Allison: Correct, rollover for business startup.
Pete: And that's something you got to be an expert to do, right? That's not something any company can do that, you have to be really good.
Allison: You do. You need to know the structural and operational requirements that go behind it, and how it's set up, and why. The Erisa tax law was put in place for a reason, and so making sure franchisees and entrepreneurs understand that, and they don't throw up any red flags to IRS is really huge.
Pete: Yes, absolutely, well that's good. So I know that right now, the government, with all these relief packages, are putting a lot of money into the economy. And that translates to the SBA loans, right? They're doing some pretty special things with the SBA?
Allison: Definitely, yes. So they just rolled out the next stimulus package, which has a couple of good components to it. The first is the guarantee, so they raise the guarantee from 75% to 90 on the 7A loans.
It doesn't necessarily translate to a great benefit for the borrower necessarily. It just means that the amount covered by the federal government in the event that the borrower defaults has been increased.
Pete: Allison, does that mean that the banks are more willing to take loans?
Allison: That’s exactly what I was just going to say. That's what our hope is that they will start taking on some of those on the line, borderline loans, the more risky ones. Just to see if we can get an appetite for them to bite, so that's what our hope is, yes.
Pete: All right. So they're putting more money out there. I thought I read something also that they're doing some stuff, where if it's a new SBA loan, they'll make like the first six payments?
Allison: Yes, exactly right. So really, to qualify for the six months free PNL, you need to have your loan approved between February 1st and September 30th. There's really no disbursement line on, and like lying in the sand on that. But it needs to be improved in that window. We are encouraging borrowers to get approved sooner rather than later because there's no guarantee when these funds run out if they could run out. So it's definitely in their benefit to get their process going and get that identifier number is what it is. So they can get that free six months.
Pete: And are they also doing relief for people that already have SBA loans?
Allison: They are. They're deferring payments as well if you've got already an existing SBA loan. And we're just recommending them going back to their existing lender they work with instead of starting over with somebody new in any of those scenarios. And then we've got a couple of partners in place that can work with them too.
Pete: Yes, that's great. And I know that they're working on another relief package. Have you heard anything about that?
Allison: I have not. We were really skeptical on this one because we knew what it did the first time, the first go-around last spring. It really inundated lenders, and because of that, new SBA loans and existing ones in the pipeline were put on the back burner, rightfully so, because people needed to stay afloat. And we're not seeing this go around, which is great. So I think lenders are better prepared, and they were ready for it.
Pete: So let's talk a little bit about that because they did, they get overwhelmed with activity. So have you seen the time in which to get an SBA loan processed, is that timeline changed?
Allison: It has a little bit. We saw back in late summer, early fall lenders coming back online asking for new loan submissions, which was really encouraging. And we're still seeing that today. But typically, we're still getting pre-approvals within 24 to 48 hours. Why that makes me hesitant is because you really want your candidate to get through underwriting, which is taking about three to four weeks. But that's the solid approval you want to see.
Pete: Yes. Is that longer than it would normally be? So is that like a couple longer?
Allison: It is. It's about double what it is; we are seeing it get better. Banks are going in and out all the time.
Guidant came out with the top 20 lenders from 2020, and so you're constantly shifting who you're working with and finding out who that appetite is for franchise lending and developing relationships with those lenders because you don't want to have all your eggs in one basket ever with any one lender.
Pete: Yes, sure. And from a standpoint of Guidant, right? When we talk about SBA loans, is there an advantage to working with Guidant versus my local bank? I mean, you guys have an advantage because you know the franchise business models, and you know the banks that are buying paper for those specific brands?
Allison: Definitely. We actually have a list that we work out of. It's a shared doc, so we know what banks, like what brands. In addition to that, Guidant takes a $2500 deposit instead of charging the candidate.
So once the candidate gets funded, we actually return that deposit to the candidate, so we want to make sure that they have that guarantee, knowing if they're going to work with us, we're going to get them to the finish line.
Pete: Oh, that's awesome, okay. So good, so Guidant, you get to work with people all the time that are wanting to go into business, right? So what piece of advice would you give somebody that is thinking about investing in a business, becoming an entrepreneur?
Allison: Yes, I get that question a lot, especially from emerging brands. The biggest thing I say is do your homework, do your due diligence. Make sure that you're looking for whether it's a small business or a franchise that fits your strengths and your skills.
In addition, I really recommend investing in a coach or a mentor, somebody that's actually walked in your footsteps before and can give you that advice that you might not have thought of. That's a huge one.
And then really just focus on setting goals, you know when you open your doors to operate what your one month, six months, five-year plan looks like and be okay with it.
Pete: Do you require people to have a pro forma? So when you talk about those goals for their business, obviously, that's a pro forma. Do you guys require people to have those?
Allison: We do on the SBA side, and definitely the business plan kind of goes hand in hand with it because they need to be laying that out and thinking about it before they even go down the path of actually owning.
Pete: Yes, absolutely. So somebody's thinking about going into business, what characteristics do you think makes somebody a successful business owner?
Allison: Well, obviously, first and foremost is work ethic, perseverance, making sure that they're giving it 150% all of the time. Next would probably be for me; I've seen this a lot is hiring the right talent. Making sure that you have a team onboard that is behind you, and you trust and have the faith and the same goals in.
And then really relationship building, whether you're a service brand and working by yourself or your brick and mortar, building relationships is so key to success in any aspect of life. So that's something I've always lived by.
Pete: Yes, absolutely. Well, you got to be a good leader, right? If you're running a business. And I was just going through some training, I was reading about this.
And they're talking about now, it's really tough to be a leader, because there are five generations that are in the workforce, and it's a much different piece because all five different generations kind of go with the different way they look at things.
Allison: Right, and leaders encourage and build, they don't beat down their employees. So there's a lot of different leaders out there we've seen through this whole political race.
Pete: Well, it was kind of when I started in the corporate world; it was all top-down, right? It was almost like the military at board for sure. It was a great place to work, but it was very authoritarian, and just do what I told you to do, and don't think. And I know Nat had that experience when he was in the corporate world, too, so.
Allison: Yes, patience, you've got to have patience. 99% of this population doesn't get overnight success, and so just knowing that it's going to take time to build something that you're proud of.
Pete: Yes. So very successful with what you guys are doing with Guidant, and we always like to kind of touch on the personal side, kind of what drives you. So Nat's going to ask you some just kind of random personal questions, kind of. We'll get into learning a little bit more about you.
Nat: Well, actually, as you were talking, it kind of was making me think, or I had this question. Like what is the best piece of advice somebody's ever given you?
Allison: Yes, that's a good one. Probably, and this is the best advice and maybe the worst because it can catch me off guard. But being transparent, fully transparent with people. I think those close to me know that I'm always transparent; you never have to guess what I'm thinking or feeling.
But I believe when you put it out there, somebody can get your true intentions. They understand why you're making the choices you make, good, bad or ugly. So I think for me, communication and being transparent is key.
Nat: That's awesome. And we always like to kind of ask people, like what are some of your success habits? Do you have any like daily routines that you do each day that helps you be successful?
Allison: Well, we went remote, obviously with COVID hitting. And so I instantly invested in a standing desk.
Nat: Hey, I'm standing right now.
Allison: Yes, me too. And I'm usually walking, but I would be winded right now if I was on it.
Nat: So you have a treadmill desk?
Allison: I have a walking treadmill.
Nat: Oh, that's pretty cool.
Allison: Down here. You know I get on every day, and when we have long meetings, there's probably half a dozen of us on the leadership team that have them, and so you can tell the people that are walking with headphones in.
But that's kept me sane for sure; you have to have that work-life balance because when you are remote, you can be inundated in your office from 7 am to 7 pm, and I have three kids and a husband, so that doesn't work well for me.
Nat: Yes. Starbucks or Dunkin donuts?
Allison: Oh, for sure, Starbucks, because that was my first job out of college.
Nat: Well, that's right, you're in Seattle too, right?
Allison: Yes.
Nat: Apple or android?
Allison: Oh, definitely Apple.
Nat: Okay, awesome. Anything else that you'd like to kind of add as you're thinking about the lending environment and some of the people you've been working with recently? Or any other things?
Allison: Yes. I think really just when we work with all of our partners; it's just setting those expectations and making sure clients really understand what they're in for and what they can stomach. And making sure if they're going to go the SB path, to recognize that it could take a little bit longer.
And they need to be qualified, and they need to be experienced, which is why we really encourage the rollover and portfolio loans right now because those are two slam dunks.
Nat: Yes.
Pete: I got to know what's your favorite book?
Allison: Oh, that's a good one. Well, what I'm reading right now is Good to Great by Jim Collins. And what I love about that is that as he goes after those big beast companies and really tries to find out what's great about them is none of them lack discipline, and none of them were afraid to upset people along the way.
And so I think it's key to being great, is you're not going to make everybody happy all the time and that's okay.
Pete: You follow anybody like Tony Robbins, or do you have any kind of thought leaders you follow?
Allison: I do; I follow David Hong with OrangeTheory, just because I'm an OTfer. I think what he built was amazing; I mean, going from zero to 1200 locations and making a billion in profit in 10 years was pretty spectacular.
And then I think all of us follow Gary Vaynerchuk; he's definitely a serial entrepreneur and thought leader. And anytime you post anything on social media, I always have a little nugget that I take away from him, so he's great.
Pete: That's awesome.
Nat: Do you think he's going to end up buying the New York Jets one day?
Allison: I don't know. It wouldn't surprise me.
Nat: Yes, that's really cool.
Pete: Well, Allison, congratulations on all your success with Guidant. And thank you for helping all the people that are looking to get into business. You guys provide a valuable service and give people the opportunity to follow their dream, to take control of their destiny, to live life on their terms. So thank you for everything you do for people.
Allison: You are so welcome. Thank you for partnering with us and asking me to be part of this; I appreciate it.
