The Funding Secret Most Small Business Owners Don't Know About And How It's Changing the Game with Jake Lerner

0:01John Lee Dumas:Boom! Shake the room, Fire Nation. JLD here and welcome to Entrepreneurs on Fire, brought to you by High Level, the all-in-one sales and marketing platform. Today we'll be breaking down the funding secrets most small business owners don't know about and how it's changing the game. And to drop these value bombs, I brought to Jake Lerner and to EO Fire Studios. Jake has served as Chief Revenue Officer for Revenued since 2020. He oversees all sales channels and focuses on growing the direct-to-consumer initiative in addition to building relationships with strategic partners and innovating new products.

0:34John Lee Dumas:Prior to Revenue, he was the president of Vantage Capital. Spent four years with Fora Financial. And today we talk about the funding gap, myth-busting, revenue over credits, real growth story, the first step to capital, and oh, so much more. And a big thank you for sponsoring today's episode goes to Jake and our sponsors. Fire Nation, stop putting off launching your website or business. Hostinger makes it incredibly simple and affordable to get online with everything you need to succeed all in one place. Visit hostinger.com slash onfire. Use code onfire for 20 % off. Your next chapter starts today.

1:12John Lee Dumas:If you are building a real business, you need real infrastructure. High Level gives you website hosting, funnels, email marketing, automation, calendar booking, payments, and course hosting all on one platform, plus award-winning 24-7 support. Get a 30-day free trial and my full bonus stack that includes a 15-minute private call with me and much more at highlevelfire.com. highlevelfire.com. Jake, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. What's up, Fire Nation? Something that I think is interesting about being successful is the ability to put yourself out there and to be open to any opportunity and explore how you can make a difference.

1:57John Lee Dumas:Fire Nation, we're here to make a difference. We're also here to hear the funding secret that most small business owners don't know about. And by the way, it's changing the game. And I want to start, Jake, by talking about the funding gap because there's a funding gap out there. I've been doing Entrepreneurs on Fire since 2012, over 5 ,000 episodes. I literally have seen it for all 14 of these years. So what is really behind the small business funding gap and why? Like, why do so many entrepreneurs give up before they find real options? I think from the top, I think getting capital from a bank has gotten tougher and tougher.

2:35the SBA is supposed to make it easier for small business owners to access capital. But in actuality, when you look at, and when a business owner looks at kind of the stipulations and requirements, you know, multiple tax returns of profitability, hair samples, you name it, they look at it and they get deterred. And when they see the process of call it three to four months at minimum, just to get a decision, it's something that, you know, they realize they can't wait that long. So I think that's the biggest gap is understanding that access to capital is easier than they might think. And that's what deters them, I think.

3:13John Lee Dumas:Well, Jake, I love busting myths. It's one thing that I like to do before a breakfast in the morning. So break it down for us. What is the biggest myth about alternative business funding that you want to set straight right here, right now on EO Fire? I think that it's overly expensive, right? So if you look at the absolute cost of capital, especially with a product like revenue, sure, it might be higher than a bank. But if you're using it in a responsible way, there's a lot, it can be the cheapest cost of capital. For example, if you're looking to cover payroll for a week, the revenue product is call it 48 basis points cost of capital.

3:53So just to put it in perspective, you need$10 ,000 to cover payroll, you paid literally$48 to cover that rather than either bouncing payroll and having your employees leave or any other financing that might be detrimental. So I think understanding that if you use it the right way, alternative financing can be the better option than a bank where you might pay call it 2 % to 3 % on the entire line in origination just to access capital once. So it's really just understanding the financing. But I do think the biggest myth is that it is an extremely cost-sensitive product.

4:32John Lee Dumas:Now, Fire Nation, I know this isn't the first time that you've heard the word Revenued because Revenued and Entrepreneurs on Fire, we are currently in an amazing partnership. They are sponsoring the podcast. And we're going to be hearing from them a lot coming up over the next few months because it's a perfect fit for you, for an entrepreneur, for a small business owner that has that funding gap. And I want to talk about revenue over credit and specifically how revenues model works and specifically why, why Jake, why does revenue matter more than a credit score? So it's a great question. I think the biggest thing here is that we as call it the underwriting, you know, financial institutions, so to speak, we understand why someone's personal FICO score can be low, right?

5:19Maybe you've maxed out credit cards, trying to get the business off the ground or you've had an issue with something completely unrelated to your business, the beauty of our product is we look predominantly at your cash flow. So we want to see consistency. We want to see that you know how to handle finances. And most importantly, that the revenue that's coming into the bank account is real and we can quantify that. And so we kind of overlook your personal track record and really look at your business track record to get an understanding of the business.

5:51John Lee Dumas:So let's like really kind of even dive a little bit deeper over why revenue matters more than a credit score. Can you maybe give us a little more detail there and maybe even provide an example of one of your past clients where you like you really saw that in action? The reason why revenue matters naturally is because that's ultimately our recourse. So when we look at it, we see this is what this is how this person was able to grow the business. This is exactly how they're getting their revenue. And it really puts into perspective how the business operates and functions. So we see the full picture of the business rather than just a credit score that you've earned over time.

6:35On the example front, one of my favorite examples is we have a construction company that we do a lot of business with in the state of Oklahoma. They do concrete pours for the state. and so typically they have a cash flow gap for about seven days prior to the business owner coming to us he was coming out of his personal finances to fund those projects so somewhere in the nature of like three to four hundred thousand dollars per concrete pour knowing that he would have a gap for just a seven day period and now if the state call it didn't pass the the what's called the, I'm blanking out here, the inspection, right?

7:13He wouldn't get paid. And now his personal finances are tied up into the business. So when he came to revenue, the concept was every time I need to do a concrete pour, I can draw$300 ,000, utilize it. Once the state passes it, I pay it off. I give call it 50, you know, basis points, half a percent of margin has caught the capital to revenue, but I'm able to retain six and a half percent of the margins that I was making instead like a seven, and I didn't have to co-mingle my personal and business finances. So I think it's just understanding how your business operates and how it functions and utilizing capital in the right way to ultimately allow you to grow and not have to come out of pocket or take any other equity options that they might be looking at.

7:56John Lee Dumas:Fire Nation, we're going to be talking about the flex line versus business card, about real growth trajectory, the first step in capital and more when we get back from thanking our sponsors. Fire Nation, I know you've been sitting on an amazing idea. Well, it's time to move from one day I'll launch this project to taking action. Seriously, the barrier is way lower than you think, and that's where Hostinger comes in. Hostinger is your all-in-one home base to get online, domain, website, hosting, business email, even email marketing all in one place. No tech headaches, no juggling five different tools at the same time.

8:31John Lee Dumas:So many people never pursue their dreams because it feels complicated or expensive. Hostinger flips that script. You can go from idea to MVP in minutes by chatting with AI, and it's incredibly affordable, so you can't use cost as an excuse. Millions of people trust Hostinger to power their online presence, and now it's your turn. Head over to hostinger.com slash onfire and use code onfire for 20 % off and build your site today. You are Fire Nation, and Fire Nation takes action. hostinger.com slash on fire. That's H-O-S-T-I-N-G-E-R.com slash on fire. Fire Nation, if you are building a real business, you need real infrastructure.

9:13John Lee Dumas:That is why High Level is Entrepreneur on Fire's featured partner. High Level gives you a website builder and hosting, funnels and landing pages, email marketing, appointment scheduling, payment processing, course and membership hosting, and so much more. Everything you need to succeed all under one roof. No duct tape, no juggling five platforms, just one clean system for your business. And their award-winning 24-7 support has your back when you need it most. When you sign up at highlevelfire.com, you also get my exclusive bonus stack, a 30-day free trial, a private 15-minute call with me, JLD, access to my weekly live office hours, a digital copy of my book, The Common Path to Uncommon Success, my 50 Days to Something Execution Roadmap, and more.

9:56John Lee Dumas:Visit highlevelfire.com and start building your something today. Jake, we're back. And I want to talk about Flexline versus business card. I mean, what is the difference between a Flexline and one of those traditional business credit cards? I mean, you used to see these entrepreneurs started back in the day, they'd be like, they'd have like one of those baseball packs. They'd be like, okay, like this is where we're keeping all of our business credit cards. This is how we're storing them because that's how they would launch their business. So how does an entrepreneur know which one they need. Flex line, traditional business credit cards.

10:30John Lee Dumas:What are the pros and cons? So I would say the pros of a traditional business card is that you don't pay interest or cost of capital in the first 30 days, right? Now, interest does accrue. There is high APR. And then one of the negatives to the business card ultimately is capacity, right? So let's say you're doing$100 ,000 a month in revenue. And let's just say you have a restaurant and it clears$200 ,000. You're making$200 ,000 based on your FICO score and your overall income. They, let's just use, I don't know, the Chase Inc business card, right? They might approve you for $20 ,000 or$30 ,000 because they're really just looking at your net income.

11:11It's a personal card wrapped with a business wrapper, right? With our underwriting and our flex line, what we do, and we also offer a business card as well. It's just a different way to utilize the funds, But what we do is we ultimately are looking at your revenue stream, right? And we're underwriting on that capacity. So we're looking at giving you somewhere between$70 ,000 to$100 ,000. So what we're doing is we're dwarfing the capacity. So I always say, because if you're looking at cost of capital the right way, if you have a need that you know you could pay off in 30 days and it meets the criteria of the$20 ,000, like by all means you should use the the chase or amex or whatever business card you have right um but i don't think that's super realistic i think there's there's needs for longer periods of time and you're not really sure at the time of the purchase when you're going to be able to pay it off so i think the ability to have that flexibility with something like revenue and really in addition we don't care that you have the chase business card vmx so you could take them both um and so So we would say, if you have a$100 ,000 project, maybe use the first 20 on the Amex or Chase and the other 80 ,000 with us.

12:23But that's really the big difference here is I think that we really understand the capacity needs of a business and we're able to call it dwarf the current capacity that they have through business cards.

12:35John Lee Dumas:And that's really what I loved when I was learning more about revenue is now it gives you another option, like a very meaningful option. You're not just now stuck with this baseball pack of business credit cards trying to fumble and transfer balances and doing all these million things. You're spending more time doing that than actually growing your business. No, revenue comes in and they give you real options. Now, on that note, Jake, my audience loves real stories. They love case studies. I asked you for an example earlier. You gave a great one, but I want to really break down a true growth story.

13:07John Lee Dumas:So can you share a real example of how a business used Revenued to actually grow? Obviously, we're talking about the funding within Revenued to actually grow. Now, you don't have to use the name of the business if you want to keep things private. That's totally fine. But just give us that story. Tell us how they did it. Well, definitely have to keep the name private. But we actually funded a startup. It wasn't a startup by the time it got to us, but a digital ticket broker. I'm not sure if they were using AI or what the underlying technology is, but what they were able to do is consistently draw a million dollars to purchase tickets to sporting events and concerts that they didn't have the capital to do.

13:50And they were able to grow their revenue called three or four acts over the last year by quickly drawing a million dollars on the spot, buying tickets, selling them, paying it off, and rinse and repeat. And they were able to grow their revenue, I think it was four or five acts year over year. So that's a true growth story of how they were able to not only use the product responsibly and most efficiently, but also really, you know, use it to grow.

14:16John Lee Dumas:I want to talk about the first step to capital because there's entrepreneurs that are listening right now. There are small business owners. They are listening right now. They need funding, Jake. They are hitting a wall. They're seeing the end. I mean, it's right there. I always say people, they don't run out of ideas. They don't run out of passion a lot of times. They run out of money. Like that's, that's like the sad reality. So what if somebody is listening right now? What if they need funding? What is the first step that they could take today? Today, they can understand the use case for the capital, right?

14:51Really hone in on why you need it, how long you need it, for what, the purpose, and then understanding your margins, right? Understanding if you make this decision, because there is no such thing as free capital. So either you're giving up equity in the business, which no one wants to do, you're taking a long-term asset-based product, or you're taking alternative financing. So if you're doing one of those three things, you really have to understand your margins and figure out which is the best to go with. And then really it's about gathering your business information and your bank information.

15:24Right. So, you know, if I was doing a plug here, I would say head over to Revenued and fill out the business info and complete your bank link and we'll underwrite on the spot. That's all you really need to do. But if you're looking at the big picture, you really got to understand your use cases, margins, gather your business information, your business documents, whether it's financials, tax returns, bank statements, and really convey all options on the table.

15:50John Lee Dumas:Now, when you say on the spot, like realistically, like how much time could it take from somebody taking that step, going to revenue and learning more? The beauty is we decision make within a day. So same day funding ultimately is like our API or our metric. And really the way we were able to do that was utilizing technology to automate a lot of our processes. So it's simply, you know, our application is called three to four minutes. You complete the business information, a little bit of ownership information, complete our bank link to basically give us live transaction data for the last call at 90 to 120 days.

16:30We can see the full picture of the business. And then really it's off to the races. We're making a decision in a few hours or so. And then really it's about getting contracts back and forth, maybe, you know, quick diligence questions if they come up. And then, you know, we're setting you guys up with a portal to draw funds directly or the Visa Business Card is going out in the mail and you can start using it for purchases.

16:51John Lee Dumas:Jake, we call this the closing value bomb. So share one thing that Fire Nation needs to understand about funding so they can stop spinning their wheels because so many people out there, they're just spinning their wheels, looking at this, looking at that, and get back to growing their business. So what's that one thing about funding that we need to understand that we might not know? Understand the best outlook for your business. Don't commit to something that is not aligned with your business long term. If you want it to succeed, you really have to make sure you're using the right product and getting out there with the right product to ultimately grow the business rather than, like you say, you know, it's early on giving up equity in the short term rather than taking alternative financing that may, you know, on paper look like it's expensive, but ultimately giving up 10 % of your business that could be worth tens of millions of dollars one day is even more expensive.

17:48So it's really just understanding and making the right decision for your business.

17:52John Lee Dumas:So Jake, what is your call to action for our listeners today? If they want to see more, if they want to learn more about Revenued, what do you want them to do today? Go to revenue.com, click the apply button, fill out your information. Should take about three to four minutes and let us handle the rest. Wow, three to four minutes, Fire Nation, potentially same day funding. And by the way, you want a little something extra and a little bit of a bonus, you actually go to revenue. That's with a D, revenue.com slash fire. That's revenue.com slash fire. You can apply today. You can be ready for whatever comes next.

18:31John Lee Dumas:So Fire Nation, you're the average of the five people you spend the most time with. You've been hanging out with JL and JLD today. So keep up the heat. And for links to everything we talked about, visit eofire.com, type Jake in the search bar and the show notes page will pop right up. And Jake, thank you for sharing your truth, your knowledge, your value with Fire Nation today. For that, we salute you and we'll catch you on the flip side. Awesome. Thanks, John. Hey, Fire Nation, a huge thank you to our sponsors and Jake for sponsoring today's episode. and Fire Nation, are you an entrepreneur on fire who's looking to share your amazing message with the world?

19:04John Lee Dumas:If yes, we are now accepting applications for EO Fire. So to learn more about becoming a guest, visit eofire.com slash guest and I'll catch you there or on the flip side. Fire Nation, stop putting off launching your website or business. Hostinger makes it incredibly simple and affordable to get online with everything you need to succeed all in one place. Visit hostinger.com slash onfire. Use code ONFIRE for 20 % off. Your next chapter starts today. If you are building a real business, you need real infrastructure. High Level gives you website hosting, funnels, email marketing, automation, calendar booking, payments, and course hosting all on one platform, plus award-winning 24-7 support.

19:45John Lee Dumas:Get a 30-day free trial and my full bonus stack that includes a 15-minute private call with me and much more at highlevelfire.com. Highlevelfire.com.

19:59Thank you.