Angela Proffitt:
And her most recent book is Finance Your Own Business: Get on the Financing Fast Track, which I know for some of us who might have large overhead, it's hard to even begin to think about how do you finance your own business. And then some of us have really low overhead and it's like, “Oh, I don't need a lot to operate.” But you're missing a lot of write offs. And so Gerri and I are going to talk about that today from an educational perspective. And she serves as an educator, just like I do. Director of NAV, which is an online platform that matches small business owners to the best financing options. And it really gives a free access to personal and business credit scores. So there's going to be a ton of nuggets for you guys to tune in today. So Gerri, thank you so much for being here today.

Gerri Detweiler:
Oh, thank you so much, Angela. And I do not like math either. So please, do not think that I am a finance nerd. I love what I do, but yeah, I checked out at algebra two I was done.

Angela Proffitt:
So how did you even get into the whole world of credit and financing? For somebody who like doesn't like math, how did you become this expert? Where did it all begin?

Gerri Detweiler:
I truly fell into it. I was living and working in DC, Washington, DC after college and a job I was working for a company that turned out to be shady and I left there and then a friend had a job at this consumer advocacy group and I ended up taking the job there not really knowing what it would entail. And it was just the right place at the right time kind of thing. That happens sometimes and it was when they were working on legislation to tell consumers up front how much your credit card costs, because in the old days, you'd get the credit card and then you'd find out the interest rate. They were working on the legislation to give consumers free credit reports for the first time and make sure that you could actually read them. So what's interesting to me right now being where I am at Angela, working with small business owners, is that it's almost like we've gone through a time warp. And the reason I say that is that business owners are not protected by all the legislation that consumers are.

Gerri Detweiler:
So we aren't entitled to free copies of our business credit reports, we aren't entitled to know the interest rate of a small business loan before we get one. And I will tell you many of these lenders are very creative in the way they describe the cost of these loans. And so I'm getting to do this in a way that I think is really important because I know you know from your experience in small business, most business owners are not finance experts. Right?

Angela Proffitt:
No.

Gerri Detweiler:
So they are very vulnerable to whatever's fast and easy, which in many cases could also be very expensive and could even result in them going out of business. So I love being able to help them ward off these issues.

Angela Proffitt:
Yep. I see it every day. How some of these… And really, it happens more in people. Most of our clients that we run in, they're over 50 years old, they've had a business for a long time, super established in the community. And then I just start asking business questions and it's like, they don't know what they don't know. When I was in my 20s I didn't know all this, it's just I happen to surround myself with the people who could teach me these things. And then some people they're like, “Oh my God, I feel so stupid.” And I'm like, “No, I'm not trying to make You feel that way, you just didn't know and you never knew to ask the question. You were just doing what seemed easy, you were trusting people,” which people are super shady, super shady in the credit industry I've learned. And I've even gotten myself into messes because I just wanted it to be easy. Mainly, let's talk about your name being your business and it not being separated and someone's stealing your identity. And guys don't use the same password for everything. Okay?

Angela Proffitt:
So that was my first realm as a business, I was like, “Oh, my gosh, what do you mean my credit's ruined because someone stole my identity? How does that even happen?” And you don't know to be aware of these things until something bad happens. But before we even go down that route, do you focus on teaching and helping small business owners understanding what is capital? How to access capital? How to raise capital? And for brainy people who don't even know what that means, because I'm like, “The capital of what?” This is how they say stupid I was, but I didn't grow up with entrepreneur parents. I didn't know any different. So can you talk to us a little bit about how to access capital and what does that really mean?

Speaker 3:
Welcome to Business Unveiled, the podcast designed to help you thrive in the creative community. Here's your host, events and productivity consultant, Angela Proffitt.

Angela Proffitt:
What's up GSD leaders, thank you so much for tuning in to another episode of Business Unveiled, where we share expert tips and secrets from top creative industry professionals. We're going take you behind the scenes of our experiences, share with you what we've learned from them and how it's made us stronger because no one said it's easy owning a business. But it's a lot more fun when you've got a strong support team around you. And that's exactly what we do at GSD Creative. We're right there by your side. And I'm so excited that you've chosen this podcast to take the first step in growing a productive, profitable and successful, wildly successful business within the hospitality and creative industry. Today's podcast is being brought to you by one of my favorite platforms, Kajabi. So stop trading your time for money. Kajabi provides digital entrepreneurs an all-in-one platform, which enables you to create a life of freedom on your terms, whatever that may be, everything is housed under one platform.

Angela Proffitt:
So there's really no need for multiple services. Kajabi really has all of the tools that you need in one place if you're looking for a home to share your knowledge and build online courses. You have a community of like minded people with proven success in selling knowledge online. And the support with Kajabi is amazing. Give it a try today, bit.ly/apkajabi.

Gerri Detweiler:
Yes. So small business financing is very confusing. There are a lot of different lenders out there. And for the most part, if you have a well established business, great credit, you've been in business for a couple of years, you have great revenues, then you may be in a great position to go get a traditional bank or credit union loan. And if you can, you should, because those will be the best types of loans available. But we know from data from the Federal Reserve that a lot of banks have been pulling back on small business lending and they've also been focused on higher dollar volume small business lending. So for you, you may think, “Hey, $200,000, that's a lot. It's enough to make my stomach roll.” But for a bank that may be too small because it's not profitable for them to make a loan of under a million dollars. And so that's where business owners often end up looking at other types of financing. They may get online offers, they may get offers from PayPal and Amazon and other companies saying quick, easy loans.

Gerri Detweiler:
And sometimes that's the right decision. But often business owners don't know what their options are and so they're ending up with whatever's fastest and easiest versus what is the best for the business. So what I try to do is to help you understand the landscape, see where you fit in and then figure out what the best financing options are for you and then also what you can do to qualify for those better financing options down the line.

Angela Proffitt:
So, for those of you listening, who like me, when I graduated college and I got this coupon book and I'm like, “What do you mean I have all these loans?” Sallie Mae loans. And I'm calling my Dad. I'm like, “Wait, where did I sign? You signed me up for these loans?” I would just sign it because my dad told me to. I didn't understand that not only did I have 40,000 ish dollars to pay back. And they're like, “Oh, you can pay back in 30 years.” But I'm like, “Wait, what! That just seems really crazy.” I came from a Dave Ramsey family that was like, you pay for things as you go, you don't live beyond your means. And then as Americans, we treat education very differently. And then some business owners who fall into starting a business or owning a business, they don't understand it either. But at a younger age, I'm kind of thankful that my parents were like, “Yeah, you have to pay that back and you pay interest.” And I'm like… I didn't understand. I didn't know what an interest rate was, I didn't know to renegotiate.

Angela Proffitt:
And again, student loans are treated differently. I didn't know the different types of loans and All I knew is I wanted to pay those loans off, I was not going to pay it for 10 years, 20 or 30. And I think I worked three jobs to pay it off in three years, because I didn't want that hanging over my head. And so as business owners, can you share with us what are the different types of options that people may not understand long term? I guess I think of it as like a mortgage. Should I do 15 years, do 30 years? How do the banks even look at that now?

Gerri Detweiler:
Yeah. Well, let me touch on one thing you just mentioned, which was you said you came from a Dave Ramsey family. So credit and credit cards are bad. But I want to point out one thing that's really important. So even if you're listening and you're thinking, “I am not going to take on any financing, I'm going to bootstrap my business.” We'll talk about other options in a moment. But make sure you're using the right pieces of plastic in your business because business debit cards, business debit cards are the only type of plastic that is not covered by federal law if they're fraudulently used. So if you think about it and you were a victim of identity theft it sounds like, If you think about it, if someone gets a hold of your business debit card, the money out of your account. They've drained your account, now you have to go to your financial institution to try to get them to put the money back in. And to be fair, most of them are going to try to work with you to get it reimbursed, but there's no time frame.

Gerri Detweiler:
There's no saying they have to do that within 48 hours or 14 days like they have to with consumer. And so you've got bills to pay. And now suddenly, this money's out of your account. And so, one thing, simple thing you can do think about is using a business credit card in your business, instead of a business debit card. And if you're nervous about debt, you can do like I was just on a podcast with Travis Huff and he goes in and pays his credit card off daily, because he doesn't want to add up debts.

Angela Proffitt:
Wow!

Gerri Detweiler:
He makes a purchase, he goes in and he pays it off. But you can do that. But you can use it like a debit card and paid off in full. But then you have the protection of federal law, because business credit cards are protected in the case of fraudulent use. So that's just one simple shift. Now, there's another benefit that could come along with using that business credit card. And that is that many of them don't report to your personal credit unless you default. Not all of them. Some of them report to both the owners personal credit reports as well as their business credit reports. If you're using a credit card that shows up on your personal credit, then if you have a month where you'd have to lay out a lot of expenses before you get reimbursed for them or maybe you have to invest in some new equipment or something else that you're adding for your business, those high balances, if they show up on your personal credit, will bring down your credit scores, because that's a big important factor.

Gerri Detweiler:
And I can tell you there was a business owner who she had some financing pull through the last minute, she maxed out her personal credit cards, which hey, sometimes you do what you have to do, but her business was solid and she was able to refinance that debt with an SBA guaranteed loan a year later and pay off those credit cards. And as a result of paying down those credit card balances that showed up on her personal credit, her personal credit scores jumped 125 points.

Angela Proffitt:
Wow!

Gerri Detweiler:
So they're right there, is just a strategy that even if you're not thinking of lines of credit or loans or SBA loans or whatever, you just think about using the right card in your business so that you can protect your personal credit, build some business credit and protect yourself in the case of fraudulent use.

Angela Proffitt:
Yeah. And guys I'll tell you, we've had some really crazy things happen. Literally I'm like, “Why is this happening to me?” And it happens at the worst moments. I haven't had identity theft just once, not twice, but three times. And the people that I bank with, my [inaudible 00:15:16], it was just such a mess. And if you take nothing away from this podcast exactly what you just said, make sure you have a business credit card now. Well, I did come from the whole Dave Ramsey family, thank God, that I surround myself with people who taught me how to use other people's money. And that's not a bad thing if you pay it off. And again, it was for business not to go into debt, but it helped me build credit on personal as well as a business credit. But one day, I just happened to need gas. And I used my business credit card and $35,000 later.

Gerri Detweiler:
Whoa!

Angela Proffitt:
Yep. And the first of every month, we have so many auto bills. And there're some months where overhead might be 30,000, it might be 40, it might be 50, it depends on what events we have going on, it depends on a lot of factors. And so I started to get all these text messages from I won't even say my bank name, because I can't stand them. But I have so much history tied up in that. People are like, “Oh, why don't you just change banks? I'm like, “Well, it's not that easy for someone who's had an account for almost two decades.” You build relationships with people, it's not their fault, whatever. But yeah, it took well over two months to get my money back. And that was me being psycho stalker, because I had to pay bills. Who just has all this money sitting around? Because most of us don't. And so I was able to talk to a few vendors and tell them what happened. And I'm like, “Listen, as soon as I get the money back, I'll pay you.” And they knew I was good for it, thank God.

Angela Proffitt:
But it puts you in this horrible, stressful bind. I couldn't sleep at night. I hate owing people money. And so what you just said about using a credit card, and so I don't even carry my business debit anymore, ever. I don't want to even accidentally swipe at a gas station. Because it just transpired into this horrible… There's no telling how many hours I wasted on it. And it's not like you can just have your assistant help you with that stuff. The bank wants you in person to follow all this stuff and when you're traveling it's just a huge headache. So you mentioned something about SBA loans. And so again, for people who are green, don't know, what are the benefits and what exactly does that mean? I know what it is, but just in case a new business owner's listening?

Gerri Detweiler:
Sure, sure. So the Small Business Administration doesn't make loans. But what it does is it guarantees loans. And so different financial institutions will offer SBA loans of various types, there's the 7a, is the name of the… Terrible names they're all for the part of the U.S code that describes where that program is, but they have terrible names. But 7a is the most common. And you could use it for working capital and you could even use it to refinance debt and expansion of your business, et cetera. Lots of different uses, they have a larger one that goes up to five million, one that goes to 350,000. So there's all these different programs out there. And we can certainly, Angela, add a link to a free SBA guide to the show notes if you'd like.

Angela Proffitt:
Yeah.

Gerri Detweiler:
But the point to make with SBA is it's designed to help entrepreneurs who can't get similar capital elsewhere. And so depending on where you are in your business, you might find an SBA loan program for a microloan which are $50,000 or less, or you might be at a place where you want to purchase a building. And there's a beautiful SBA program, the 504 program that lets you purchase a building with very little money down and the interest rate is super low. And you can own or occupy 51%, so you could rent out the other 49% of that building and diversify your income. So it is a way to have your own space, but also potentially to invest in commercial real estate at the same time.

Gerri Detweiler:
So there's just a variety of these different programs out there. And what I want you to understand as a business owner is the SBA sets the minimum requirements for each of these loans. But then each lender has their own requirements. So just because you go to your bank and they say, “I don't know, we can't give you an SBA loan,” doesn't mean necessarily that another lender can't. So that's an important thing to keep in mind.

Angela Proffitt:
Gotcha. So I know some data that you had shared with me, it's a significant pain point. 32 million small businesses just in the U.S. And we'll spend 30 plus hours searching for financing. This is what the Federal Reserve says. And then the business credit data… Again, it's super hard to understand. And so for you, if people have questions or they need guidance, do you come in as a consultant to small businesses to help them figure out as a trusted expert? Can people hire you to come in and help them figure it out?

Gerri Detweiler:
Yeah. Even better. So Nav is a free platform, the easiest way to think of us is we're like Credit Karma, but for small business. So we're the only place right now where you can go and get your business credit reports from all three of the major bureaus, Dun & Bradstreet, Equifax and Experian, both have commercial divisions. So you can pull your business credit, it doesn't affect your credit scores at all. You can check it on a monthly basis, great for spotting problems like identity theft and fraud. And business identity theft is a big problem. So that's just a great service to know in terms of just staying on top of your credit, but then our ultimate goal is to use that technology and the data behind it to help match you to lenders. So we aren't a lender, but we are a marketplace and we work with lots of different lenders, all the major small business credit card issuers and we show you which ones are a good fit based on your qualifications and we don't sell your name to lenders.

Gerri Detweiler:
So you won't get phone calls just because you sign up for a Nav account. But we're trying to use that technology. But then we do have people who will get on the phone with you and if you're saying, “Hey, I'm confused or I'm not sure what I'm seeing or I really want to try to get this kind of financing and it's not showing up as a match for me on Nav.” Then we have credit lending specialists who walk our customers through that kind of thing all day long. So we have over a million business owners who use our platform and we're happy to help any business owner who wants those insights.

Angela Proffitt:
And it's free?

Gerri Detweiler:
It's free.

Angela Proffitt:
That's incredible. There's not many free things out there for small business owners. So that's amazing. What is the most popular type of financing for younger businesses? So how can they navigate if… And what is considered in the market a younger business? Is that under five years?

Gerri Detweiler:
For most lenders, it's going to be under two years. And so once you hit that two year mark, it's almost magical, that a lot more lenders feel like you've survived those first two years you're likely to stick around. And so when you're under two years old, you do have to be a little bit more creative. If you have great revenues, that's going to be helpful. But often you do have to look for financing, that's going to rely heavily on your personal qualifications. So personal guarantees, having strong personal credit is going to be very valuable. And then there could be potentially things like Crowdfunding, although I don't know in the event planning business how common I would see that for that type of business. And then business credit cards. And believe it or not, even your credit card at 18% is a lot cheaper than a lot of other types of financing that is out there for business owners. Because like I said, they don't tell you an APR, they don't tell you an interest rate.

Gerri Detweiler:
And so sometimes they'll say, “Well, here's our fee.” And when we have a bunch of free calculators at Nav, you plug it in there and you discover, “Oh, the interest rate is really 35% or 45%.” Or even more, because there's not really caps on how much it can cost. So it can be much more expensive than just say, you take a business credit card, get that zero percent for 18 months and get some time under your belt.

Angela Proffitt:
Yeah. I also would love to know your thoughts on this whole credit card fee thing because nowadays most of our… Well, we actually require our clients to put a card on file. And that transpired which I love because I'm so that girl now who works the credit card points system. And so when clients are like, “Okay, here's five different cards, I want you to put 40 on this 50 on this, this is this because I want points for this.” And then they'll go in and just pay it off, which is great because they have saved for this event or this wedding or this number one party or whatever we're doing. And so I used to be like, “Oh my God, this is so crazy.” So our interns that come in super young, they're like, “Wait, what? You have different cards for different things and people just give you their card?”

Angela Proffitt:
And I'm like, “Oh…” But now, as a more experienced life person, I'm like, “Oh, I do the same thing.” I'm like, “Use our business Amex for this because then we get Amazon points and then we don't really pay for flights anymore as long as Southwest goes.” I feel like there are some great benefits. And again, coming from the Dave Ramsey world, I had to learn how to [inaudible 00:25:13] a little bit and you don't want to get behind. And you do… We don't do it every day. But every time you can be able to pay it and you have to make sure that you also don't get… I've coached some planners, they get confused. They see all this money in their bank account and then they spend it all when they owe $25,000 to vendors. So you have to have discipline and then also putting money aside, I use a separate account for taxes and savings and IRAs, that's a whole nother subject.

Angela Proffitt:
So if somebody racked up debt in college, shopping and spring break and then they start a business and they want to take out a loan to start something, does the bank when they're trying to take out a small business loan… Well, let's just say they made it to the new year mark, but they're so in debt from their college days from partying and shopping, is that going to affect them to be able to get a small business loan? And the reason I'm saying this you all, is because I have a niece that's about to start college and I want her to understand that the choices financially that she makes right now could affect her for the next 10 years if she wants to start a business in four years. So, selfishly I'm asking this question, but I'm sure people are thinking it. So how can that affect you in a negative way?

Gerri Detweiler:
Yeah. Many lenders, especially if it's just unsecured credit. So that means there's no collateral involved, it's not like your vendor who's letting you pay for things in 30 days, it's just you're going to get a loan or a line of credit. They often do check personal credit. Now, for some of these small business lenders, it's what's called a soft credit check, so it doesn't affect your credit score, but they are looking at the personal credit score of the owner. And I can tell you in the case of small business credit cards, they are checking the owner's personal credit. So, that's a plus and a minus. It's a plus if you have a new business and you have no business credit, you can still get a business credit card. If you have bad personal credit, it's going to be more challenging to get a business credit card. So for someone who has a lot of personal debt, first, if it's student loan debt, as long as you're making the payments on time, it's fine.

Gerri Detweiler:
The credit scoring models really don't care the total amount of student loan debt, that's not really an issue. What they care is whether you are paying on time. And that's true even if you get on one of these repayment plans like income-based repayment or pay as you earn where they reduce your payments based on your income from the previous year. Even if you have a lower monthly payment on one of those programs, as long as you don't miss it, you're fine, it's going to protect your credit. But where you run into trouble is when you start running up high balances on credit cards, that's where you really see a big impact on the personal credit score. And then like the example I gave earlier, the business owner whose credit score jumped 125 points. If you're trying to get traditional financing, the lender's probably going to check your personal credit and they see it's lower because of all this credit card debt that could make it more difficult for you to get financing.

Gerri Detweiler:
So to the extent possible, I try to encourage business owners as soon as possible to utilize financing that is separate from their personal, you might have to give a personal guarantee, but keep it off your personal credit report if you can. And then as you build business credit, you'll have more options. So the Fed just to summarize this, the Fed says that about half of all business owners who have anywhere from one to 500 employees, about half of them use their personal credit to get financing, the other half either use just business credit or a combination of business and personal credit to get financing. So we're trying at Nav to help you build that business credit side as quickly as possible so you can move things away from you personally.

Angela Proffitt:
Well, and just from a legal perspective too, isn't it much more on the safe side to do it under business? Or does that matter?

Gerri Detweiler:
No, I think it is. And that's why I'm sure you tell your audience to have that official business structure. Right?

Angela Proffitt:
Yeah.

Gerri Detweiler:
If you're a sole proprietor, there's no separation. There is no separation between you and the business if you're a sole prop, so we don't recommend that. But you have that legal separation and then you start using business products and it could be as simple as just the vendor terms that you get with your suppliers and vendors where they say, “Okay, you can pay us in net 30, due in 30 days.” Those vendors often check business credit not personal credit and they're just looking for red lags. They're just looking to make sure you don't have a lot of tax liens or late payments or collection accounts or other problems that might indicate you won't pay them on time. That's a simple way to start building your business credit, as well as getting a business credit card.

Angela Proffitt:
So let's talk about business credit cards a little bit more. And from a pro and a con, are there any cons? I'm like, “Oh, my gosh, this is…” Again, if you pay it off, but what are pros and cons of the different types of business cards?

Gerri Detweiler:
Sure. So the one big con with business credit cards is that a few years ago, well, this was actually signed into law 10 years ago now. Obama, signed into law the Credit Card Act. And I don't know if you remember before this, you might have… I don't know if you experienced this, but I sure heard from a lot of people did, where your credit card issuer could change your interest rate anytime for any reason? They would change the due date and if you missed the due date, they'd raise your interest rate and charge you a late fee and it was just a mess. There was so much shady stuff going on. So they passed this law, the Credit Card Act that prevented all that stuff, but they exempted business credit cards. So business credit cards are not covered by the card act. Now most of the major issuers came in and said, “You know what? We're just going to apply most if not the large majority of all those protections to our small business credit cards as well as our consumer cards.”

Gerri Detweiler:
But the one thing they left the right to do, and this is almost always across the board, is that if you miss a payment on your business credit card, almost always they'll raise the interest rate and they'll raise it on the existing balance. On your consumer card, you have to be 60 days late for them to do that. On your business credit card, you miss it by a day, your interest rate's going up. So I really encourage business owners who use business credit cards to set up auto pay for the minimum payment because as long as you make that minimum payment on time, you're fine. Now, of course, the ideal is to go in and pay off a balance in full each month.

Gerri Detweiler:
But hey, at least you know that if you get busy or a job turns into a big disaster and you forget to make that payment or a client, whatever goes off the rails and you don't have the money to pay it off in full this month, at least you know that minimum is being paid and your interest rate is going to be okay. So that's the one caution I would say with business credit cards that you have to be especially vigilant about.

Angela Proffitt:
So if people do get busy and they don't have auto pay, do you suggest them calling the credit card company and telling them what happened? And should they try to negotiate or is it just it is what it is, don't even try?

Gerri Detweiler:
Yeah, I think you should always try to negotiate. If it's a first time occurrence, sometimes they will work with you especially if you have large charge volume, they love to see you as a business owner charging a lot. And that's why they make these cards so lucrative in terms of miles and points and cashback and everything, because business owners tend to spend a lot more than consumers do on their cards. So they want you as a customer. So I would not be afraid to do that. But even proactively, if you haven't done it already, I would go in with all your credit cards, consumer or business and set up alerts. You can set up alerts, so it texts or emails you when a payment is due, it texts or emails you when a purchase above a certain amount is made. If you give cards to employees, please, please, please, go ahead and set up the user controls that they have.

Angela Proffitt:
A limit.

Gerri Detweiler:
Yes, a limit. Because you are on the hook. Your employee could go off on a vacation and not come back to work and put it on the business credit card. If you've authorized them to use that credit card, it's your problem, not the issuers. So you want to set up limits. And fortunately, many of the small business credit cards have great options there where you can limit certain types of stores, certain types of amounts, certain purchase amounts, et cetera and then alert you to those purchases.

Angela Proffitt:
Yeah. And again, I'll coach people and they're like, “How do you know this?” And I'm like, “Because this happened to me.” So the big thing that we have been dealing with and I would love to know your thoughts on this, is we have a lot of clients coming to us now and they're like, “Can you just run Facebook ads and Instagram ads for us?” I'm like, “Well, it's not that easy. And we don't really do that and your digital assets are a mess, so no, I'm not going to take your money and do anything because you're not driving the consumer to a conversion spot that's going to make them want to buy from you.” So there's lots of education there, but what I will say is… And again, because it's happened to me early on, with any type of online advertising that we're doing, we specifically have a card for Facebook and Instagram, we have a Google card.

Angela Proffitt:
And if you run Google AdWords, if you run… I don't know. We've just found that… And then all of our bills are set up on another card, which that card is not used for anything but auto pay. Because it has happened before where I didn't know a card was stolen or turned off. I didn't know that I had to sign back up for auto pay because Xfinity one day our Wi-Fi just quits working and I call in and they're like, “Oh, you haven't paid your bill.” I'm like, “My bills are on auto. How did I not pay my bill?” They're like, “Oh, well, we sent you a letter in the mail telling you blah, blah, blah.” I'm like, “I don't open my mail ever. I don't deal with paper, that's why I'm signed up for paperless this and paperless that, plus I travel, I'm busy.” And so it took a little bit of time, but you don't find out something's wrong until something major happens, like your Wi-Fi getting turned off.

Angela Proffitt:
And so do you think that's a best practices to not use one card for everything and to split it up? Our banker suggests that we did that years ago and it has helped with fraud. And then we had a client get their Facebook account hacked and their credit card through Facebook got hacked and then they had all kinds of other things hooked up to that business credit card. So what are your thoughts on navigating all of that?

Gerri Detweiler:
I love the idea of splitting those up. So I actually enjoy it. I think it's a great tip. I may have to share your tip with other people. But I definitely think you should have two different cards. And I would say keeping those cards open and active is really important because you just never know what's going to happen. You never know what like you said, it could be fraud, it could be the issuer decides that they're going to cut the credit limits and portion the portfolio and you're the one who gets that cut. I do love the fact that many of these issuers now have the ability to lock your card. And I had this happen to me, my purse was stolen recently and so I locked my credit cards. Yeah. Totally my fault. But anyway, I locked the cards. And then what happens is any auto pay, any recurring charges will still go through, it's just new purchases.

Gerri Detweiler:
If they try to go to a store or buy something online, those will be declined. And so there is some flexibility there that you didn't use to have. You used to have to shut it down, then you have to get a new card number and tell all the companies that are on auto pay what the new card number is. It's much better than it used to be. But I also want to point out that if there are times where you need to carry a balance, it could be a seasonal issue, it could be again, a client that goes off the rails and is disputing their credit card purchases to you and you're trying to straighten that out. Then if you have any kind of a balance from month to month, then any new purchases incur interest immediately. So if you're carrying a balance, you don't really have a grace period, everything you charge is incurring interest immediately.

Gerri Detweiler:
So having a separate card that you could use four times when you need a little more cash flow, or you need to make a major purchase and pay for it over a few months is a great option as well. So I think the strategy that you're talking about is very smart and very useful. The only thing I would say is just make sure that as you get more cards, you keep on top of due days and balances so you can see the full picture.

Angela Proffitt:
Yeah, absolutely. And the other thing that helped me because it does seem like a lot. But in addition to the security piece, it's like, “Okay, our business Amex gets this, our business Southwest gets this.” So I'm very strategic when it comes to that. But all of our stuff flows into our QuickBooks which makes it easy to catch fraud. And that's actually how an accountant that I worked with caught fraud. Because you set up these rules and we don't typically shop at Walmart, we don't… There's places we just don't typically go. And so if the system doesn't recognize it, it uncategorizes it. So I've learned the hard way to go in once a month and at least look at it because that's how fraud occurs to small business owners when we're not paying attention. It's just crazy. So tell us about your latest book. What is that about? Is it a really easy read and easy to understand for small business owners? And what is the top actionable takeaway from your newest book?

Gerri Detweiler:
Sure. I hope it's easy to read.

Angela Proffitt:
Because sometimes it's like these people use huge word. I'm like, “Wait, what does that mean?” I'm like, “Timeout, let me Google that.” Because if you're not in the banking credit world, just like when people we're not in healthcare and I use these acronyms and people are like, “Wait, what's the EMR? What is this?” And it's like, “I don't mean to talk in terms like that.” They say when you write a book, write on a fourth grade level, at least that's what I was told. But I don't know how digestible and easy sometimes like when I'm listening to business books and I'm trying to learn from it, but I'm having to pause Audible to go Google the words to find out, “Well, what does this really mean?” Because if I don't understand it, it could screw me later on. Again, I've figured that out the hard way too.

Gerri Detweiler:
Yeah, that's a good point. That's a good point. I did write it with a small business attorney Garrett Sutton, Garrett is on Robert Kiyosaki's Rich Dad team and a great, great guy. And he deals with small business owners all over the world actually. So our goal was when we wrote it, and I wrote it before I came to Nav, our goal was, it was the very… So I wrote way back in the day, I wrote the very first mass market book that talked about FICO scores. So this is at the beginning of my career. And this was really the very first mass market book that talked about business credit and business credit scores. And it came out of a need that Garrett found with his small business clients, where some of them were paying a lot of money to these business credit building programs that made it sound like, “Hey, if you pay us enough, we can help you get a million dollars in business credit lines with no personal guarantee.” And he had one client, I'll just tell you real quick who.

Angela Proffitt:
Yeah.

Gerri Detweiler:
Spent $80,000 buying what's called a shelf corporation, that's a corporation that's been around for a long time and put on the shelf with a promise of a million dollars in available credit. Well, the guy basically lost 80 grand on this-

Angela Proffitt:
Oh, my gosh!

Gerri Detweiler:
… on this deal. So we wrote that book and just coincidentally or maybe divinely inspired, I don't know, I interviewed the CEO of Nav and they were pretty young when I first talked to them, they were a new business. And I loved what they were trying to do, which is basically, help business owners navigate this in an easy way with a free online platform. And it kept up with them and then when the book came out, I thought, “Oh, they might want to buy a few books.” And instead, I ended up working there full time. So just one of those things that worked out. Yeah. So, Finance Your Own Business is my latest book and it talks about business financing and small business credit as well.

Angela Proffitt:
Okay. So again, can you give us some examples of if I was going to go to the bank and ask for a loan if I was starting a business, are there some things that you should say and some things that you should not say?

Gerri Detweiler:
Well, the key things that lenders are going to want to look at is your time in business, credit and sometimes that's business, sometimes just personal, with a bank it's usually a combination of both. And then they're going to want to look at your revenues. And for that, banks often ask for a couple of years of tax returns, online lenders, what they usually do is similar to your QuickBooks account, where they link to your bank account and it's read only, they can't take money out, but they're doing it to evaluate your revenues. And then based on that, then that tells them how much they can lend you for short term lending. So you have the bank on one end, you have your personal credit on the other. And in between, there's a lot of different options in there. And there's many online lenders that offer short term financing, whether it's a line of credit, which is like a credit card or a term loan, which is where you borrow X amount of money and you pay it back over say 12 or 24 or 36 months, et cetera.

Gerri Detweiler:
There's just a variety of different options in there and it depends on where you are in your business. And so that's one reason why at Nav, we're trying to build that technology on the back end for you. So you can see, “Oh, here's the things that I am eligible for based on my current qualifications, so now I know and I don't have to go to each lender individually and try to figure out whether I fit in their bucket.”

Angela Proffitt:
Okay. It's also interesting. I'm over here secretly laughing. I'll tell you why I asked you that. So my brother who was a newer business owner in business for two years and I'm in the background of saying, “No, don't do that. I made that mistake, don't do that.” And so he is setting up a courtroom, a mock courtroom where you can… If you're a defense attorney, he'll train you on how to become a better attorney and calm down in front of judges to help their clients and no one's really focusing on that. And so he's been renting a place which much like venue rental and have helped hundreds of people and consulting venues and small boutique hotels and things like that. And so I'm actually the one who helps them do projections for new venues.

Angela Proffitt:
And so it's just funny because I've done the numbers for so many people who literally have dirt and we have sold the idea to banks to get them a loan to build these beautiful venues because we put up a website, we do the SEO for a year, we have amazing packages together, we have a projection of revenue, we know hopefully about it's going to cost to run the venue depending on where it is. And then we got [inaudible 00:45:28] shows and then these expos and you can pre-sell the venue if you have a really good architect that does these 3D images, because technology is so amazing now. And so when people get us on the early end of a project, we can really get revenue coming in and the bank's like, “Holy cow.” And then they'll just keep giving you more money. And so when my brother came to me and he's like, “I'm really tired of wasting all this money, maybe I should buy a building.” And so I'm like, “Okay.” Well, we have strategic partners who partner, I'm in this organization EEO.

Angela Proffitt:
And so I sat down with the lenders who helped a lot of entrepreneurs in Nashville and I started talking with them. But I'm the one with the established business, because I've been in it for almost 20 years. And they're like, “Well, tell us a little bit about you.” And I'm like, “I'll help my brother whatever. If I need to [inaudible 00:46:24] or whatever I need to do. He's good for it, I know where he lives.” And so I said the wrong thing apparently, because they're like, “So you have multiple businesses let's talk about your revenue.” I'm like, “Well, I don't really want to do the business that I've had for 20 years, I'm really slowing down on that and I'm focusing more of my time on speaking and education and on the productivity business. I'm co founder of a women's co working space that just opened like a month ago.” And so their faces… And I didn't know where I'd said the wrong thing. I was just being honest. And so, one of the guys, he knows me and he's like, “Ang, you shouldn't say that.

Angela Proffitt:
The banks not going to give your brother money if you're going to cosign for something or you're going to be part of this when you're telling them that millions of dollars of your revenue that you've been bringing in for X amount of years, that you don't want to do that anymore?” And I'm like, “Oh, no, no, that's not what I meant. It is what I meant, but I have the same amount, not if more revenue coming from other areas. So my time will be divided differently.” So it's like then that spiraled us into this whole… “Well, how do you know that the co working space is going to make that much? And how do you know your speaking? And how do you know…” And I'm like, “Well, it's been doing okay in their projections and if I have to go back to doing events to maintain a lifestyle, I always have that option, right?”

Angela Proffitt:
But we left there and the guy was like, “You should never have said that. Don't tell the bank that you're thinking about moving.” But is that bad to just be honest? I would never not pay the loan back, I just-

Gerri Detweiler:
Yeah, banks are so conservative. Right?

Angela Proffitt:
So, conservative.

Gerri Detweiler:
So you do have to make a really good case. And yeah, you don't give them any reason to doubt it. They have to go back and sell this on their end. But one thing you mentioned that I think is worth talking about, and that is having a business mentor or a business coach and someone… It could be your accounting professional, but you are going to need to figure out how much do I ask for? And how am I going to use it? And am I going to use it in a way that makes money? And will the cost of the financing that I'm thinking about, will that just put me in a more precarious position, or will I really leverage it to make money? Because you can use financing to make more money like you said in the beginning, other people's money. You can do that. But having that mentor to help you think through those issues is invaluable. And I think especially if you have an accounting professional who really has experience with small business owners and can help you with this, that can be really, really helpful.

Angela Proffitt:
And I'll also say too, just in my experience in working with the same accounting company for a very long time and then they continue to grow and grow and grow and grow and thrive which is great. And then you become a smaller fish in a pond sometimes. And so for me to do an annual audit of how everything is going, I think is very important. Again, you don't know what you don't know until things pop up. And I think it was maybe a year or two ago I got a letter in the mail from the IRS that was like, “Your extension has been filed.” I'm like, “What! I've never filed an extension.” I turn my stuff in on time. And I am a little all over the place but when it comes to that, I thought I was paying someone to keep up with these things for me. And then I go back and look and it's like, “Oh, your account hasn't been reconciled in years the appropriate way.”

Angela Proffitt:
And I'm like, “Is this my fault?” And I'm like, “Yeah, I guess it is my fault because I didn't pay attention close enough because I was just trusting that this company was doing it for me because I've been with them for so long.” And they didn't mean to make an error, everybody makes mistakes. And so I would just say as a business owner who is crazy busy and you think you can just pay somebody to do everything for you, I would still… It's really hard for me to trust people now, especially with money given that so many crazy things have happened. And it's like, we work so hard to please our clients and running the business and the money, it's not the fun part at all, at all. It gives me a headache, frankly. But you got to do it. You got to. You got to be responsible for your own business. And I'm like, “Yeah, there's always money there.”

Angela Proffitt:
So, going back to a question that I had, is that I didn't realize all these fees that were adding up by allowing our clients to pay with Apple Pay and credit cards, there's all these different fees. And so years ago, when Apple Pay first came out and we started, we're like, “Yes, you can pay with this, you can pay with [inaudible 00:51:33], by PayPal.” We have money coming from so many different areas. And then at the end of the year my accountant ended up… He was like, “You could have paid someone a full time salary for all the credit card fees that you are racking up.” And so some people say, “Yeah, we just pass that on or we do a processing.” What are your thoughts on that? Is it just, it is what it is if you own a business and you accept credit cards, you're just going to have to build that into your annual fee bank? What are your thoughts on that?

Gerri Detweiler:
Yeah, it is interesting because as a business owner, you're on both sides of it. You're loving the benefits that you get from your credit card. But those come from the swipe fees or the interchange fees. The fees that go to the credit card issuer and the brands when you swipe that credit card. And on the other side, you also don't want to overpay on those fees, but you don't really have a choice. If you accept that brand of cards, you can't say to them, “Oh, well, I'll accept your Chase Ink, but I won't accept your Chase Sapphire Reserve, because that one's a premium card and the fee is higher.” So, you have to be very careful because there are restrictions on what you can do as far as passing on the cost to your client. You can always do a discount for cash. So that's always a possibility. We'll never run into any problems if you offer a discount for cash. But I think the research is pretty much shown that people do to tend to spend more when they use their credit cards. It's human nature.

Gerri Detweiler:
It doesn't feel like we've really spent that money. And I think especially for big events, like weddings or other events where you want the memory of a lifetime, you're probably going to pull out… You probably feel more comfortable spending more if you have access to credit, which good or bad, it's just the reality. So I wouldn't automatically say I'm not going to accept credit cards, because then things will tank for your [inaudible 00:53:35], they are going to go to someone who will. But I think what you're talking about is being very conscious of what those costs are. And then if you wanted to build in an equivalent discount for cash, you could certainly do that very safely and that would be a possibility. But do be very careful about surcharging because there are some restrictions on when and how you can surcharge depending on the type of… Whether you're using a credit card or debit card.

Angela Proffitt:
So I know some people that offer services necessarily not like a product, especially in the events world. I haven't had this happen to me, but I've had people that I coach where a client will pay with a credit card and then they weren't happy with the service, so then they call the credit card and do a chargeback.

Gerri Detweiler:
Yep.

Angela Proffitt:
So what are your thoughts on how do business owners because there's two sides to every story. So how do you suggest business owners handled those types of situations?

Gerri Detweiler:
Well, first of all, I'm not an expert on disputing credit card chargebacks, but there are people who actually that's what they focus on.

Angela Proffitt:
Got you.

Gerri Detweiler:
Is helping merchants successfully dispute credit card chargebacks. But a lot of it will go to your contract to having a very clear contract so that you can provide that documentation to fight the chargeback. And if it's a good amount of money, if you're a photographer for example and that could be your entire day's worth of work, then that may be something where you have to fight it, because otherwise you're writing off a whole day of work plus whatever other costs were involved, travel and other things. So having a really solid contract is going to be essential if you need to or want to fight a chargeback. But they are a reality of life and you have to sometimes just be willing to go toe to toe if someone is being unreasonable in their attempts to get their money back.

Angela Proffitt:
Yeah. And sometimes, we've had people say that, “We're just going to write it off as charity or something.” I don't know. People get creative sometimes, but I guess it is case by case. Well, this has been super helpful and super insightful. And so for everyone to connect with you or would you say going to Nav, it's N is in Nancy, A, V is in Victor, nav.com/podcast, you can download a free build business credit checklist. I'm going to go get that. And then you can use… Do we have a promo code that we should put in the show notes to get a free month of the Nav business boost, which gives you access to this full business and credit report?

Gerri Detweiler:
Yes. So many of our customers use our free account and that's perfectly fine. We do have a higher level of subscription, which is our paid accounts that offer additional benefits. And if you want to try out the paid program, the promo code you'll see on that page nav.com/podcast is just podcast. And that will get you a free month to try out that. And you can upgrade and downgrade at any time as well. So if you check it out and you say, “It's not what I need right now,” you can downgrade back to a free account and keep your account. But I'm going to emphasize again, Angela, just like you said staying on top of your numbers is so important. Staying on top of your business credit and your personal credit is really important because business fraud and theft, even if you're not going to borrow money, it's a growing problem. And if someone is using your business name to get credit, you want to find out about it as soon as possible, so you can stop them from doing further damage.

Angela Proffitt:
Yeah. And it's a nightmare. And I've figured out people are like, “Oh my God, that's so cool to be in People Magazine and be all over the internet.” And I'm like, “Well, that comes with some cons because I feel like as a business owner, especially because it's under my name, it makes you a target. It's like, the more you're out there and the more information you put out there, you're just a target for hackers to get to you and your money. And I still… I'll never understand why credit card companies will not prosecute these crazy people. And it's like they order… I was in Cabo recently and I needed to do something for a client, so I needed to log into one bank and move money to make this last minute purchases because so many of our clients are so last minute. It's like they roll out of bed bump their head and they come up with 10 grand and they're like [inaudible 00:58:18]. I'm like, “Where did this money come from? This wasn't in the budget.”

Angela Proffitt:
But whatever, I don't ask questions anymore. And immediately I start getting all the text messages from my chase card that Victoria's Secret, Sprint, Nike, I'm like “Shit.” So I get a call and they're like, “I think your cards been compromised.” I'm like, “Yes, it has.” But these people order all this stuff, it goes to an address. I'm like, “Can you just go to the address or stop it if it was ordered on Amazon?” I'll never understand that world but it's like they don't… I'm like, “I want to press charges this is a lot of money and this is causing me… It's a huge pain and inconvenience as a business owner.”

Angela Proffitt:
And they're like, “But you're not responsible for the charges why are you so upset? You're covered.” I'm like, “People need to be held accountable for their actions.” And this is why fraud is so bad. Is because who's holding them accountable? So that's just one thing that it's like, “Yeah, I'm glad I don't have to pay for it, but that's really not why I'm mad.” I'm mad because now I've got a… If you have a bunch of stuff on auto pay, you got to go back and redo all that stuff.

Gerri Detweiler:
Yeah. It's a huge inconvenience. Isn't it? Yes. And I was also a victim of credit card fraud. Someone opened a Macy's account under my name and when I talked to them about it because I had credit monitoring, so I got alerted right away. They're like, “Yeah, the shoes are on the truck right now being delivered.” And I'm like, “First of all, that's not my problem, so you deal with that.” And they wanted to keep me on the phone. I'm like, “Whoa, this isn't my problem. It's not my account.” But you would think that they could call 911, have someone go to the delivery address and watch them take those shoes and take a picture or something, but-

Angela Proffitt:
Yeah. I don't understand. My brother owns a PI company, a private investigation company. And so they've had consumers who own businesses, where the police would not take it into their own hands and they've hired his company to… People pay their personal money to go and follow these hackers. And the last case that they worked, they followed them to this huge warehouse, huge warehouse. And it was a real business where it was just fraud and all this stuff and then they would resell it on eBay. And I don't know. It's a whole nother industry that is crazy. But I don't want to be a victim of it. It seems to happen so frequently. But anyway, thank you so much for your time today. This was helpful.

Gerri Detweiler:
Now, I want to interview you, it sounds like you've got some amazing stories.

Angela Proffitt:
Oh, my gosh, crazy. And so your book, Finance Your Own Business, it's on Audible and Amazon?

Gerri Detweiler:
That's correct.

Angela Proffitt:
Okay. So guys, if you want to go and get Gerri's book, I will definitely download it from Audible, because I'm an Audible girl. And then be sure to go to nav.com/podcast, we'll put it in the show notes and we will also put that code in there. And I know this doesn't sound fun, but you all just be proactive and don't be a victim like I have been so many times just from experience. Just save yourself the stress and the sleepless nights where you have to worry about these things. So just do a little bit of proactiveness and be sure to tune in next week so you don't miss juicy details about how to run your business better. And thanks for listening to Business Unveiled. Everybody, have a great day. Bye. Now that you have all the tools you need to conquer the world in GST, just share this with your friends and your fellow GST leaders. And be sure you're a subscriber so you never miss the juicy details of Business Unveiled.

Angela Proffitt:
And you can ask Siri to listen to the latest episode, but you got to be a subscriber. Before I go, I have a huge favor to ask and it would mean the world to me. While you're listening, snap a quick screenshot, post it to your Instagram story, tag me @GSTleader_ and share with me your top takeaway from this episode and how it relates to you. Until next time, remember stay productive and profitable.

Speaker 3:
You've been listening to Business Unveiled with Angela Proffitt. Join us next time as we share our experiences to help you be more productive and profitable in your creative business. For more great resources, visit Angelaproffitt.com.