814 Deb Curtis:

Out of all those credit requests, one that stood the test of time and had the better chances of a final bank credit approval was the business acquisition financing. You’re buying something and financing that’s already built, already put together, there’s employees, there’s customers, the engines are running, you’re just transitioning in.

It is notoriously challenging for women entrepreneurs to find financing to grow their businesses, whether venture capital, angel investment or a bank loan.

Small business finance expert Deb Curtis says the easiest path for aspiring female founders is to secure financing to take over an existing business.

MELINDA

Hi, I’m Melinda Wittstock and welcome to Wings of Inspired Business, where we share the inspiring entrepreneurial journeys, epiphanies, and practical advice from successful female founders … so you have everything you need at your fingertips to build the business and life of your dreams. I’m a 5-time serial entrepreneur and the CEO and founder of Podopolo, the interactive app revolutionizing podcast discovery and discussion and making podcasting profitable for creators. I’d like to invite you to take a minute, download Podopolo from either app store, listen to the rest of this episode there, and join the conversation with your questions, perspectives, experiences, and advice … Because together we’re stronger, and we all soar higher when we fly together.

Today we meet an inspiring entrepreneur who got tired of bumping her head against the corporate glass ceiling as a lending expert and struck out on her own to help women and minority entrepreneurs finance their businesses.

Deb Curtis is the founder of Curtis Small Business Financing Solutions, specializing in SBA acquisition finance. Today we talk about the best ways to find financing, at a time when it seems more difficult than ever.

Deb will be here in a moment, and first,

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We all know the stats: Women founders get only 2% of the available venture capital money, a stat that hasn’t changed in more than 2 decades. It’s a challenge made even more difficult in these days of high interest rates as many VCs are sitting on mountains of what they call “dry powder”, drastically curtailing new investments. Meantime the banks aren’t lending much either, not that it was ever easy for women launching or growing early stage businesses to get loans.

Deb Curtis is an expert in small business lending, with a focus on what is available for women from the Small Business Administration, better known as the SBA. If you got an EIDL loan during Covid, you know that SBA financing is not the easiest to navigate, and Deb says it is much easier if you choose a different entrepreneurial path – that is, buying a business that already exists. Deb specializes in acquisition finance, and says women have more opportunities for funding the purchase of a business.

Today we get into the do’s and don’ts of raising money, how to overcome the barriers, and what is possible.

Let’s put on our wings with the inspiring Deb Curtis and be sure to download the podcast app Podopolo so we can keep the conversation going after the episode.

Melinda Wittstock:

Deb, welcome to Wings.

Deb Curtis:

Glad to be here, Melinda, thank you so much for having me.

Melinda Wittstock:

Well, you, like so many women, hit the glass ceiling trying to climb the corporate ladder, which is obviously not easy. However, it’s a gift to entrepreneurship because so many women such as yourself have chosen to overcome that particular corporate adversity by branching out on your own. So what was the aha moment where you just said, enough of this, I’m just going to create my own gig?

Deb Curtis:

Boy, enough of this was always a thought in the majority of my career, but nobody ever really taught me, what are those other options, Melinda? We all are frustrated and there are a lot of women today that are stuck in corporate, that was me, but nobody’s teaching women or the minority population how to get unstuck. And the first thing that everyone considers is, well, I got to start up a side hustle or a brand new business, and that’s scary, that’s ground zero.

But there are other options that my career allowed me to recognize that were easier for men and equally as for women, but unfortunately more men do this than women and that’s why I’m going to be a voice of reason for all the girls in the country here. That you can purchase finance and established money making small business with bank financing backed by the SBA today and call it as you may, a career promotion to CEO, small business owner of an established business. Where do you hear that, Melinda?

Melinda Wittstock:

You don’t and whether it’s venture capital or figuring out the SBA or any of these things, that information is not necessarily readily available. There’s a lot written about VC, but most of the headlines have remained the same for the past two decades, is that female founders of scalable tech companies only get 2% of the available venture capital money, and that’s a number that has not moved in two decades. So it’s like, so what to do about that? It also means that there’s a necessity for other sources of funding. So tell me a little bit about how you help women navigate the SBA and other ways that they can fund their businesses?

Deb Curtis:

… Throughout my career, I was always in business banking, small business lending, and I have to be very thankful for many of my corporate supervisors back in the day that taught me a lot about small businesses and the right questions to ask and how to really be a good relationship manager with these small businesses. So I got to see the good, the bad, and the ugly throughout my career of helping out small businesses who had loans on the bank books. And then eventually, I was introduced to SBA, which stands for the Small Business Administration, and it’s an affiliate of the US government, we’ve heard of it, there was tons of SBA, PPP, and EIDL loans in during the pandemic and such. But all of the different credit requests, Melinda, of SBA consists of capital for a brand new startup, working capital for the current business that needs cash, business debt consolidation, purchase finance, building for the business, or construction, build a building for your business.

And then the last one that I am attached to is business acquisition financing, otherwise known as change of business ownership financing of an established profitable business. Out of all those credit requests, Melinda, through my career, the one that stood the test of time and had the better chances of a final bank credit approval was the business acquisition financing. You’re buying something and financing it that’s already built, already put together, there’s employees, there’s customers, the engines are running, you’re just transitioning in.

Through all of those different transactions, I saw the challenges, the hurt of small businesses during startup stages, that’s risky. But the ones that did well were the owners that took over established companies. And so that’s my main focus today, is to help individuals acquire these established businesses. But my passion and desire has led me to lift up women and minorities to do this and not just keep, sorry guys, not just keep helping out the men all the time. Listen, I’ll help them if they need it, but by golly, I’ve got to be a voice for the girls out there.

Melinda Wittstock:

It’s so true. Right now, given the climate that we’re in with interest rates jacked up so quick, so fast to the point of some bank failures and such, the really difficult climate right now for funds generally, because a lot of venture capitalists and angel networks are sitting on their capital because they don’t know if they need to keep some back to assist their existing portfolio companies, so they’re not really looking at much that’s new, it’s very difficult to get business loans. And then you have this whole predatory private lending stuff offering owners interest rates of like 49% daily payments, you realize crazy wild west stuff going on out there.

If you need capital for your business, we’ll get into the acquisition thing in a moment because I think that’s a really compelling, but for anyone listening to this that’s in a tough spot because they’re a startup either thy are pre-revenue or they have some revenue, but they certainly have no money to necessarily invest in the business to get it to the next level, what’s their best course of action with the SBA? [inaudible 00:07:09] the relationships there because it seems impenetrable.

Deb Curtis:

You know it, girl, and that is true. And here is where the system, in my opinion is very broken and very challenging for a business owner or an individual to access bank financing backed by the SBA. This is the best way that I explain it because it’s true and accurate, the SBA does not give the capital, what the SBA does, they just guarantee the bank that provides the capital, the loans for the businesses. Now, the SBA SOP has its credit policy, all the banks got to follow the government’s credit policy as to what they want as far as underwriting procedures and eligibility. Where the disconnect is for most people, well, for all people and even for some SBA lenders, they still struggle to figure this out, every bank, big, medium, small, every credit union, every non-bank, all those different banks and non-bank lenders that do business lending with the SBA government guarantee, they all have their own bank in-house credit policy.

Melinda, you could be a business owner and you want to apply for $250,000 for working capital, you could call six different banks today and be told six different reasons of why either they can’t or that they will look at helping you. And you’ll get a different answer from every bank or non-bank lender because they all have different credit policies inside their own house, so to speak. So that’s where there’s a disconnect, it’s like you’re going fishing and you’re catching different fish or you’re going to be skunked, one or the other. Does that make sense?

Melinda Wittstock:

Right. So you’ve got to go with all these different things and then assuming that they do decide to lend it to you, where does the SBA come in? Is that something that the bank does or does [inaudible 00:09:41]?

Deb Curtis:

Yeah.

Melinda Wittstock:

That works.

Deb Curtis:

Great question. The banks that have their own in-house credit policy also must follow the SBA’s credit policy. And the reason being is, if that business loan should go into default and be charged off, the SBA, the government will guarantee whatever that loan balance is up to 75%. So that’s pretty significant that the banks will be provided 75% of the loan balance if it goes.

Melinda Wittstock:

I think that would be risk enough for the banks to be more amenable to-

Deb Curtis:

You would think you’re right on, but they’re not, they’re still looking at the 25% that’s still possibly unsecured. Because SBA is all about the business cash flow, they want to make sure before any money is given to these small businesses, they have to report that they’re making profits and that they’re cash flowing.

Melinda Wittstock:

… My goodness, by the time you’re profitable … I suppose different businesses are different, in my case, it’s not like a technology business, there’s so much cost ahead of revenue for those transformational, innovative businesses, right?

Deb Curtis:

Right.

Melinda Wittstock:

And so what’s interesting to me is that, that’s what venture capital is for, except the venture capitalists are becoming more like banks.

Deb Curtis:

Mm-hmm. Correct. And you were saying, just a minute ago, that if your business is profitable, do you really need the loan? And most often, the businesses that need the loan aren’t reporting it or aren’t making it and then they’re turned down, so it’s tough. But remember, I just focus on business acquisitions of companies that are cash flowing. But mind you, 80% of the businesses for sale today will not sell because the buyer can’t get a bank loan because the seller didn’t report all their cash flow, and so you have to search for the diamonds in the rough that are for sale.

Melinda Wittstock:

So say a business that’s trying to make sure that their tax liability, say, is a little bit lower, and so on their tax returns and such, it doesn’t really show the full cash flow. So then you can’t borrow to acquire that business. Is that-

Deb Curtis:

That can happen.

Melinda Wittstock:

… The root of it or?

Deb Curtis:

My best advice is to business owners, because let’s face it, everybody, if they can take a cut from paying taxes to the IRS, they’ll do what they can, track it. I have some sellers that may have on their business expenses, a management expense that’s rather large and maybe an annual expense of a hundred grand or 150 grand and I’ll ask what that is and they’ll be honest with me, they’ll tell me that they sent money from the business profits to their Fidelity account for retirement. That’s fine, but we just need proof of it, so the bank is going to want to see the fidelity statements and the bank statements from the business that it connected and that’s where the cash flow went, because our buyer might not put aside that money, that’s real cash flow for the business.

Where it gets messy, Melinda, is that business owners, and I want to say especially the older generation, the baby boomers, like I think of my dad, they didn’t want anything to do with the computer and stuff like that, they were still writing things down spiral notebook, so some of the baby boomer businesses, it’s hard to track it. And I’m always educating, if you’re going to take expenses to offset what you’re going to pay to the government, just retain receipts, keep track of everything because one day when you sell your business, you’re going to need to prove that for the buyer’s bank lender, then it counts. But unfortunately, our older generations, they don’t like computers, they don’t even like email, so it’s messy out there. But there are diamonds in the rough where they hired a CPA or a business advisor and they did a good job of tracking everything, so there are opportunities out there for sure that are eligible.

Melinda Wittstock:

Well, it raises an interesting point because I think a lot of people go into business without any exit plan in mind, and you’re going to have an exit one way or another.

Deb Curtis:

Right.

Melinda Wittstock:

Even if it’s retiring or you want to pass it on to somebody else at every point. But because there’s so little thought put into that, people don’t think about what’s going to actually grow the valuation of their business or what they need to have in place to be able to get a better multiple for it than they would otherwise and all these sorts of things. So this is really important from the outset for any founder to get those systems and such in place as you can. And of course, that’s tricky because at the time, you’re just in a mad scramble.

I had another guest on my podcast who was talking about her rice and beans year, where she was working three different part-time jobs, growing her business, eating rice and beans, dealing with debt collectors. And then after a year, she was able to get to a million dollars and more and the thing took off. But in that moment, in that rice and beans phase, you’re probably not really thinking about buttoning up all your systems and your legal and all those things, but it still needs to be done.

Deb Curtis:

Mm-hmm. It does need to be done because a lot of the businesses on the market that can’t sell were due to an unexpected health events or an unexpected exit of some sort, a death. Earlier in our conversation here on the podcast, I was telling you how thankful I was for what I was trained when I was a younger business banker, and one of the first questions I was told to always ask a business owner, no matter if they started the business today or they’ve been in business for 10, 15 years, what is their succession plan? What are their exit plans? Because if it’s not in place, something’s going to happen. And I used to manage a portfolio of small businesses where that something happened, and it’s very sad to see how quickly life can unravel for not only the business, but the family of the business owner.

Melinda Wittstock:

That’s why I’m addicted to the show Succession. It’s interesting because I think we all as entrepreneurs have the gene where we think we’re invincible, but we’re not. And so what advice would you give to someone who is potentially going to buy a business in terms of that and the options that are open to you? Because that that’s one way to grow a business, like in our case, with Podopolo, we could look at different technologies that are out there that it might make sense to build ourselves or it might make sense to just buy something that already exists or a lot of companies in the technology space that have great tech, but no real business around it. You know what I mean? So there are assets or there are aqua hires, there’s a whole bunch of different ways of going about it.

What’s the best way to finance those things? There’s obviously the SBA program, we can get into that, but there are probably other mechanisms as well bringing in some private equity, money or I don’t know, lots of things. What are some of the things that you advise?

Deb Curtis:

I would advise similar to first time home buyers learning and being educated, go to a source that gives you the money. And the reason why I’m saying this, the source would be a bank or a business acquisition loan consultant like myself, go to the source first that’s going to give the money, the capital for the business acquisition, that’s where you need to start. And the why behind that is, we need to pre-qualify you to see just like when you purchase finance a home, how much business can you afford? Because businesses sell for 250,000 up to 5 million that qualify for SBA financing, so that’s a big range of business sizes. And your resume of your professional history, there are a lot of things that we look at first and foremost with you as a business buyer.

And then we tell you how much dollar would you qualify for because you’re going to need down payment. Just like when you purchase finance a home, you’re going to need some experience of, and I shouldn’t say some, you’re going to need experience of managing people. Listen, if you don’t like people, then you probably shouldn’t be a business owner because people first, the people who develop the business and the numbers. And if you can’t manage people, this might be a tough road for you. But get qualified first and foremost with the bank or business acquisition consultant.

What’s happening, Melinda, and what has traditionally happened for a long time, anybody interested in buying a business starts first with the business broker that’s selling the business representing the seller because that’s where they make a commission, that’s their livelihood, I got to sell this business. And individuals that want to buy it, start with the broker that’s responsible to sell the business. And what part of I’ve got you in my best interest as the business buyer is in that? It’s not good, so I’m trying to be a voice of reason to reverse that. And let’s get better at qualifying business buyers for a set industry, a set dollar size, make sure that all of their ducks are in order and they fit this specific pre-qualification, so to speak, like a first time home buyer, then we go shopping for that business.

When you first bought your very first home, it’s like the wedding dress for your daughter. Don’t just pick out your favorite one because you’re never going to qualify for it, and I was a sucker with my daughter on that with wedding dress costs and such. But that’s the same thing when it comes to a small business, we all think we can afford this, but we really can’t. And then when we work with the business brokers or we can organically network, like you mentioned your Podopolo, am I saying that correctly?

Melinda Wittstock:

It’s Podopolo, but you-

Deb Curtis:

Podopolo.

Melinda Wittstock:

… Can say however you like of it.

Deb Curtis:

With a little my Midwest way. But that’s networking, when we network and we communicate and we build relationships with one another, you may come across a business that you like and in general conversation, you may just find out, Melinda, maybe when do you want to sell your business? And somebody would be interested in purchase financing it and then you’re not even dealing with the business brokers.

So a lot of the, where do you find these businesses? As you were asking, where would your community start? Well, first start with the bank, start with an acquisition consultant, find out what you qualify for, then we go looking for the business, whether it’s listed publicly or we go about it privately. Some of the best acquisitions are the ones that you just built a relationship with and the owner loves you, thinks you’re a great person, and they believe that you can keep the legacy growing. And sometimes that’s more important to these business owners than the money itself. So I hope that answers.

Melinda Wittstock:

Yeah, 100%. So tell me, Deb, a little bit more about your personal journey of what you learned along the way and the challenges you faced moving from corporate to setting up this business of yours?

Deb Curtis:

The challenges along the way, and I look at those challenges, they were hurtful at the time, but they taught me a lot, they built up my grit, so to speak. I have a mantra that I’ve lived by God, grit, and grace, my three Gs that I get through life with all three of them, God, Grit and Grace. And being a female, I worked in a very male dominated industry, and my very first career job of 18 years, I was denied a promotion because of being a woman. And that’s true, and this was back in the nineties and you could get away with that, you could never get away with that today, but you could back then. I won’t make the story long, but I fought hard on that situation and said, women can do this job just as much as the men can and I would not give up.

I was positively persistent, and within six months, they agreed to promote me on a probationary period, Melinda. I was the only woman that was on a probationary period for promotion, all the guys that wanted a promotion, they just got promoted and were granted the new salary and the way they went, but it was different for women. I passed that probationary period, I proved them that I can do this job, and I paved the way for other women in that industry, in that business, and I was there for 18 years. Back then, corporate really did take care of employees, they were just a little backwards back then with not promoting women, so my loyalty to them was great because I was there for 18 years. And what meant more to me, Melinda, was that promotion on my resume than the pay itself, and I know without a doubt I was paid much less than the men were because that’s the way it was.

Well, then I transferred into the banking industry and found my way of another female trying to find her way in a very male dominated industry, which is business banking. Think of 15, 20 years ago, you walk into the bank and most of the business lenders were men, that’s just the way it’s been, that that’s how it was. So again, I try to get promoted and for whatever reason, even though I was a top performer, I was just declined and passed over, dismissed for whatever reason, but I stayed the course with God, grit, and grace.

And then that’s when I was introduced to SBA lending, and same situation, employer after employer. But I finally realized in 2018, I need to set up a side hustle, I need to set up an LLC and do what I do. And this was allowable with the companies that I work for, I worked for banks that did SBA lending, and if that particular bank that I was working for declined the loan because it didn’t fit in that bank particular credit box that I was talking about earlier, remember I said all these different banks that do SBA lending have their own credit policies. Well, if the bank I was working for said, no, we’re not interested in this loan, I had the right to refer that decline loan to banks that I knew would do it, and then those banks would pay me a referral fee, but I had to let my employer who turned down the loan collect 50% of that referral fee, crazy, isn’t it? But that’s the way it worked.

My LLC started where whoever I was working for, if they said, no, to a small business owner, declined the loan, but yet Deb Curtis found a bank that would finance it, she got paid half of the referral fee, her employer collected an income for her work to find it. And over time, I realized I’m doing better farming out stuff than I am just working direct as a direct lender. Over time, I realized, enough is enough, I’m going to exit corporate and I’m going to take this LLC that I started in ’18 as a side hustle on a part-time basis and turn it into my full-time career helping individuals purchase finance, established moneymaking small businesses. And I will find the bank that will do the financing backed by the SBA, and those banks then pay me the whole fee for packaging up and mentoring my buyers who are the SBA borrowers buying these businesses and finding them the best sourced bank capital for them to fund the whole entire project.

My passion is helping women all day long and the minority population, yes, I will help out men, I love my husband, he’s a hard worker, but he’s always had it better than me in corporate and he knows it. But my heart is to really teach, educate, and inspire all the women out there, whether you’re a current business owner working for corporate, yes, you can still keep working for corporate and you can buy a business that’s established if it’s absentee owned. So there’s an option for everybody out there, and that’s how I’ve landed my ship, so to speak, and will probably end my career in the next 10 years doing what I’m doing.

Melinda Wittstock:

what an inspiring story. Entrepreneurs all have things they’ve overcome, and I joke often on this show, for anyone who’s heard this, my apologies in advance, but if you want therapy, just become an entrepreneur. Because it’s going to confront you with all these things, there’s always a new challenge every day, so it’s how you deal with that adversity, how you reframe it, how you make it your friend, how you learn from it and continue on. So Deb, what’s the best way for a woman owned business or a minority owned business to get in touch with you to learn about all your services, and if they’re thinking about buying a business, what’s the best way to find you?

Deb Curtis:

Well, my email is best and that’s easy, it’s deb@debcurtis.com, that’s as simple as it gets, and that will tell you that my website is debcurtis.com, that’s the best way, is by email. My favorite platform of social media choice right now is LinkedIn, and I do a lot of educating online with LinkedIn audio events and online posts. And I support everybody on LinkedIn, so you can find me there under Deb Curtis, I’ve got colors, red, white, and blue banner. So yes, deb curtis.com, deb@debcurtis.com, that’s as easy as it gets.

Melinda Wittstock:

Fantastic. Well, thank you so much-

Deb Curtis:

Thank you.

Melinda Wittstock:

… For putting on your wings and flying with us today.

Deb Curtis:

You got it, thank you for allowing me to fly, it’s been a good ride.