My name is Matt Manero. I’m the founder and President of Commercial Fleet Financing here in Dallas, Texas. I wanted to talk to you about what’s going on in this deferment process. What does it take to get credit approved today? What is the overall economic situation that exists for our clients, our company, and how are we going to navigate through this?
The three primary topics that I’m going to be talking about:
- SBA Updates
- Getting Approved and Funded (Bonus Tips)
- Deferring your payments and having a plan
Bonus Q&A content will be included from our Facebook LIVE Video.
What’s going on with the SBA money, what’s going on with the application process?
How is this thing going to play itself out for all of us? The reality is that it changes literally day by day, the rules, the application, the additional information that’s needed. It’s all over the place. We are finding that the Paycheck Protection Program PPP program is slow, but it is getting approved.
I would suggest everybody go watch my previous video, which you get very specific information on how to apply and what’s going on with SBA Relief: PPP vs EIDL
If your company has applied for the PPP program, we are hearing that a lot of companies are having success with their approvals. I have not heard of one company who has been fully funded yet. We’re all keeping our fingers crossed that the funds go through and people do get their hands on the money.
As far as the Economic Injury Disaster Loan EIDL program through the SBA, by the way, the PPP is through your bank. That will be backstopped and funded by the SBA program, but the EIDL is more difficult. That appears to be a much more difficult process. If I could make a recommendation to you, try for the PPP program first, definitely fill out the application.
Do not lose the opportunity to get your hands on this money.
I would suggest that you think very seriously about working with your local bank that is an SBA approved bank. We are hearing stories of big banks making it far more difficult for customers than the smaller banks. So we would suggest to you that you work with a local bank. I am totally convinced that the government will be funding this money. There’s no doubt in my mind that the government will fund these approvals for the PPP or the IDL program.
I beg you to please dot your I’s and cross your T’s and don’t take the path of least resistance.
Give as much information as you possibly can to the lender in order to maximize your chances of getting your SBA request for the two different types of loans, the PPP loan, or the EIDL loan approved.
Getting Approved and Funded
Let’s move now to the second topic tonight, which is about what does it take to currently get approved in the marketplace? I want you want to buy new equipment, you want to buy used equipment, you want to grow your fleet, you want to replace your fleet, you want to trade in units.
CFF History in the Previous Economic Crisis’s
What does the lending environment look like? I can tell you that after being in business for 25 years, I started commercial fleet in 1995 I went through the startup phase in 95’ just like you have, I went through 01’ and 02’ after 9/11, it was very challenging.
I went through 08’-09’ that was very challenging. This economic time crisis that we’re in is different than 08’-09’ in the primary difference is because there is a tremendous amount of liquidity available.
In other words, the banks have money they can get their hands-on money and in 08’-09’ that wasn’t the case. It was very difficult for liquidity to exist in the finance market of any kind.
Whether it was financing the equipment or financing real estate, whether it’s commercial or residential, it didn’t matter. Money was hard to come by. It’s not the case right now. The banks aren’t liquid and they are lending.
However, there are a few things that are very important for you to understand.
If you’re applying for credit, whether it’s for commercial, whether it’s to commercial fleet, or to maybe your local bank or even one of our competitors.
The important questions that you’re going to be asked is:
1. What is your story, your current story?
What are you doing to protect yourself against COVID-19 from an economic standpoint? Not are you disinfecting your trucks and your steering wheels and things like that or your office. What are you doing as a business to combat it? We need to know that information.
2. What is your plan? How will you navigate through this?
Is it because you’re going to get the PPP money? Is it because you have reserves for the rainy day that you feel you can weather the storm? Are you making some cuts in your fixed expenses and your staff? Are you trading equipment and not replacing it? So actually you’re getting some cash into the business. What’s the plan?Now more than ever, that story and that plan matters when you’re approaching a new bank or finance company for money.
3. What’s your proof?
Primarily proof of revenue, so unlike even just 30 days ago, how you make your money is very, very important. Tell us what your revenue stream is. Tell us about your contracts. How long have you had the contract? How much does the contract pay per month? Is the contract continuing? Do the contracts seem to be able to perform at the same level that it has in the past? Help the bank and the finance company with proof of your revenue, which then triggers that. In most situations you’re going to be asked for some bank statements.
Now, the idea that that quick little four-line credit application that you could do even 30 days ago, it’s harder to get those approved right now.
Even if you’ve got great personal credit and you’ve been around for a long time, we are finding our credit departments are asking for verification of your existing cash position and verified through bank statements.
- Get your three months bank statements ready and submit them with your deal along with your complete credit application.
- We would also suggest you get two years tax returns a fired up. Most of our clients don’t have 2019 tax return so that’s okay, but we’re going to ask most likely for some 2018 numbers and maybe your year to date internally prepared, 2019 numbers and now that we’re past the first quarter of 2020.
- Don’t be surprised if the banks are starting to come back and asking you for your Q1 internally prepared income statement and balance sheet.
If you have the ability to provide copies of the contracts that you have that justify and prove out your revenue stream, please submit those. That helps and we see this a lot in which the client applies for credit, but they haven’t quite decided on the specific piece of equipment.
Deciding on the Best Options
What I can tell you is those changes that vacillation back and forth of, I’m not exactly sure whether I’m going to get this where I’m going with that one.
It’s kind of freaking out our credit guys. I would challenge you know the equipment that you want to buy because every company is so overworked right now with handling deferrals and processing new business, that changes make it very difficult to be efficient and changes, slow the process down.
When you’re ready to go, then go ahead and do your, your submittal. Obviously, your credit score matters late payments, but down payments matters a little bit more too. If you can put, if you just sold a piece of equipment or you trade your training in a piece of equipment that down payment is more important than ever.
We are offering, what we refer to as Essential Business Owners and Essential Industries have “90 Day NO Pay” deferred payment. You don’t have to make your payment for 90 days on certain types of vocational trucks & equipment.
For our Over the Road trucking clients, we have 120-day program for LOW payments for 120 days. Pay 120 bucks a month and you can go in and start busting boats with a newer used piece of equipment. First full payment in 135 days! So don’t forget to reach out to us if those programs are of interest to you.
Deferring Your Payments and Having a Plan
Are you going to be hurt if you request the deferment in getting approved for your next piece of equipment?
I’ve had a lot of conversations with the banks that service our loans and I can tell you that in almost all circumstances, they have put up very specific guidelines that your request for a deferment will not hurt your ability to get financing. Now, if you just asked for a deferment and now you’re looking for a new piece of equipment, that is a little problematic, right?
They’re going to say, “Well wait a minute, he didn’t have it here. She didn’t have the cashflow for the last batch of trucks that we did. How do they have the cashflow for this new piece of equipment?”
So be sensitive about that. But if you’re not buying equipment and you need the deferment and you ask for it, the odds are it is not going to hurt you in the future.
So my point is hold off as long as you possibly can before you request the deferment, but if you need it, ask for it and get it and then take that deferment and figure out what can you do with that cash flow to go ahead and secure your business from a cashflow standpoint, stabilize your business and maybe even turn that money into additional revenue through new opportunities.
So I’m not overly concerned that if you needed to affirm it that it’s going to hurt you because I’ve had very detailed conversations with our servicing and lenders and they are promising me through real specific mandates that deferments will not hurt your ability to get approved down the road.
Let’s be straight about this. Transportation runs America. It’s one of the reasons why our company tagline is we finance America one truck at a time. You’re in an essential business. If you’re a client of commercial fleet, you’re in the transportation business and transportation runs America. We are essential to the economy.
I also believe that generalists get crushed and experts get paid. In other words, are you in a niche and are you one of the best players in that niche?
Now more than ever, it’s time for you to make that adjustment in your business.
For example, if you’re in trucking and you’re a generalist and you do flatbed and heavy haul and drive in and refer, maybe it’s time to be a reefer carrier because refrigerated goods are moving pretty dog on. Well right now, especially refrigerated goods that connect to the medical industry moving great. Maybe it’s time to really become that 800-pound gorilla in your niche.
The reason so many companies don’t go for a niche is because they need revenue. I’ve got to take a little from here. I got to take a little from there. You kind of end up being a Jack of all trades and a master of none.
So I would challenge you use this opportunity to do this reset that’s happening for so many of us in business to really pick what is the niche that I can dominate and become this monster in and on my slice of this niche.
I would remind you to really spend time with your key relationships.
- Who are your best customers and your best finance companies and your best lending relationships and your best vendors?
- How do you really just maximize those right now and make sure that they are giving you what you need?
- Are you giving them what they need in return?
Now more than ever, relationships are key, and I know without a question of a doubt that how we all handle this economic crisis will be remembered when this economic crisis is over. I can’t say that when everyone is so flush with cash and everyone’s business is so good, right?
Everything Becomes Commoditized
Your customers don’t treat you maybe as well as you should. Maybe we don’t treat our customers as well as we should.
I can promise you that right now in this economic downturn there are key factors of how you or your company will be perceived after this is all over:
- How we handle ourselves.
- How we treat others.
- How we handle our business.
- How we communicate through potential problems.
- How we suggest or open up new opportunities .
My point is the favors, the relationships, the things that you do for people now will be remembered, so don’t run from it. I think something else that’s really important is what happens at the end of this economic crisis. The reality is we’re in transportation and transportation is a vital part of the supply chain and the supply chain contracts and expands over and over it contracts and it expands and maybe people aren’t renovating their kitchens or their bathrooms, so they don’t need toilets and granite countertops or two by fours or roofing material or sheathing material or bricks.
Right now, maybe everyone’s starting to contract a little bit maybe, but sooner or later the supply chain of transportation has to bust open again. We are lucky that the supply chain of transportation can only contract for so long.
Look, the March Over the Road numbers came out and there were 8,000 Class A truck orders in March. That’s bad. Like that’s not good. The number is always a good year as always, North of 200,000 Class A truck, well 8,000 a month ends up playing out for the rest of the year. That’s 96,000 Class A orders. That’s to dog on low. The good news is it can’t stay like that forever. It you can only run trucks so long before repair and maintenance kicks in and driver retention kicks in and aggravation kicks in. Sooner or later it has to bust again. And I promise you that the industries that we’re in, the industries that you’re in, the transportation industry can only contract for so long.
Your job is to hold on. It’s to win every day. It’s to stay motivated. State communicating, stay positive so that when this thing starts to open up again, we are still in business and ready to pounce and take advantage of it.
You know what I’m saying is true. You’re watching some of your competitors’ contract right now. You don’t even hear about those guys anymore.
Yeah, they’re running scared and you’ve got to hang on so that when that tide comes back in, there’s not going to be as many boats in the Harbor and one of our boats is the one that the tide lifts. I’m hopeful that that helps you tonight just with a little bit of an update on the SBA situation.
What happens if you take a deferment? Don’t worry about it. What happens if you’re applying for new credit? Dot the I’s crossed the T’s, submit more information, tell your usher story, document that you’ve got consistent revenue.
If it’s contracts, that’s great. If it’s just a phone number where we can go ahead and call your hauling reference or your contract and they can give us a good reference that goes a long way. Support it with three months bank statements and maybe some tax returns or financial statements and stay motivated.
Stay true to the fact that understand that transportation runs America, whether it’s trucking or it’s construction or it’s towing or its delivery, transportation has to expand. Again, it can only stay contracted for so long and we believe that so long in this thing, it’s another 60 to 90 days. I’m not saying in 90 days it’s going to return to the “heydays” of 2018, but it won’t stay where it is for too long. That much. I know for sure.
I hope this was beneficial to you. I love coming to you on all media formats. I love getting comments and questions. I hope this is beneficial and we will see you all down the road.
I do want to offer this up as well that, do not take my advice as gospel. I am not a CPA. I’m not your accountant. I’m not someone who you should be relying upon for this information. You need to go double check and triple check this information on your own
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Questions from our Facebook Live Video
What are your thoughts on cargo vans?
Matt Manero: I love delivery right now, whether it’s cargo vans for a plumbing company or its cargo vans for an electrician. It’s cargo vans for someone that has a third mile, the last mile contract. Maybe it’s even as a contractor for Amazon or FedEx ground. We love that stuff. I think it’s a great space to be in. If you just look at what’s happening with Amazon and Walmart and the digital movement versus the brick and mortar movement, I actually think delivery is going to be a huge positive segment of transportation and it’s happening right now.
So, if that’s a space that you’re in, I highly recommend that you stay in it. Call your vendors, see what you can do to get more opportunities for more business from them.
When we’re in quarantine, people are shopping on Amazon and it’s being shipped by UPS and Amazon and FedEx. Let’s not also forget about what’s happening with food delivery. It’s phenomenal in a lot of ways.
Now, it’s not good enough to help the restaurant industry. That’s still very problematic. We know that, but you know, if you’re a food delivery company, you’re doing great.
Look, I ordered these special meals from a company called Icon Meals, and I’d go in there twice a week to the lobby there and I’d go to the refrigerator and I pulled my meals out and I went in there yesterday and there were virtually no meals in the refrigerated box.
I asked the Icon Meals’ expert, “What’s going on? Where’s all food?” and she said, “We are so busy with our online orders that we literally can’t cook enough just to ship our online orders, let alone stack the refrigerators.”
So, like I said in the last stream, SBA Relief Programs, remember for every action there is an equal and opposite reaction. If there’s a buy, there’s a sell. If there is a sell, there is a buy when there’s bad news somewhere. If you look hard enough, there’s good news. And that good news is opportunity for those of us who are willing to innovate, stay gritty and go out and find it.
We’ve been in it for 25 years, my friends, I’ve been through the startup phase. I’ve been through 01’-02’. I’ve been through 08’-09’ and I can tell you that this right now, while it seems terrible, I can tell you it’s not as bad as 08’-09’. Why? Because there’s tremendous liquidity in the marketplace. The banks have money.
Look at what happened in a way to not just to give everybody just a little bit of commentary.
The government funded Stimulus Package in 08’-09’ was $500 billion.
They’ve already committed trillions of dollars to this. So there is money. The government is helping, and capitalism is alive and well. We’re just in this early phase of this thing and it’s going to go on for a little bit longer.
So, hug those kids tight, hug those vendors. Hug those key employees tight. Hug those drivers tight. Well, I guess I got to stop it. You can’t be hugging anybody right now, right, with the, with the distancing.
But give them an elbow bump and tell them that you care about them. We’re all going to get through this thing. So, if there’s anything we can do here at Commercial Fleet, we want to jump in there and help you in any way possible.
Matt, did you have opportunity ideas for transfer companies that specialize in large 56 passenger vans?
Matt Manero: Yeah, that’s a tough one, Jeremy. Jeremy’s talking about, Motor Coach Shell bus. I don’t have good news for those guys. Again, if you were driving school buses for school districts, you know athletic contracts. If you were doing corporate transportation from the airports for masses, for groups, for conventions, it’s going to be a really tough go. I was talking to one of our lenders, whom does do a lot in motor coach and they said it’s terrible. So Jeremy asked a tough question. I appreciate you asking me buddy.
It doesn’t look good for Motor Coach companies right now. I don’t know how a motor coach company can fully innovate and make a real change. I mean, look, let’s say you had the contract to shuttle people from the hotel to the airport or from the hotel to the shopping malls. It’s a tough gig, man.
When the hotels are down, you know, 90% in occupancy, that is a very, very difficult business to be in right now. I have no silver lining on that. I really don’t. I wish I did.
Will deferment impact my company credit score?
Matt Manero: Just to reiterate, I am under the impression that it will not, it will not impact your credit score. If you need it, ask for it. If you don’t need it, don’t ask for it. There is no free lunch on that one, right? So don’t, don’t look at all of this. Like there’s free money.
By the way, for those of you who are doing the PPP program, I need you to dot your I’s and cross your T’s. I’m very concerned about what people are going to do with that PPP money when they get it. You know, the rules are very clear.
75% of that deposit has to be applied to your payroll run and only 25% of that deposit can be used for renting or mortgage or utilities, and customers are going to have to document that. Dot the I’s and cross the T’s on that.
What I’m concerned about is some people get this influx of cash, they’re not going to apply it to payroll and they’re going to do it for something else. Maybe in a way, borrowing from Peter to pay Paul, and you’re going to end up getting called out on that in a year or two or three. So take the stimulus money, but use the stimulus money for what it was designed to, which is to keep people employed.
I’m going to put a PDF for everybody to see and read on your own the summary that we’ve come up with.
I will put a link to the application in which you can get started on applying for the PPP loan. Now let’s move to the next loan. Under the Care Acts called the Economic Injury Disaster Loan. It is referred to as the EIDL loan.
Look Up ANY SBA Document form here: https://www.sba.gov/document/
Disaster Loan Online Application and details: https://disasterloan.sba.gov/ela/
Visit the SBA website for more information: https://www.sba.gov/
President of CFF, Matt Manero, Will be going into detail about the deferment process and taking on credit for you or your business.
About Commercial Fleet Financing, Inc.: At Commercial Fleet Financing (CFF), our pros have given smart advice to fleet owners and owner-operators in the transportation, moving, towing or construction industries for more than two decades. With CFF, finding the right financing solutions is a phone call away and most borrowers secure commercial vehicle financing with ease. To talk directly with one of our finance pros and get started with a credit approval in as little as two hours.
CFF’s phone number is (469) 281-2962.