In this episode of the M&A Launchpad Podcast, hosts Feras Moussa and Casey Minshew sit down with Mathias Smith, founder of Pioneer Capital Advisory and a seasoned expert in SBA financing. Mathias shares his entrepreneurial journey, from launching his own firm to helping countless buyers navigate the often-complex SBA process. He opens up about the real challenges of growing a new business, the power of social media for client acquisition, and why being proactive and well-informed is key when seeking financing for business acquisitions.
Whether you’re a first-time buyer or an experienced entrepreneur, Mathias offers practical insights into what it really takes to secure SBA funding and grow a business from the ground up.
In this podcast episode, we discuss:
• Mathias’s background in SBA lending and why he started Pioneer Capital Advisory
• How social media (especially Twitter) has helped grow his client base
• Key steps for navigating the SBA process with confidence
• Why a solid business plan and clear financials are essential
• Using HELOCs creatively for business acquisitions
• The value of having expert guidance through the SBA journey
• Real-world challenges of scaling a new business and building a team
• Staying adaptable and resilient through entrepreneurship
Connect with Mathias:
Twitter: @mathiasmsmith
Website: https://www.pioneercapitaladvisory.com
Additional Resources:
Sponsored by O’Connell Advisory Group – Work with a trusted Quality of Earnings and Financial Diligence partner who focuses solely on business acquisitions.
Visit: https://www.oconnelladvisorygroup.com
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Transcript
00:00 On today’s episode, we are interviewing with Matias Smith. And I’m going to tell you, when you start getting into the SBA
00:07 side of the business and you start getting into the the weeds and the changes and all of these things, this
00:12 guy really knows his stuff because he’s not just a banker. He was he worked for banks, but really is has a massive
00:17 following on X all around how to do SBA home equity lines and things like that.
00:23 And he’s gone off on his own helping over 95 people in the last couple years. I really think that this was one of
00:29 those podcasts you want to dive in and listen to. So, Ben, what were your thoughts? You know, I mean, I think it was
00:34 interesting. I mean, I thought it was going to be another, okay, another banker. Let’s talk about SBA. We’ve done a couple podcasts already. And I think,
00:39 you know, um, but it really took it took a it took a cool turn because he’s really an entrepreneur, too. He started
00:45 his own company, went out on his own, had some challenges, you know. So, I think that we kind of dive into that on
00:50 today’s episode. But then I think the other thing too is the power of X which is formerly Twitter for those that don’t
00:56 know what we’re talking about and how he’s leveraging that in this SBA M&A
01:01 searcher space for and educating people out there. And I thought that that was pretty fun. Yeah. Knowing these little details about
01:08 how to finance your business, right? These little caveats will keep you out of problems. And it sounds like, you know, he’s the right guy to reach out to
01:14 if you have questions or whatever you need to help you structure it before it ever goes to a banker. Uh absolutely
01:19 gold podcast. Jump right in. Love it.
01:26 Welcome to the M&A Launchpad podcast with your hosts Casey and Ferris with Equity Launchpad. On this podcast, you
01:31 will gain insights on acquiring, investing in, and selling profitable businesses in the lower to middle market. Whether you’re a business owner,
01:37 investor, or spying entrepreneur, at Equity Launchpad, we will provide you with the knowledge, guidance, and capital to navigate the world of mergers
01:43 and acquisitions. Hey there, this is Casey with the M&A Launchpad podcast. want to let you know
01:50 about October 25th. Put it on your calendar. This is a do not missed one day event. There’s going to be
01:56 incredible headliners, but really at the end of the day, you’re going to get a chance to talk to people that have made
02:02 acquisitions, learn from some of the challenges that they’ve made because this is definitely a challenging process. But more importantly, there’s
02:09 going to be people there that can help you and support you along the way from great vendors, quality of earnings, how
02:15 to run the due diligence process, and how do I get financed? How do I raise capital? How do I structure all of these
02:21 things? October 25th in Chicago, we’re going to be gathering. It’s going to be hundreds of people that are all focused,
02:27 like-minded people. And man, everyone that’s come has given us incredible feedback. So, mark your calendar.
02:33 October 25th in Chicago. We look forward to seeing you. Hey Matias, welcome to
02:39 the podcast. Uh, great to have you today. Hey C Ben, thanks for having me on.
02:44 Definitely appreciate the opportunity here. Yeah, absolutely, man. It’s it’s it’s I love what you’re doing. You know, I’m my
02:50 background is in the SBA side. Uh, you know, several hundreds of millions of loans that I’ve placed in that. I’ve
02:55 taken some myself, so I know the game. Uh, we’re excited about to have you. So, why don’t you go in, tell us a little
03:00 bit about your background and, uh, tell us about your company. Yeah, absolutely, Casey. Yeah. First and
03:06 foremost, thanks for having me on. One of the guys on my team, Raphael, actually went to the M&A Launchpad conference back in May in Houston. Had
03:14 amazing things to say and and that was kind of a tiein here with reaching out. But to give you my background, so I’m
03:21 based in Madison, Wisconsin. I’m currently sitting in a Myriad Alofts hotel room in Dallas, Texas here for a
03:28 just a M&A networking cocktail appetizers thing with Kevin Henderson at
03:34 SMB Law Group and Chris Beer over at Midwest CPA. But my my background case Casey and Ben is I started in the SBA
03:41 lending space background of college. So went to the University of Wisconsin Madison, graduated from there back in
03:47 December of 2014. got into the SBA lending space working as a middle office
03:52 kind of desk jockey of sorts. Um, facilitating deals from the time they got approved through closing and
03:58 funding. Started in in that space back in March of 2015 and spent about seven
04:04 years and two months um working at four different banks. So was at Live Oak Bank for half a year back in 2021 as a closer
04:12 there. Worked in their SBA division. So basically ETA search fund lending type
04:17 deals. also worked on their sponsor finance team too. So we have upmarket bigger deals with independent sponsor
04:23 groups. Spent three three and a half years uh working at bank called by line bank. So
04:28 another have big big bank in the SBA space there. Worked on everything from
04:34 people trying to buy a decrepit bar near Wrigley Field in Chicago to people buying self storage in Florida and kind
04:40 of things across the the gamut and then worked at two banks based in Wisconsin. Uh one called First Bank Financial
04:47 Center. So, a bank that mostly did owner occupied commercial real estate. So, anything from someone building a gun
04:54 range in Pennsylvania to people building Culver’s QSR restaurants in Illinois,
05:00 uh, buying out the building that they’re leasing from their landlord for their manufacturing business in Wisconsin and
05:07 then lots of gas station deals. The the guy Casey that I actually got my start with um, working at First Bank Financial
05:14 Center, his name was Brent Benjamin. He was like the gas station lining zar in
05:19 South Central Wisconsin. So that just completely random fact there. And then most recently was a a bank based in
05:26 Madison, Wisconsin, which is where I live now. A bank called First Business Bank. And so that was my last bank
05:33 before going off and starting Pioneer. Um would would it help for me give the the story with starting Pioneer and kind
05:39 of Absolutely, man. Yeah, for sure. Yeah, let’s hear it. Thanks. Yeah. So the the last bank I was at first business bank the day I started
05:46 that bank I got a DM on LinkedIn from an attorney that I used to work with before at Live Oak and Bine this guy named
05:54 Scott Oliver who’s a partner at a law firm called Lewis and Capus based in Indianapolis and so Scott reached out
06:00 and said you know hey Matias congrats on on your new job wish you all the best of luck man hey by the way here’s a space
06:07 on on Twitter of all these people looking to buy these small to mediumsiz businesses and he said even though your
06:12 job isn’t sales in your middle office guy, you’re pretty good on social media. You should go on Twitter and put conso
06:18 there to educate these buyers on how to go through the SBA financing process for acquisitions and basically to kind of
06:25 put knowledge out there just to be helpful, but also to help your bank drum up business. So, I thought to myself,
06:31 you know, why not see what I can do to help the team at my new bank? So, I just start pumping content on Twitter,
06:37 basically pounding the drum, putting out stuff on anything from this is how you take out a home equity line of credit
06:43 that’s not drawn on to leverage your house over 75% to avoid pledging out an
06:49 SBA loan to this is what banks want to see in an acquisition, management plan,
06:54 and projection. And topical content kept along those lines. And so over the two
06:59 months I was at my last bank, Casey and Ben, between March and May of 2022, I sent my bank $15 million of at bats from
07:07 people I was meeting on Twitter over the DMs. And what ended up happening was halfway through my time at my bank, I
07:13 made the mistake of retweeting a tweet from the bank’s Twitter, which was dumb looking back in retrospect. And so my
07:20 head of marketing at the bank found my Twitter since she ran the the Twitter pro profile or yeah profile at the bank.
07:28 And so she started reading through my feed on HELOC Shield this and that etc etc polls in my banks have compliance
07:36 and so you guys can probably guess where this conversation’s going. Oh yeah. Long story short, they they reached out to me, asked to hop on a
07:42 video call, and they basically said, you know, we love your enthusiasm about business buying, SBA financing, but due
07:49 to the fact that this is a publicly traded bank, we have to rein in a little bit here. And so essentially, they’re
07:54 asking me was to run myself by them first before posting it. So I I thought this is kind of silly at the time, just
07:60 me being me. So I put disclaimer at the top of my profile basically to try to make it arms length in nature. And I
08:06 just said, you know, everything I’m posting on my Twitter is my own views and not representative of my bank. So I
08:12 kept posting, kept meeting people, kept um kept saying leads to the bank and and
08:18 ke around the same time I was observing from afar, you know, folks like the SMB Law Group guys basically spinning up
08:24 their thing and others as well in the financial due diligence space and similar. And so I kind of saw this
08:30 movement of people out of corporate America to work as service providers to help these acquisition entrepreneurs
08:37 with going through this process. And so I get to the I get to my two-month review and leading up to this I
08:43 constantly have my direct manager and my head compliance hitting my LinkedIn profile basically looking over my social
08:50 media like a hawk. And so I get to my two-month review, first week of May of 2022, and my boss basically says, “You
08:58 know, you’re kicking ass at your job. Everyone likes working with you, but we need you off of Twitter or we need you
09:04 to stop posting about banking and SBA because there’s a concern from Upper Management First Business Bank that if
09:10 someone’s deal goes sideways on Twitter, they’re going to point back to your profile and basically say, “Your guy
09:16 told us to do this, and it’s g it’s going to be our fault.” So, at that point, like I I got it. It clicked,
09:22 right? Like, they they don’t want me to do this. I work at this bank. I just have to live with this. But right after
09:28 this two-month review, just from a timing circumstance, I had this trip planned to Greece with my wife for for
09:35 two weeks. And so, we’re we go to Athens, Santorini, Cre, then back to Athens. And while I’m in Greece with my
09:41 with my wife, I’m thinking to myself, you know, here’s this market of all these people that want to buy these
09:46 extremely profitable small to medium-sized businesses, the same ones that you guys meet at your conference and and similar. And I thought, you
09:54 know, my bank, if you kind of look at the fact they’ve made the business decision to not let me be active on
09:60 Twitter to try to drum a business, if you zoom out from a macro level, they
10:05 might end up getting passed the market by banks that are more entrepreneurial, ones like First Business Bank, Live Oak
10:11 Bank, and similar, and where they’re letting their their lenders kind of take advantage of this. And so I thought, you
10:17 know, I I don’t want to work at this bank. What are my other options? So I thought option one, I go to a different
10:24 bank, I get the same job somewhere else, but then you never know what bag of goods you’re getting sold until you
10:29 ultimately end up going there. And so I thought, you know, I don’t really want to do that. And so I thought, what does
10:35 it look like if I want to kind of live and work in and around the space and just be very active in the social media
10:41 community, LinkedIn, Twitter, search funer. And so back when I’d been a closer or middle office guy at these
10:48 banks, Ben Casey, most of the banks I worked with, the deals I worked on as a closer came from referral sources or
10:55 from loan brokers or or loan consultants. And many of these people were old guys, you know, 60s7s, some of
11:02 them three-piece suits, um where many of them had come from like a sales background, but none of them really knew
11:09 the inner workings of the banks. And so I thought, you know, having worked at these four different banks and seen like
11:16 the under the hood of how the cookie ultimately gets baked and understanding the logistical piece coupled with having
11:23 stayed in touch with the lenders I’d worked with at these banks as they gone to different institutions since many
11:29 loan officers don’t stay at the same bank forever. They hop around a bit. And then that kind of coupled with the fact
11:36 that this market in the business buying space was just taking off like a rocket around this time and that banks in the
11:43 space with the exception of you know small community banks and then also Wells Fargo, Chase Bank and um Bank of
11:51 America, most of these SBA banks will pay referral fees to firms that send
11:56 deals to them. Banks like Live Oak Bank, Huntington Bank and many others. I thought, you know, why not take the
12:02 dragon by its tail or the bull by its horns and build a business plan around the thesis of helping these
12:09 entrepreneurs in this Twitter social media ecosystem with going through the
12:14 SBA acquisition financing process. And so that was the spark that really lit the idea behind Pioneer Capital
12:20 Advisory. So this is middle of May of 2022. I think it was May 16th was when I
12:26 incorporated. And so since that time, we’ve built a a system or team kind of
12:32 almost analogous or mirror like to the same way the banks have their structure from a human capital infrastructure
12:40 where it’s almost an assembly line of sorts where we have two sales personnel
12:45 um currently Raphael and Ellen and my team where they’ll take sales calls. They’ll learn about the acquisition
12:51 entrepreneurs transaction the business that they’re buying. will sign an engagement letter with them and then
12:58 from there it goes to a team of three analysts. Um, we have Pablo, our head of credit, Fernanda and Romero, where
13:05 they’ll put together a deal deck that ultimately has sources and uses, cash flow analysis, a background, the
13:12 acquisition entrepreneur, a background the industry, and then a discussion of why the the buyer’s background makes
13:18 sense for the deal. And then we take that and we pitch it out to the ocean of banks, specifically the ones that we
13:24 think will be a good fit for the deal. And then from that point forward, my chief operating officer, Valerie Sash,
13:31 who sits in Indianapolis, basically kind of acts as the account manager or less
13:36 on sorts between the acquisition entrepreneur and the banks to help the transaction go smoothly from
13:42 underwriting all the way through to closing. And so we’ve been fortunate enough to work with 95 people in the
13:49 last three years and two months to to go through this process. But it’s been a fun ride.
13:54 Let’s, you know, I mean, it was good stuff. I mean, I I think it’s interesting because I mean, I think we I I I was thinking that this this podcast
14:00 was kind of going to go like what what about SBA and how does SBA work, but I think it’s interesting because you’re also starting a company too, right? You
14:07 know, and and and what goes into the growth of that and it just happens to be in the SBA space too. So, you know, kind
14:14 of I’m just going to just go off script here. What has been some of the challenges, you know, and the other thing that I wanted to piggyback to this
14:20 too because you mentioned it and I’m a big Twitter fan as well. How are you leveraging Twitter to grow your
14:25 business? Because I think a lot of entrepreneurs really need to get comfortable with more and more things
14:30 are happening online and social media and you just have to adopt it regardless if you don’t like it or not. It’s just
14:36 part of doing business these days, right? First off, they just need change from Twitter to X now. Well, oh yes,
14:42 I have been forced on my app to get off Twitter. So, just let you know that’s our first step to all the entre update.
14:49 I I remember there was a moment case Casey, you update the app and you have the little Twitter bird. It changes the X and it’s gone. You can’t go back.
14:56 You can’t go back. It forced me yesterday. You’re no longer a Twitter user. You had to do the X. You had to
15:02 and I bit that bullet about a couple years ago. But, you know, but all right. So, maybe let’s start with, you know,
15:08 what what’s been some of the challenges along growing this this new firm, right, which is an incredible journey that
15:13 you’ve had over the last two years, you know, or excuse me, three. Um and and then also again how are you
15:20 leveraging the social media because I think that’s important for entrepreneurs to hear that too, right? I mean obviously you listen to us on a podcast
15:26 so we we know the power of some of these things but I think Twitter I mean I I I follow a lot of these same people that
15:31 you’re even mentioning you know on Twitter and I think that there’s a lot going on there too. So and the Yeah. Yeah. No. So the the
15:37 biggest challenges that that I’ve had so kept segueing back to what what I saw
15:42 back when I started Pioneer was how lots of people were kind of doing this on a standalone basis. Ben and Casey is that
15:49 there weren’t any firms I was acutely aware of where they built this type of business like on a a larger scale. It
15:56 was lots of people doing these kind of on a one-off basis like say you Casey pure hypothetical or like a fractional
16:02 CFO type and you know people looking for SBA financing you’d send them to the banks and you’d be involved as possible
16:09 is trying to figure out like what should the actual architecture look like from a
16:15 people standpoint for this type of business and then what should each of the people be doing in those defined
16:21 roles. What are those KPIs? Where do you find those people? So, like what’s the
16:26 avatar of the type of person that you’re trying to hire for? And then the good people that know SBA well, for example,
16:32 my like my chief operating officer, Valerie, where they have lots of options or banks they could go to. How do you
16:40 pitch those people on taking a flyer to come work for you? So, that that I’d say has been one of the biggest challenges.
16:46 And then, Kev, along the way going through different iterations of of Pioneer like V1 or like V1 1.0 0 or
16:54 1.1.1 was just me. And then I had three people working for me in the Philippines. That didn’t work. So I I
17:02 went that down. Then last year I had one guy that was working for me basically as a sales associate account manager of
17:09 sorts. That ultimately didn’t work because I just sucked at trading him and there was other issues too. And so now
17:16 we’re on like 1.9 version 1.9 and like I feel like we have version 1.9
17:22 well built out and now it’s like how do we scale version 1.9 to 2.4 or whatnot.
17:29 So, I’ll being somebody that had, you know, did this in my business, right? Focused
17:35 completely on commercial financing. Um, you know, with all of the tools now to
17:40 automate a lot of this stuff, um, I think your business can get extremely
17:46 even more efficient just by using the tools that are out there now. I mean, having a pipeline, being able to respond
17:52 an email. I’ll tell you, when we work with SBA banks, I think one of the hardest problems is is that they never tell you what stage they’re on, right?
17:58 Yeah. It’s like they’re like, “Hey, the commitment is coming.” And you’re like, “Well, when is the commitment coming?” And they’re like, “Well, it’s coming.”
18:04 Is that all lenders? I feel like you’re like a black box. So, so why would you just I feel like part of that bet not to pop
18:10 in is a little bit intentional, right? Like that they they kind of there’s a bit of a game there, right? So,
18:16 and it’s like, you know, there’s it’s all these things you deal with when you work through these banks where I think from a a broker standpoint, right? being
18:22 that adviser or whatever you want to call it, you know, you could almost be that guy that takes that uh all of that
18:28 communication and automate it and then then they don’t care about the bank. The bank’s just
18:34 your funding source. And I’m sure you’re probably doing a lot of that. But that’s kind of the stuff that I thought about um Yeah. with with some of the stuff I
18:40 was doing and the stuff that we do here is just figuring out how to automate it where you can reduce some of the redundancies and the follow-ups and the
18:46 communication. Yeah. Yeah. No, people that that adopt that more quickly, right, are are the ones that
18:52 are going to be successful, I think, in this really it’s it’s this new phase of our economy, right? I mean, and we could we could throw out the the cliche AI and
18:59 all this stuff, but that stuff’s that’s real, you know, and and and it’s getting smarter every day. And I think the
19:05 quicker that you adopt that and and get it into your workflow, you know, from from not only sales and
19:11 marketing perspective, but also underwriting, we’re seeing that a lot on, you know, I mean, spreadsheet work
19:16 is becoming a lot easier to be done. And I mean, there they could where you could pop in a spreadsheet, it’ll do it for
19:22 you or it’ll give you the formula to do it. I mean, back in the day, that that was very very tough, right? You had to hire people to do some of these things,
19:28 you know, and so, you know, I think that’s important to understand, too. you know, I I I could go I I mean, I’d love to go down the AI
19:35 rabbit hole here, but like this is something where I’m constantly pressing my people is like, how can we be more
19:42 efficient? How can we lean into the AI and things like that? And like I I put posts
19:47 basically out on on LinkedIn. Um I I had some guy that kept posting me. It was a it was a prospect because he could tell
19:55 that I used Chad GPT to reformat my email. And you have the infamous dashes
19:60 when you use chat GPT. Yeah. And so it’s seemingly obvious. And like my whole thing is, you know,
20:06 you there are gonna be two camps of people like in any professional service space. One is people that get on the
20:12 train, other is people that don’t get in the train, right? And like you don’t want to be stuck riding the horse when
20:17 the your competitors could be in the Lamborghini. And like AI helps you get to the Lamborghini. The question is what
20:24 that looks like. So, oh So, this I’m going to dive into some some of the cool stuff. Um, now that I
20:29 know you’re not a banker. I mean, you you’re a past banker. You know, let’s let’s get into the stuff where I think
20:35 that our listeners really have those questions, which are like, you know, I’ve got a home equity line of
20:41 credit that I want to tap to buy my SBA loan, right? What what what are the ways to get through those things? The other
20:46 one is is I think one of the biggest ones is SBA has made so many recent
20:52 changes, right? Um, I’ve noticed myself I have a I have a relationship that I put through one of my bank friends. He
20:58 just told me he’s like SBA is slower. He’s like they they they gutted the SBA
21:03 and so rules rags, you also have all these other challenges that are happening inside of the SBA, right? So
21:09 yeah, my question my big question is is like what are those like hey I posted this on
21:16 Twitter and I got so much feedback. What are a couple of those that you did that were just like like I think the home
21:22 equity line is a great one. I think that is a yeah great angle or or like hey man like how do I get 0% down? How do I
21:29 structure it? Yeah. And by the way I wouldn’t ever suggest it. Yeah. Because leverage is at 10 and a quarter
21:35 interest rates. I don’t think I would leverage like that. But the point is people are trying to be creative and it sounds like you’re a creative person
21:41 that was in a bank that’s not creative and they’re like hey and I get it. I actually agree with the bank, you know,
21:47 like that that does put a lot of liability on, but now you’re a free man. So, what are some of those ticks trick
21:52 tricks and tips that you can give our guys that are listening, guys and gals, that are going, “Man, I need to know
21:57 this SBA process.” Yeah. So, a few different things. So, like um so one is if you if you’re
22:05 currently in the trenches and like once you own a business there, the the the
22:10 sea or the ocean just gets easier, right? like you’re you’re in the arena, you’re holding the sword, metaphorically
22:16 speaking. So, if if you currently are fortunate enough to own a business now and things are going well, if you want
22:22 to do kind of a rollup strategy, the the buy and build play, let’s say that you’re in Dallas, Texas, where where I
22:30 am now is the time of this podcast and you own an HVAC business and you want to buy another one. Basically, if you’re
22:37 willing to have your current HVAC business be a co-signer, co-borrower on
22:43 the acquisition loan on the SBA loan for the for the add-on, and if the ownership
22:48 group of the business that you’re going to buy is the same as the one that you have now, and if it’s in the same
22:54 driving distance, same geographic radius, you can do the 0% down because that qualifies as the expansion
23:01 acquisition. But the multiple has to be the the multiple has to be low enough to make that work. And like I I can’t do
23:08 math in my head. I’ I’ve never been good been good at that. You kind of has to pop into a spreadsheet if you’re me. But
23:14 basically, if the numbers work, the cash flow of your current company can support
23:19 gets woven into the global cash flow for the underwriting for that. So yeah, that
23:24 that’d be the first one. Like, you know, that’s great. And that kind of brings up the thing for, you know, people that are doing an SBA loan. You
23:30 know what I mean? They are going to look at your global cash flow, right? That is a big deal. Most people don’t realize
23:35 that they’re going to look at you personally, but if you own three or four pieces of real estate and if you have this and you have that,
23:41 all of that gets bulked in to cover that debt service. Correct. Yeah. I was gonna say, let’s unpack
23:47 that, right? Because I mean I mean I had heard about that maybe from you a few years ago. I was like, what the heck is that? I mean I’ I’ve done commercial
23:53 real estate and they never talk about that, right? It’s all about personal liquidity and net worth and and and you
23:58 know that type of stuff because they’re really they’re they’re underwriting the underlying cash flows of the company, right? But
24:03 you’re saying that that they’re going to take everything that you own, right, as a way to cover the new debt, right?
24:10 Is that what’s happening? Yeah. So, so if you own, let’s say, Ben, that you own that existing HVAC business
24:17 and you if you want to do the 0% down specifically, you have to have that
24:22 company be a co-signer on the loan for the purchase of deal number two. Now, if you can come up with the 10%
24:28 down independently, and you don’t need to do the 0% down thing, you can
24:34 basically keep those two businesses siloed separately from each other. Some banks
24:40 might want to grab a corporate guarantee from the first business because that enables them to factor in the the global
24:47 cash flow with pulling in the financials of deal number one to deal number two.
24:52 But that’s a bank discretion thing. That’s not an SBA mandate. But let’s be honest, they’re going to
24:58 ask for it. So, let’s get to that point. Like most I mean I’ve done hundreds of
25:03 these loans, brokering, doing those things. the bank is going to ask for every PG of everything you own,
25:10 everything like that. So at Pioneer, are you are you helping your clients avoid
25:16 like going, “Hey man, you don’t have to push back or any of that stuff.” Support. Yeah. So we like if if we’re working
25:22 with someone Casey, we tell the clients, push back when there’s an opportunity to push back. And so sometimes like if the
25:29 bank comes back with a ridiculous ask because we’re we’re in this position
25:34 where like the the person we’re working with is our client and we’re trying to advocate for them but we’re also trying
25:40 to maintain the relationship with the bank and at times that things can get adversarial situationally depending not
25:47 typically. So sometimes we’ll tell the client you know hey this like what the banker is asking you for is
25:53 discretionary. tell the banker that you checked the SBA guidelines and this isn’t a mandate and like we’ll just tell
26:00 them what’s right back in an email kind of thing. So, no, that’s great stuff because I mean
26:06 there look there’s a lot to it. I think everybody thinks SBA is just like walk in, get a loan, and you’re out the door.
26:12 Yeah, man. You’ve got to have you’ve gota you’ve got to have your stuff. I mean I so one of the clients I helped in the past you know they had submitted
26:19 their financials for 2024 uh their P&L uh they were on a cash basis obviously
26:26 when they file their tax returns they file on a cash basis but their yeah reporting is on an acrruel basis and at
26:32 the beginning of the year they made them go back and basically redo the financials with their CPA to show the
26:39 the cash basis of the year-to- date opposed as the acrruel and man that it took a long time Like it takes a long
26:45 time for an entrepreneur to go what? Like I don’t get it. Yeah. You know, but there are these things,
26:51 right, that I think like what when when someone works with you or a group like yours,
26:56 this is where that upfront scrubbing is really going to help, right? Is that before it ever gets put in the bank
27:01 hopper, right? Right. You guys have enough knowledge on your on your funnel to say, “Hey,
27:06 yeah, we’re going to scrub this thing. We’re going to get it to where when we when we hit submit, we’re we’re 90% of the way
27:13 there. Yeah. And that’s the thing we try to do, Casey. So, like if um le let’s
27:18 say hypothetically you’re coming to us, you have have a business you’re looking at and you haven’t shipped out the LOI
27:25 yet, but you’ve had started negotiations. You want to figure out will the structure work that you’re
27:31 contemplating, etc., etc. That’s where we’ll get involved and have roll up our sleeves because what we don’t want
27:36 because it reflects badly on us is to take someone on and then the deal is just not fundable because that’s just a
27:42 waste of of everyone’s time involved. So, so I guess what just pop in super quick
27:50 then. So, one interesting piece of knowledge for anyone watching this podcast with the new guideline changes
27:55 and this actually came up with a client I’m working with now is if you’re buying
28:00 a business post June 1st and SBA guidelines change and if your seller
28:06 wants to keep equity in the business, they have to personally guarantee the the SBA loan. Now the second nuance to
28:14 that is if you’re raising equity and the seller so like you’re going out to the
28:20 market of equity investors to come up with a down payment and if the seller is rolling equity so that they’re going to
28:26 be in the cap table the investors have to be co-borrowers. Oh I didn’t realize that. Oh okay. I’d
28:33 heard that first part, right, where they, you know, if there if there’s if there’s a seller note that they have to PG it, which I think it’s pretty
28:40 heavy-handed. You because you you’re not you’re no longer have any control over the business, but yet you want me to to guarantee it,
28:45 right? You know, but so let’s unpack that second point because I think that that’s important. A lot of people and not the seller note. What he’s
28:51 saying is the rollover equity. If I want you to stand for 20%. Yeah. If you want to stand for 20%, you’ve got
28:57 a you’ve got a PG. Well, oh, I thought he was talking about I thought you were mentioning Matias that like if you’re raising money that the people that
29:04 you’re raising money for also have to sign. So like Yeah. So if if Casey wants to buy Ben’s
29:11 plumbing and Ben’s going to keep 10% of Ben’s plumbing, Casey’s going to buy 90. But
29:17 in order for Casey to do the deal, Casey needs to go out to the Ocean of Investors to raise equity. The people in
29:24 the cap table from the ocean investors that are gonna own part of Ben’s plumbing have to be co-borrowers on
29:30 Casey’s SV alone. That’s so they but are they co-g guaranurs or they just
29:35 not co- guarantors just cobborrowers. So but I mean like that’s if I’m an investor that still gives me pause right
29:41 like maybe I don’t have to personally guarantee anything but you’re still on you’re you’re still you’re signing on something outside of investing right?
29:48 Yeah like like your your name or entity name or whatever is like on on the loan documents. So yeah,
29:53 and and I’m not an attorney. I when I worked in SBA banks, I never worked on
29:58 like the workout side. So I don’t know specifically as far as what the legal implications are there.
30:06 Could the banks try to go after the investors or or whatnot, but it’s something that just throws like an added
30:12 unnecessarily monkey wrench in the whole process basically. And I would say, okay, so if you’re having somebody sign on something, there’s a reason that you
30:19 have that you there there’s some amount of hook into them and and you know, if you’re a lender, the SBA or even any
30:25 other lender, right? It’s because if something goes wrong, goes sideways, they want to be able to go after and try to get get right write the ship, so to
30:33 speak. So let’s run some scenarios here because this is a good one. So what if the investment group was an entity,
30:39 right, that was syndicated, right? So, let’s say it’s it’s Joe’s, you know, or let’s just say it’s it’s it’s entity 123
30:46 and you syndicate a million dollars in that from from a group of investors,
30:51 right? And that’s going to be the investment into the into the new project. So, on the documents, right,
30:57 the the borrower is me. So, Casey’s now the borrower and I own 81%
31:05 of the business, right? So, on paper, I own 81%. my 19% is XYZ corp business and
31:13 that’s where I got my million dollars. Right. So in that structure you’re
31:18 saying that everybody in XYZ all the investors that syndicated would have to
31:24 be on the loan documents as signers. Oh not in that structure if So just to
31:29 to clarify Casey would would your seller there be retaining any ownership or no?
31:34 Yeah he so no seller would not retain anything. We’re buying out completely buyout
31:40 and I’m going to go raise a million dollars from my partners so I can close on this business with working capital
31:46 and all the stuff I need. Yeah. So in that structure the answer is no. The only things of your investors
31:52 would be they would need to provide the bank with you know their names um what
31:58 whatever at the beneficial ownership levels needed to go into the SBA system
32:03 just for KYC stuff. So like they won’t be on a loan. And then you would need to
32:08 have in your operating agreement or shareholder agreement that they’re basically acknowledging that you can
32:15 take out the SBA loan borrowing for whatever amount because that allows you to avoid getting the acknowledgement and
32:21 consent in the loan agreement with the bank where they have to sign on sign on the specific pages. So I actually just
32:27 had what you just said. So in the operating agreement, right? So yeah, for for our listeners, you know, most I would say
32:34 almost everybody that’s listening is going to buy a business. There’s a few of them that are going to do it all out of their own pocket, but
32:40 almost everybody’s going to try to raise from five, 10, 15 people, right, to close.
32:46 So let’s let’s do a true example. It’s a $3 million business and I’ve got to come up with 10%.
32:52 Right? So I’ve got to come up with $300,000. So I create entity that’s gonna I’m
32:58 gonna raise money from. those investors are going to have ownership in in in that entity which is going to have, you
33:03 know, cash flow rights in in the business. The person that’s raising the
33:09 money is going to be the guarantor and they’re going to own at least 81%
33:15 of it the business. So, it doesn’t need to Okay. So, it
33:21 doesn’t anything under 19% doesn’t have to have a PG.
33:26 Yeah. So the the person that’s the buyer Casey doesn’t have to have at least 81%.
33:33 It’s that any investor if you pierce back on the beneficial level the individual investors no one can have
33:41 more than 19%. like each individual person has to be below 20
33:46 and so depending on the size of the deal like I’ve seen deals recently where a guy own like 60% of the business because
33:53 there’s just a massive equity raise like big transaction but typically on most of these SB deals I’d say it’s it’s fairly
34:00 uncommon for the sponsor like in this hypothetical case you to own let’s say
34:06 less than like 70 or 75% give or take. Gotcha. And and real quick, I mean, we
34:14 can dive deep on SBA stuff. I mean, I think we we you know, but I I think the the interesting part of your story,
34:20 Matias, is is is really kind of the unlocking the the world of X, right?
34:25 You know, the formerly known as Twitter for for everybody that’s not familiar with what the heck I’m talking about.
34:30 Um, talk to me about like just I mean, you said that you had gotten put onto it. I I forgot the gentleman’s name, but
34:36 you know, and then you kind of just started posting. like did you have any kind of agenda or were you just kind of
34:42 posting your own thoughts and and and then how are you now kind of being more methodical about it to grow your
34:48 followers and and drive those leads to your company at this point? Yeah. So, back when I started, Ben, I I
34:56 was just posting on like anything that was topically useful that that I thought
35:01 for business buyers, like the thing on the home equity, line of credit. I I think I did a thread on business plans,
35:07 fundamentals of business plans, what banks want to see. Same thing with projections.
35:14 Um I I think I did one on requirements for lease agreements and SBA loans,
35:20 landlord subordination agreements, things like that. and then people would comment on them and sometimes they’d
35:26 have specific questions and then they’d reach out and hit me up with a DM. So that was kind of the initial what what I
35:33 was doing back back when I was at the SBA banks or back when I was at First Business Bank. And then now what I’m
35:39 doing is kind of similar to that is trying to find specific topics or like
35:45 things that are becoming problems in deals. So, working capital true-ups, um,
35:52 adbacks, how to think about adback intensive deals, why you should de like
35:57 always get line of credit the time that you buy the business and how much it sucks if you don’t get it the time you buy the business, things like that. And
36:04 then trying to write on those topics specifically. and then basically including a a call to action to the the
36:11 roundrobin calendarly for Pioneer or or for my Cali to schedule calls with
36:17 people to meet with them, get them pre-qualified by issuing a a financial
36:23 letter of support. So essentially, if someone has at least $100,000 of liquidity across cash and taxable
36:30 stocks, they have a good resume with management experience and profit and loss experience and at least a 680
36:37 credit score, and they’re willing to provide us the completed SBA personal financial statement and the supporting
36:42 documentation. we’ll put together what we call a financial letter of support to basically give them validation when they
36:50 go to the Ocean of Salside Brokers that they’re SBA pre-qualified. And so that’s kind of what we’re doing
36:56 now. And then outside of that, like every once in a while, you know, posting
37:01 like the shock and a type tweets like this is what in and true stories. So,
37:07 for example, one was a guy that ended up refinancing out the debt on his
37:13 landscaping company with a top 10 SBA bank or using that bank to do the refinance from a bank based in Texas
37:21 that basically decided that they were going to call his SBA line of credit due because they wanted to pull out the SBA
37:28 space. Just crazy things like that. And like just telling people diligence your
37:33 bank, right? like find out how many SBA loans do they do, what does the process look like, go on the SBA scoreboard or
37:41 SBA lender rankings list, poke and pride around. Like don’t don’t just go down
37:47 the street to Ben the community banker that is looking to do his first SP deal
37:54 and go with that just because you want to play golf with Ben, right? Like do your homework, do your diligence, m make
38:01 sure the bank actually works in the space. Yeah. So, are you are you are you now posting on behalf of of your
38:08 company? Are you posting on behalf of yourself personally or or you know what’s the strategy or is it is it all I’m once we get your Twitter information
38:15 following you because this is good stuff. Yeah. And you know Yeah. Yeah. I mean at the end we’ll have you drop your handle too, right?
38:20 Yeah. Kind of a little bit of both, Ben. So like my I think my current following on my Twitter is around 32,000 give or
38:27 take. My company one’s just just a tad below 4,000. So, I’ve been using my
38:32 personal Twitter and then occasionally linking back to the company one. I I
38:38 really do need to do a good job at beefing up the company Twitter. One of the things I’m trying to do now, and and
38:44 this is a a good problem, but a problem nonetheless, is to make it where when
38:50 people think about Pioneer, it’s not like they think about me and then I’m the go-between to Pioneer. In the same
38:57 way, like you know, if you’re gonna go buy an iPhone, not to compare myself to Apple, you’re not thinking about Steve
39:03 Jobs or Tim Cook on the way to the Apple store. Like maybe you are, but like you’re just thinking about getting the
39:08 phone and using the phone because you know you want the iPhone 15 or 16. That’s what I’m trying to do now by like
39:15 making it so like people just think about the service offering and they don’t think like you know they have to
39:21 first reach out to me to get to the service offering and making them comfortable working directly with with
39:27 my team. Love it. That’s beautiful man. That’s a great breakthrough. So we are now going to
39:32 jump into our rocket round. So but this this has been great man and uh
39:38 now we want to know a little bit more details about you. So for our listeners, uh we always do a rocket round. We like
39:43 to know uh three major questions. So first question, what do you like to do in your free time?
39:49 Yeah. So free time, Casey, I’ I’ve been trying to improve on my golf game. So I I joined a country club at the start of
39:56 last year. Um I I’m an ideas person where sometimes like my idea there was
40:02 spend a lot of money, have that motivate me to get good at golf, and then getting busy running a business. it, you know,
40:08 things don’t always go as you plan. So, I’ve been taking golf lessons every weekend. Start started a couple weekends
40:15 ago. Um, trying to get out and get as good as I can at that just since one,
40:20 it’s just a super fun activity. Two, it’s a good business development activity and Kev just helps blow off
40:26 smoke. Outside of that, um, traveling. So, doing a trip up to Dur County,
40:32 Wisconsin with with my wife, middle of August. Going to Canada, third week of
40:38 August to visit relatives. And then, um, my wife and I are actually expecting our
40:43 first kid in January. Exciting. So, doing a a baby moon trip in in the fall to Jamaica. So,
40:50 I I just want to break it to you, man. I want to be completely honest. Your golf game’s going to go to once you have the baby
40:56 because your wife is going to kill you if you were at the golf course for five hours playing golf. I’m just telling
41:01 you, I’ve been married 20 years. I’m being honest. Yeah, we got a couple kids and I think
41:07 Yeah, he’s he’s definitely true. You’ll eventually get back out there, but I think the first few months you might not want to bring that up or if you do, you
41:13 got to do it very carefully, you know, make sure she’s had a good night’s sleep, you know. So, all right. Well, that’s
41:18 great stuff, you know. So, all right. So, second question of the rocket round here. So,
41:23 most memorable moment in your business journey so far.
41:28 Yeah, most memorable moment I would say last year was crossing a million dollars
41:34 of of revenue. And then if I had to pick a second most memorable moment moment, I
41:40 would say it was closing my first loan, which was middle of September of 2022.
41:46 So about four and a half months into running Pioneer. And so I mean basically
41:52 going from a job where I was making approximately $90,000 a year to
41:57 essentially working four and a half months making zero and then making I think it was like $10,300.
42:04 You know it it’s exciting, right? It’s like there’s there’s something here to this. So
42:10 yeah, there was this uh there’s this book uh I think it was J Paul Getty. his his autobiography says, “Profits are
42:15 better than wages.” Um, yeah, one of the books I read at a very early age and I was like, man, damn it.
42:22 You know, that’s it feels good. It feels good. Well, it feels good when a when a plan comes together, right? You mean you’re really burning the ships. You’re like, hey,
42:28 you’re stepping back from corporate America. I’m going to drop my own thing. You’re not quite sure. Your your wife’s probably like, you’re crazy. You’re not
42:33 going to make anything. And then three or four months go by and you’re like, I don’t know if I’m going to make anything. And then you finally do make something.
42:39 It’s very validating as a as an entrepreneur. And I think everybody listening to this just needs to realize that we’ve all been there. We’ve had
42:45 those long nights where you’re like, I don’t know if I’m going to be able to to make this work. Maybe I have to go back and get a job again, you know? And I
42:51 just, you know, Wednesday for me. I just encourage everybody to to be like Matias and just stick with it, right?
42:57 Believe in yourself, back yourself, and and and and you know, I mean, ultimately it works out. Yeah. All right, last question. What is
43:03 your favorite tool or resource? And I I think I can answer this one for you, but Right. Yeah. So, I’ll I’ll skip the
43:09 chat. GBT. Um, so I would say favorite tool currently is uh is Quad. So kind of
43:18 similar to Chad GBT, but like it’s more I’d say analytical. It does a better job
43:24 at writing. So you know, let’s say for example, you’re working with a client and you’re trying to give them feedback
43:29 on a business plan or structuring it. it just does a better job at really kind of
43:35 going in depth and just doing more kind of like outline format. So I I’ve really
43:40 leaned into that from a standpoint of like putting together SOPs for my for my
43:46 team, giving clients feedback on things and then also just structuring thoughts
43:52 for have longer form for form writing. And so you said cloud or claude? Uh claude. Claude D. Claude.
43:60 All right. I’ve never heard of that one. All right. So that’s I thought I thought you were gonna say X, man. But, you know, all right, we’ll go.
44:05 That was my guess. I thought I was gonna say, all right, we got we got another So, for our listeners, there’s another tool and
44:11 me and me and Casey haven’t heard of that one either. So, that’s a new I think there’s just we have to continue to keep our ears to the ground on the AI
44:16 space. It’s it’s ever evolving and there’s a lot of great tools out there. So, yeah. So, Mus, I just want to say, hey, why
44:23 don’t you tell people how they can get in contact with you, uh, get them your stuff. We’re gonna also drop them in the show notes, man. And, uh,
44:29 this has been incredible. Yeah, this is I really enjoyed the the chat and I think you know I mean it really
44:35 it shows you know I mean your your entrepreneurial journey which is what I was expecting from today’s show you know
44:41 and the and the power of social media which was awesome too. So I think it was a great show but yeah drop drop not only
44:46 your contact info but also your handle on on X just so people can follow you as well. Yeah. No, first and foremost thank you
44:52 Casey and Ben for having me. Uh so best way for anyone watching this to get in touch is either via email. My first name
44:59 Matias m- a tt like Matt and then hi a s at pioneercap.com
45:05 p io ner cap.com or uh LinkedIn first name last name on
45:13 on LinkedIn or Twitter now X and that’s SBA_Mias
45:20 is my is my handle. Love it. Love it. Fantastic. Well, again, man, thank you for coming here, sharing your story, and
45:26 uh for those listeners, you know who you you know who to reach out when you have a lot of these questions. All right, thanks for th
45:33 Awesome. Appreciate you guys. We appreciate it, buddy. Thank you for listening to the M&A Launchpad podcast. If you’ve enjoyed
45:39 today’s podcast and would like to support us, please leave us a rating and a review after you listen. If you’re looking for guidance on your next
45:45 business acquisition or sale, capital to support your next business transaction, or to invest in a private equity
45:51 opportunity, visit equityaunchpad.com to learn more and to connect with our team. If you know of an individual who would
45:57 be a great guest for the show, head over to equityaunchpad.com/nominate
46:02 where you’ll have the chance to refer yourself or someone else to be a guest on our show. I’m Casey Mchu and I look
46:07 forward to talking with you next week.
