Russ: This is the BusinessMakers show, heard on the radio and seen online at the businessmakers.com. With me now, I have Scott Breimeister, founder and CEO of LoanBox. Scott, welcome to the BusinessMakers show.

Scott: Russ thanks a lot for having me. I appreciate it.

Russ: You bet. Well I did some homework on LoanBox and I tell you, the first thing that struck me is that why haven't I heard of this before? Why haven't I seen other people do this? What's the deal?

Scott: I wish I knew the answer to that. I'm asked that all the time and all I can say is why didn't somebody invent wheel before they did.

Russ: Okay, there you go. Well tell our audience about LoanBox?

Scott: LoanBox is really a very simple product. It's basically a combination of some very well known other online platforms, primarily about 75 percent match.com.

Russ: Okay.

Scott: Except we're matching borrowers and banks.

Russ: Okay.

Scott: Commercial borrowers and banks.

Russ: Okay.

Scott: And it's about 25 percent Expedia or Travelocity, where the idea is that you're able to go to a neutral platform and look at all of the potential matches that fit your criteria.

Russ: Okay, well your comparison hits the sweet spot, because it seems like that's happened in so many different sectors of the economy, but not in commercial banking. So I'm a small business and I'm thinking, "I really need a bank loan" that's what LoanBox is for, right?

Scott: It's all about efficiency and you don't necessarily have to be a small business, middle markets and even larger businesses. Unfortunately, there's never been an opportunity for borrowers to go out and really efficiently shop the market, it's incredibly time consuming and fairly costly to go from bank to bank and make presentation after presentation and half the time you don't even know if that bank is really interested in lending.

Russ: Well, that's right. So, how are the banks receiving LoanBox?

Scott: The banks that are aggressive in the marketplace that have capital and want to make loans are incredibly receptive. The trick is convincing them that the technology is there and that it's worth their small investment to take advantage of it.

Russ: Okay. So, I mean, the vision that I have, and I didn't go apply for a bank in the process, but the vision I have is that I would come on as a small business person, I'd probably fill out some questionnaires and then you would sort of connect me with suggested banks that would fit my criteria?

Scott: Almost right on. We have a very short profile that we ask borrowers to fill out.

Russ: Okay.

Scott: And it simply asks what type of loan you're looking for, how much you're looking for, how close you would like the lender to be to your place of business and we turn around and ask the lender an identical set of questions and through a proprietary isarithm we match borrowers to banks and banks to borrowers, based on the criteria that they have established for themselves.

Russ: Okay. So if I went and did this, and I described what I'm trying to finance some inventory and I need it for this long and ideally it'll be at this rate, would you potentially put me in tough with multiple banks? Or would it just be the best one?

Scott: Absolutely, multiple banks.

Russ: Okay.

Scott: And what is unusual about our product is that, not only do we put the banker in touch with the borrower, but we put the borrower in touch with the banker.

Russ: Okay.

Scott: Often times, borrowers can be in the right bank, but if they get directed to the wrong banker, you may as well be in the wrong bank, because you're still not gonna get a loan.

Russ: It's kind of a shot in the dark sometimes.

Scott: So here we get the right people talking to the right people.

Russ: That's so cool. So why wouldn't a bank want to be part of LoanBox?

Scott: Well there are certain banks in every marketplace that are struggling right now that may be operating with restrictions placed by the FDIC.

Russ: Okay.

Scott: And obviously for a variety of reasons that isn't often public information, but the reality is they're really not in the market right now to make loans.

Russ: Oh, okay.

Scott: So those people probably wouldn't be good candidates.

Russ: Might as well leave them off the list.

Scott: So why waste your time going to talk to them because, even if they want to do it, they can't.

Russ: Right.

Scott: So it's really the more aggressive banks that are out looking to build their portfolio, possibly reallocate to more of the CNI, which is the Commercial and Industrial Loan and away from real estate.

Russ: Right.

Scott: Other banks have some space cleared up at this point for real estate and their eager to do real estate. So unless you put your criteria on the site, you're really not gonna know what the banks are interested in.

Russ: Well that's right. We've had several sort of banker guests on the show before, used to have a big time sponsor that was a banker and when we talked about business banking and clearly in our sort of sweet spot our audience, we have startups here and we have companies up to, I'm sure, 100 million, even that still watch the show. I've always thought, down on the lower end of that revenue spectrum, it always required personal guarantees and that sort of thing. Did I have the right picture there? Or when you open up the marketplace, might I even find somebody that would even do a small business loan without a personal guarantee?

Scott: In this environment, I think it's probably highly unlikely that any bank is gonna do a smaller loan without a personal guarantee.

Russ: Right.

Scott: The smaller loans are probably, these days, possibly even gonna require an SBA guarantee.

Russ: Okay.

Scott: But virtually all of the banks that are subscribers to LoanBox currently and that are contemplating subscribing to the site has small business lending groups and do those types of loans. As you get into those larger more established businesses, the SBA probably isn't gonna be needed, the SBA guarantee, but typically personal guarantees often are required until you get into the small publicly traded companies. Banks like to know that, if everything goes bad, that there's gonna be somebody at the end of the day standing behind the loan.

Russ: No, absolutely. I familiar with that for sure, that that's what they require. So how long, it's loanbox.com, right?

Scott: No, it's loanbox.net

Russ: I'm glad we talked about that.

Scott: Exactly.

Russ: loanbox.net site. So how long has loanbox.net been up and available?

Scott: The site has been up since March. We launched with a full media campaign in Houston and beginning in mid-June, we provided the same level of support in the Dallas Ft. Worth metroplex area.

Russ: Okay.

Scott: And we plan to be in San Antonio and Austin this coming fall.

Russ: Okay. So there is this sort of a geographical connection on commercial loans. I mean you just about have to be in the same community as your bank.

Scott: You really do. There's laws that govern where banks can lend, typically the Community Reinvestment Act plays a big, has a big criteria that they have to comply with, so it's very important that the banks stay within their markets.

Russ: Okay. Well, we're talking with Scott Breimeister, the founder and CEO of LoanBox and I'm gonna be back with more of a Scott after this.

This is the BusinessMakers show, heard on the radio and seen online at the businessmakers.com.

Russ: This is the BusinessMakers show, heard on the radio and seen online at the businessmakers.com and continuing on with Scott Breimeister, founder and CEO of LoanBox. So, we just established that your company sort of has to rollout geographically. Does that mean that when you open in Dallas, that LoanBox has employees in Dallas?

Scott: LoanBox doesn't have employees in Dallas. The important thing is that LoanBox has banks that subscribe to the platform with offices in Dallas.

Russ: Okay. So I mean, is your plan to roll out nationally and some day to be in all the major cities?

Scott: Absolutely. We're hoping to be on the west coast starting in early 2012 and over to the east coast, if not late 2012, early 2013, and then we'll work our way toward the middle.

Russ: Okay, real interesting. Okay, so this is a show where business people watch and they know business quite well, so how does LoanBox make money?

Scott: Well, LoanBox has two unique constituents that typically have different objectives. We've got banks that want to lend money and hopefully lend it at the highest interest rates they can.

Russ: Right.

Scott: And we have borrowers that want to borrow money at the lowest interest rates that they can.

Russ: Okay.

Scott: So we're trying to establish a marketplace where they can bid for one another's business.

Russ: Okay.

Scott: And LoanBox makes money from banks on a subscription basis.

Russ: Okay.

Scott: And from borrowers, one month at a time, for $49.00.

Russ: Okay, so I got a small business, I've decided, "Hey this makes sense" I used just go knock on doors of a couple of banks I knew, it never worked out, maybe this will open me up to the whole market. I would come on to loanbox.net, subscribe, pay $49.00 a month, and expect perhaps to either find a bank that would fit my criteria, or to determine, hey there isn't one.

Scott: No doubt about it and you will find out typically, within about 48 hours, which banks meet your criteria.

Russ: Okay.

Scott: And if you don't find a match, or that match doesn't result in a loan, hopefully you have learned what it's going to take for you to work on to make yourself credit worthy.

Russ: Okay so, but you'd probably would then therefore expect to have a lot of businesses come on and subscribe, maybe for just for one month, and really take the lay of the land and figure out, "Wow, should I stick this out, or should I go back and change something about business" and then come back later?

Scott: Absolutely and once you've gotten your compatibility report and you've seen those matches, unless additional lenders join up during that 30 day period that you're a subscriber, you've pretty much seen all that you really need to see, so you've got a list of four, or five, or six, or eight banks and it's just a matter of contacting them or waiting for them to contact you and moving forward.

Russ: Okay, okay. Now you used the term bid a while ago, you said bid for your business. Do you even have times where banks will kind of get into a competitive bidding.

Scott: It happens all the time and we're not facilitating that, that's between the borrower and the bank, but the reality is, and there are testimonials on the website that talk about having four or five banks contact them and being in a position to reduce their interest rate, maybe extend the term of the loan, so the cash flow improves and that's the name of the game.

Russ: Cool, okay. Now always interested in businesses like these, what triggered the idea to start it and I know that you do have a commercial banking background, but give our listeners a little overview of what Scott Breimeister's in the business world.

Scott: Scott Breimeister came to Houston 30 years ago, started out with one of the big CPA firms and quickly moved over to the commercial banking area, spent about five years as a lender and for about the next 25 years, I've been a commercial borrower.

Russ: Okay.

Scott: So, if I don't know anything else, I think I have a pretty good understanding of the relationship between commercial lending and commercial borrowing.

Russ: Okay.

Scott: And it darned on me about 18 months ago that banks were still doing business and prospecting for clients the same way today that they were 25 years ago and there's been an explosion of technology, none of which they've taken advantage of.

Russ: Right.

Scott: So, we try to come up with a product that was easy and simple and effective and now we're trying to convince them to give it a try.

Russ: How many employees do you have today?

Scott: We have four full-time employees, we're expanding all the time, probably have about six or eight by the end of the month, it's marketing and programming and all the fun things that make a business go.

Russ: You bet. Well Scott, I really appreciate you coming and telling us your story. That's Scott Breimeister, founder and CEO of LoanBox, which you can find at loanbox.net.

This is the BusinessMakers show, heard on the radio and seen online at the businessmakers.com