096 | Unlock Hidden Capital: How to Scale Your Business with Smart Leverage with Jimmy Rios

Patrick: [00:00:00] What if the secret to scaling your business faster wasn’t working harder, but learning how to leverage other people’s money the right way? Welcome back to another episode of the Vital Wealth Strategies Podcast. I’m your host, Patrick Lonergan, and today’s conversation is one you don’t wanna miss. I’m sitting down with Jimmy Rios, the CEO and founder of Rios Business Advisors and Next level credit, a true master at helping entrepreneurs unlock capital, build business credit, and create a blueprint for growth.
Without risking everything they’ve worked so hard to build. Together, we dive deep into the strategies that separate those who stay stuck from those who scale from building a rock solid foundation for your business credit. To creating systems that generate additional income streams to developing the financial discipline and team of advisors that every successful entrepreneur needs.
By the end of this episode, you’ll understand how to position your business to access the capital you need, not just to survive, but to [00:01:00] thrive, and how to do it in a way that sets you up for long-term success. And if you’re ready to start building a tax and financial strategy that supports that kind of growth, make sure you visit vital strategies.com/tax.
That’s where you can begin creating a personalized strategy that helps you keep more of what you make and build the kind of financial foundation that fuels real freedom. So grab a notebook, settle in, and listen to the end because the insights Jimmy Shares could completely change the way you think about building wealth in your business.
I’m excited about today’s conversation. We’ve got Jimmy Rios, CEO, and founder of Rios Business Advisors and next level credit. This is going to be a, a fun conversation because when we think about. Building wealth. There’s nobody on the Forbes list that doesn’t do it without some, uh, some leverage and being able to borrow money to grow and to build their wealth.
So Jimmy, thank you so much for joining us here today.
Jimmy: Well, thank you, Patrick. It’s great to be here.
Patrick: Yeah. So I’m looking forward to this conversation. I think about the problems entrepreneurs [00:02:00] have. You know, I’ll say traditional funding often requires personal guarantees, high interest, restrictive terms, that type of thing, which are all really, really frustrating.
I also think about. The entrepreneur just feeling trapped, like, man, I’ve got opportunity in front of me, but I’m unable to unlock the capital needed to scale without jeopardizing everything that we’ve built. And also just thinking about, you know, entrepreneurs shouldn’t have to risk their entire financial future to grow and scale the business.
So I’m looking forward to getting into how we’re gonna unlock some of these, these problems today. Sure. But before we do that, can you give us a little bit of your background and tell us a little bit about your business? I
Jimmy: definitely appreciate it, Patrick. You know, I’ve been doing this since 1997. Um, in, in, I was a, a young kid going to a SU in Arizona and trying to figure out what I was gonna do with my life.
And, you know, I
Patrick: was a
Jimmy: seven year plan instead of four year plan because I changed so many degrees and try to figure out what I want. And they have an opportunity to [00:03:00] be a branch manager trainee in a company called Commercial Credit. Which were getting gobbled about by Solomon Smith, Barney, and Travelers Group.
They became Citigroup. And so I was working with this conglomerate at a young age and I became a manager in, in that space. And I learned a lot about, you know, commercial credit and consumer finance, underwriting. A lot of the different facets in leveraging were really high interest components. Towards the end of the nineties and in the 2000 at the beginning, I decided.
If I was gonna make changes, if I was gonna be able to help people the way that I envision, I was gonna have to probably do it on my own. Mm-hmm. And I didn’t know how I was going to go about doing that. So I delved into Head first, into property management, and then went into building Reals financial group, more outta necessity because a lot of the clients that were coming to me were referrals.
We didn’t have social media at the time. It was what, you know, I did a [00:04:00] job for this person and they would tell somebody and. Kind of went from there. And a lot of my clients were Latino, Hispanic, Spanish speaking, and I felt almost like I was helping my parents. Right. And yeah, being this generation Colombian American, you know, helping them, you know, through their travels in entrepreneurship and all the different things that were needed, I, I had to start doing that for my client.
So I learned how to do taxes and insurance, and mortgages and credit, and all these different verticals that I never thought that I would be already touching. Out of necessity, I dove into those head first because if I could help this one person go from renting to owning and then help them build their business and help escalate them to a better position in life, they were telling everyone.
Right? So I just, all I did was take it one step further in my evolution, right? Where we eventually it morphed into these verticals that we became, that we are now, right? It was [00:05:00] next level credit. Does the credit. Business advisors is the consulting firm. We have reals realtors that does the real estate in.
So we had all these different components and at the end of the day, it was always about education. They had came down to really finding ways to help people. Many of them just didn’t know what they didn’t. They had good ideas. They had a lot of fire and wanted to go, but they made a lot of mistakes because I made this mistake too.
Going and bootstrapping and using all our means possible to leverage. And then we get into debt and then we don’t know how to pay it back because there’s all these variables outside of our business that pool the strings, and now we’re basically stuck. We can’t delegate, we can’t get employees, we can’t buy equipment, tools, CRMs, all these things we need.
Mm-hmm. And so then they come back and say. I need money. I need more money. Yeah. I said, just give you money six months ago. What’s the [00:06:00] problem? Well, the problem is there wasn’t a blueprint. There was a guided mechanism to help people, not only leverage, but leverage properly and know on time. So that can be develop for, for loan clients.
Patrick: Jimmy, I love this. ’cause one of the things that you’re hitting on is sometimes I need access to capital so quickly because I’ve, I’ve got this short-term problem, but I haven’t thought through the long-term impact of borrowing those dollars. And the scriptures tell us, like with sort of warning lights, like, Hey, slave to the lender.
They’re not saying don’t borrow the money, but they’re just saying, Hey, when you borrow the money from this person, like they’re gonna own a piece of you. And so be, be careful around that. And so I appreciate the education that comes with like, Hey, let’s understand how to develop a process around.
Borrowing money in an intelligent way and make sure we have the cash flow to support it. ’cause I, I’ve had friends and clients come to us and they’ve said, Hey, I’m gonna take this short term loan and do this thing. And I’m looking at their financials and I’m like, that’s a terrible idea. Because what we need to do is solve the problem that [00:07:00] got you into this situation.
Now we might borrow the money, but not before we solve the problem. Otherwise we’re just like. Ticking the can down the road and we’re, we’ve dug ourselves into a deeper hole versus getting ourselves out of the hole. So I think that’s, that’s brilliant.
Jimmy: You, you make a valid point is because when people come to us and they have these, these grand visions, if we don’t hit the problem headline and we start looking at their financials and we start seeing all these things that are happening down here, they wanna go over here, but they’re gonna have to go through a lot of mud.
Get to the other side and there’s, and we’ve gone through those. We have case studies that we’ve been able to fix and help in ly through that water and making it clear again. But it takes a very devoted mentor guide, so to speak, to be able to follow the disciplines that we’ve implemented to get you through that, let to your own accord if we don’t implement these checks and balances on our side.
You’re gonna run ’em off [00:08:00] and you’re gonna do the things that you’ve always done, and we got you there in the first place. Right? So when we bring somebody on board inside of work, look for ’em for success, we’re very adamant about talking about the do’s and don’t. Mm-hmm. And we’re very strict about how we’re gonna go about doing it because we’ve developed a plan that does work.
It followed, and yeah. Few, the very few that haven’t followed it have been the recipients of it not working for them. And then obviously the plan doesn’t work well. Does your plan work when you go to the gym and then come home and eat a big cake and then they’ll go back to the gym or do anything to be able to help yourself?
Patrick: Mm-hmm.
Jimmy: It, it doesn’t just work that way and people forget that we work in a process environment where everything does work. If it’s in multi-layered with steps that make sense if followed, yeah. If not, you’re basically, you don’t need our help, you’re just gonna go and do it on your own and you’re gonna run amok and then you’re gonna build more [00:09:00] problems, is what happens.
So we’re very good at identifying what problems head on first. Once we identify the problems, we need to have a blue proof for success on the solutions. And that might not be in three months or six months. Mm-hmm. Like you thought it would be. Right. That might take a year or two. Can it be done? Yes. Can it be done quickly?
Yes. Yes. But you need to learn to accept that we need to guide you and help you and not try to do everything yourself. Entrepreneurs are very stubborn. They wanna everything themselves. They don’t know how to delegate. They don’t want to pay the money that’s needed to be able to do it the right way. So they try to do it themselves.
They’ll go in circles.
Patrick: Mm-hmm.
Jimmy: Chase the material, then get exhausted, and then they come back six months or a year later, say, Jimmy, I need your help. Hey, I’m gonna help you whenever you’re ready. Yeah. You know, this time around we’re gonna do a model.
Patrick: Yeah, I love that. And there’s a few highlights I wanna point out.
First, I love your story. I love how you [00:10:00] just ca kept saying yes to opportunities that came your way, solving a new set of problems, and you’ve built out something that’s really brings a ton of value to the marketplace. And we see this with our clients all the time. We’ve seen clients that that start in one area of an industry and then they keep saying yes, and all of a sudden they’re either.
Migrated to a new section of that industry, or they’re just delivering a wide variety of services and are running very successful businesses. So I, I appreciate that. The next thing I want to touch base on is I love the idea of having a blueprint and sort of some steps that, that people can follow through on.
And I think there’s something that you highlighted as well that is, is a critical, critical piece, entrepreneurs, and it doesn’t matter where you’re at to get to the next level. You have to bring a new level of thinking to the equation, the same thinking. And so what happens is like if we had that new thinking, we would just go do it, but we don’t.
And so paying professionals, paying people that can bring that new level of [00:11:00] thinking, whether that’s a financial thinking, operational thinking, you know, I, I just look at strategy that can be applied to the business. Like all of those levels of thinking are so valuable. It’s almost impossible to put a value on it because you, you just think about.
When I look at my business and the bottom line, every dollar that hits that bottom line across certain thresholds, and now we’re 3, 5, 10, 12 times from an enterprise value point of view. And so it’s like, man, if I can figure out how to put an extra a hundred thousand dollars to the bottom line and that makes my business worth a million dollars more like.
Why don’t I pay somebody 10, 20, $30,000 to help me consult in my business and, and grow? So, I’m off on a little tangent there, but I would love to get into your blueprint and hear about some of these foundational actions that people should be looking at to, to make sure that they’re in a healthy spot to borrow money and go to the next level.
Jimmy: So let me, let me break this down in the most efficient way possible, because we have an [00:12:00] hour short, right? Mm-hmm. I’m a student of the game, right? Mm-hmm. For 25 years I’ve been studying. When, when Robert Kiyosaki came out with his books, I became a master in that realm. Mm-hmm. But I also studied the, like I get to the opposite, right?
The Dave Ramseys of the world.
Patrick: Yeah.
Jimmy: We, I wanted to get perspectives mm-hmm. Inside of the thinking, because there is a space for everything in your life, right? But if you only focus and you stay like this. Inside that world, you’re never gonna branch out to be able to do the things you need to do. So talking to a Dave Ramsey about arbitrage data, you’re just gonna waste your time.
Mm-hmm. It’s not gonna do anything for you. Not taking some of his concepts on a personal level. Right. And being able to differentiate your business from your personal, and it’s two worlds, right? You can stay really well in your personal life if you manage controls. Right. And budget dealing these things.
Your business knows a different [00:13:00] monster. It relies on blood coming through its system. It needs new blood. And to do that, you need to leverage properly to keep getting the things you need to be able to grow, right? Yeah. So understand when I start talking about assets and liabilities, right? We’re gonna build on an asset column that’s gonna produce a third arm of income for your business to keep doing the things it needs to do.
To get there though, to build that bridge, we’re gonna have to jump into some form of debt, right?
Patrick: Mm-hmm.
Jimmy: Because most of us don’t have hundreds of thousands of dollars to do the things we do. And even if we did think about a franchise owner, how much do they have to come out liquidity wise to get into a franchise model?
Just because the. So what AWAI do is we built the third and the fourth quadrant of the Kiyosaki principles where we’re building a system, right? Mm-hmm. Gonna generate money to make money or cash on cash return, [00:14:00] right? These are two point to facet because in the second quadrant of Kiyosaki, you’re the business owner and you’re the technician.
You’re doing all the work, right? Yes, those are your two hands. But in the third quadrant, we’re building a system that’s a third on it. Of your business that in, regardless of what you do with your two hands, is producing income over here. Right? Why? Because if I can properly now have the barriers of entry brought down so that I can.
Pay to get an advisor, a proper tax strategist, A CPA, all the people in my team that’s gonna help me elevate the business with proper advice, I can now put that money to work where in the buckets that they need to be able to produce optimally. Now my business is producing at a much higher level in return.
Mm-hmm. They’ll use leverage, yes. Mm-hmm. In our program, and we borrow a hundred thousand. I might put 25,000 to work in my system over here, right. That I insure and [00:15:00] start generating a five, 10 x return. That money’s gonna come back as income and it’s gonna help defray the debt service coverage for your debt, not their debt.
I didn’t take it out of my hard earned money. So this way when I meet with my tech strategy, I say, look, I need the value of this business to keep growing. Mm-hmm. I don’t need to cut. All my profits and in fact, set me up as an S corporation. Pay me a salary of a hundred thousand dollars a year. I need to be put right on paper now.
I want all my profits to flow to the top so I can start showing that I can afford the things I can afford and be fundable in the eyes of the banks. Now, I got my third one over here that’s generating 10 99 income. I need to find ways to offset the capital gains from that income. Over here, I’m setting myself up with business lines of credit.
Mm-hmm. With 0% interest, so I’m not having to bootstrap anymore [00:16:00] on this side. On the personal side, I paid on my debt on the personal side. I took the Dave Ramsey School of Knots over here, but I took the Kiki principles over here. Now we got worlds working together side by side, and we’re crossing them.
We’re elevating our lives. We’re setting up trusts, holdings, company escorts, Wales estate plans. Mm-hmm. All this life, but people saying, oh, it’s impossible. I know I need it, but I don’t have it.
Patrick: Right.
Jimmy: What do you think? Everything has place in the in, in the solar system that we built, but you need to take direction and learn through our experts.
Not just Jimmy, it’s Patrick, it’s God, it’s all these mm-hmm. People that we work with together. We make a community. And we make things happen because you were able to finally bring down your ego. Yeah. And accept help with humility.
Patrick: Man, Jimmy, this is a masterclass. I love it. You’ve hit on so many powerful things here.
Can you just maybe walk us through a little bit about what it takes [00:17:00] to maybe build some credit in my business? ’cause I, I think that’s a, you know, we’re so used to, I’ll say the personal credit and you know, our credit score and that type of thing. But I think business credit is. Something different. Can you just walk us through a little bit of that?
I know we could probably talk for a couple hours on that topic, but, uh,
Jimmy: no, and the great thing about it is I, I saw the need for it. I wrote a book, it’s called Decoding the Mystery of Business Credit.
Patrick: Mm-hmm.
Jimmy: On my website@riosbusinessfunding.com. I put the ebook in there, but I also have it on Amazon for like 16 bucks.
Mm-hmm. Right. And this is what I call the blueprint on being able to build business credit now. When I talk to people about building business credit, they get very scared. Like it’s so daunting.
Patrick: Mm-hmm.
Jimmy: Listen, everything has to have a beginning, a middle, and an end. And it’s not that difficult if you follow direction, but you need to follow something.
Right. So I link it out. Right? And the first thing is, as a person, we need to learn how to read our own personal credit. [00:18:00] Right. Because personal credit is the bridge that gets you order business credit. Mm-hmm.
Patrick: Right.
Jimmy: There’s two different ways that we’ve developed business credit. One is what I call the fast route and one is the slow route.
Right? The slow route is more inexpensive and it takes longer for a reason. Mm-hmm. Right. Deliverable. But it’s gonna take you at least two years of getting it off the ground. The fast route we have, because we understand what you said earlier, I’m in business opportunity not. I need credit. Well, if I can get it done in 90 days as opposed to two years with our Fast Track program, then I’m gonna go that route.
Is it more expensive? Yes, it’s gonna be more expensive because I’m getting you $500,000 0% interest for two years inside of 90 to 120 days. Yeah. So that’s something that you can’t do in the traditional way, but in the traditional way, at least to get something going. Until we can figure out how we’re gonna leverage you to [00:19:00] get you where you need to be, we start working on understanding our credit, right?
Mm-hmm. We need to fix your credit. Don’t do it on your own because you don’t know the tools. Even if you spend hours on YouTube trying to figure it out, are you gonna do it the right way and how much time you spend it? Mm-hmm.
Patrick: Bring
Jimmy: it to the next level credit. We’ll work through the nuances and get your credit where it needs to be.
Yeah. Once you get your credit. To a level where it needs to be, we’re gonna start setting you up with your bases and your foundation. It’s not just having an LLC to have an LLC. Mm-hmm. You have to have a fundable business. What that means is the perception of building this vision has to be Right. And when we go to setting you up, we’re gonna have you change a few things.
Like for example, if you have your website going to your house and set on a physical building mm-hmm. That, that, that we can put as a virtual office. They don’t, we don’t want to see a Google Earth of your house. Right. Because it’s not credible as a business. Mm-hmm. Yeah. Business. We wanna put a website [00:20:00] that doesn’t have your email as a Gmail, but an outro info at
Patrick: Yeah.
Jimmy: Xyz core.com. We wanna have a number that is with 4 1 1, you know that? Mm-hmm. Is not just your cell phone. Or you can put your cell phone, you want an office phone, even an EFA or something to give you credibility because as an underwriter I’m looking at tons of files. Mm-hmm. And credibility is the number one thing I look at.
Right. So it starts there. It sounds so kind of cliche, you know, like why didn’t I think of that type of thing. But you’d be amazed at how many people just go through the motions because they got an LLC.
Patrick: Yeah. This is great and one thing that I think you’re also highlighting, like we talk to our clients so much about the value of I’ll, okay, call it liquidity, cash on hand.
Okay. Fancy term for liquidity and so we like to have some minimum and maximum thresholds there. Another thing that we also like to [00:21:00] have is a source of liquidity is lines of credit and debt because the best time to get it is when you don’t need it. You know, the hardest time. To get a loan is when I’m like running outta cash and I’m struggling.
And it’s like the bank’s like, well, I don’t know if this is a good idea. Versus like, when our cash balances are continuing to grow, revenues are growing. It’s like, great, let’s get some of those, uh, opportunities opened up and available to us. And we, we like to have as much liquidity as we can possibly get.
So, uh, you know, we want to put those dollars to work. And if I can utilize. Outside capital versus my own capital. Like that’s, that’s there peoples money.
Jimmy: O PN at its best
Patrick: OPN. That’s right. So I, I think this is fantastic. You said something that I’d like to just explore a little bit more. You said, you know, if I could borrow a half million dollars at 0% interest for a couple years, can you tell me more about that?
’cause that doesn’t sound real in my mind, you know, so, yeah. Well,
Jimmy: yeah, [00:22:00] lemme break that down. Because the reality is if you think in a traditional standpoint, in underwriting, right? If they’re gonna want two years of tax returns, you’re gonna wanna see all of these variables that you may or may not have, right?
Mm-hmm. One point of distinction, when you working with a company that’s been around for a long time, right? We’ve worked with over 200 institutions continuously nationwide, right? Mm-hmm. So there’s a track record that goes behind submitting a file from re’s business funding as opposed to just a common Joe.
Doing an application at an institution now knowing the rules of the game, hoping that it sticks and it doesn’t. Now they just shot their credit because they use their personal credit. And so there’s different rules that we go by to make it happen, right? Mm-hmm. So when we construct that presentation is very key for us in being able to get the approvals that we get, right?
Have you ever heard of people getting like an American Express. Flat, you know?
Patrick: Yeah.
Jimmy: A ton of [00:23:00] leverage. And they didn’t, they weren’t asked for any financials, right? Mm-hmm. Because there’s such a strong way of presenting somebody that way, that minimizes the risk. And we took that one step further where we said, well, what if we could construct the business?
Acumen so that we respondable and we can now get those types, same types of lines of credit to be able to give to this comp, to this client. Right now you had your company, I had a podcast before this one. He was talking about, well, he just has a new company that he just started in 2025. How’s he gonna be able to qualify?
I said, well, mm-hmm. We’re gonna do it different. See, you’re thinking in the same way everybody else does. Had to build around this one. But what if I already built it on paper? Everything that’s needed. It’s called a Shell Corporation or an age Shell corporation that has all the acumen. It’s a business in a box with everything that’s needed to get funding one step further.
Because we already knew what bank A, B, and C [00:24:00] wanted. We already can submit it, but we go one further and we put a personal guarantor on that corporation to serve as the CFO. So you go and purchase this company. It’s an asset for you, it’s a tax write off for you. What you did was, in essence, build a lending entity for yourself.
So now when I go and I inquire the 500,000 in liquidity, now you can do a note to yourself, to your company A from company B, and now you can lend yourself as many times and at whatever interest rate you want. Perfectly legal, right? And these are now two companies that you own under your holdings company, right?
So all we did was just take one concept that they’ve been doing for years in doing this and just made it one step further and faster for individuals. Now we have individuals that say, well, can I just build from the ground? You can build in whatever way you want. Mm-hmm. And just give you options because Right.
If I can go and get you 50 to a hundred thousand [00:25:00] dollars and I can leverage you properly, look at it this way. This is one way we do it. We get a hundred thousand. Right. I’ll take 25,000. I’ll put it in my investment. I’m producing liquidity. Mm-hmm. I’m producing what? I’ll take 50,000 and I’ll get it, and I’ll do the hybrid Age Share corporation program so that I can in 90 to 120 days generate income from that money.
Right? Mm-hmm. Now, it got two sources coming together to bring me money, right? Yep. And Wolf taken down barriers of entry is because of my strategy right now, I’m still not dead. Right. It costs money. So we’re gonna use one side to pay off the other side, but we’ve built structures because you don’t have to just do it one time.
You need 1.5 million, then let’s get three structures set up under your holdings company, you’re gonna do the same exact thing. And because there’s three different entities, it’s like lending to three different people. Right. But we do it that way now. Banks will lend money on [00:26:00] collateral. So if I show a balance sheet that’s strong, right?
I can get more funding mm-hmm. From a bank for any other project in that short term fix flippers, for example. Yep. Come to this with that mindset they got, they wanna buy three houses, but they don’t know how, because they’re hard money and lender only gives them X amount for one.
Patrick: Mm-hmm. Right.
Jimmy: To do blanket policies where we can put together a cost utilization and really make it happen.
Patrick: This
Jimmy: is called Creating Financing at its
Patrick: best.
Jimmy: Yeah. And it’s ing outside the box.
Patrick: I, I love a lot of these ideas and I’m fascinated by how the banks look at this, but we’ll set that idea aside for just a second. I’m curious if you can give us a case study. ’cause a lot of our clients have built a business.
They have things like collateral, some cash on hand, and assets that you know, but they’re looking to grow a little farther faster. And so can you give us maybe a case study where you’ve seen somebody come in and just give us an example of. How they borrowed some money, what they use that for, how the, how you’ve seen this work [00:27:00] really efficiently to see things grow quickly.
Jimmy: Well, I have a great case study and you know, it wasn’t even as, he wasn’t as, I guess, educated or elaborate as maybe some of your clients mm-hmm. Would be, he actually came to us with a five 60 credit score and all he had to, his name was a, um, was the equity in his house. He couldn’t get equity loans in the traditional sense because of his credit score.
Right. But what I, what could I do? Right? I can leverage and get a private money loan, right, for 50,000, right? So we did that. We left 25,000 in reserves for, you know, any things that he needed. And we put 25,000 in our platform to work for him by 25,000. We insure. So he was never gonna lose the 25,000, but we also had to cover his debt service, which was like 600 bucks a month, and we put that money to work right?
Over the course of the year, from August to August, he was able to take [00:28:00] distributions of $90,000 from his portfolio, but his portfolio from the compound interest is sitting at 296,000. Right? So what did we do? We set up his corporation. We got him a salary. Now he can take from his portfolio, he can invest in his real estate.
We got him the lines of credit that he needs to be able to do the things he wanted to do. But more important than any of that, we got him in touch with all our advisors in the proper channels to be able to do the things he wants without him. Spinning his wheels, trying to, where do I go now? What do I do now?
Like these are not people that are very well versed in the world. It’s always giving a million dollars to an NBA player who’s 18 years old, they’re gonna blow it if they’re gonna do it, right? Mm-hmm. So in a matter of a year, we put systems in place. We built out a blueprint and foundation to take him to the next level because now he’s got capital.
Now he’s got liquidity, but [00:29:00] we’re also gonna have to cross a bridge of capital gas tax. Mm-hmm. Because he’s gonna start take, he already took out 91,000 in distribution. Yeah. So he’s gotta pay taxes on that. So now we start looking at different avenues in investing that money so we can do more with it.
But for him, I mean, he was able to leave his nine to five job. Mm-hmm. You know, so we just basically liberated somebody from the golden handcuffs. Yeah. Because we set up a plan, he can now pay himself. $10,000 a month salary she wasn’t making before.
Patrick: Mm-hmm.
Jimmy: Let, let’s understand that, but now he has money to be able to do the things he wants and time, which is a commodity that priceless.
Patrick: Yeah. This is, this is good.
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So I, I wanna go back to my bank question, like, is there, I’m curious about the lenders and then, you know, is there any. Question from them, like you talked about, you know, I can acquire a, an entity and then use that entity to, you know, be sort of my like new lending arm. Is there any questions from the banks on how that necessarily ties back to me and my ability to make sure that, you know, all of the money I’m borrowing is paid back?
I’m just curious how the banks look at the strategy and if there’s any, any questions there on, you know, just making sure that they’re comfortable and, uh,
Jimmy: no. I mean, the reality is that. We’re gonna have clients that are gonna [00:31:00] come through and we’re gonna have to show finances. That’s fine. You know, we have to show financials and look at the conditions and that being specifically requires.
Mm-hmm. Then, yeah, but we’re so having game this chess match that we know where to take the client based on what’s given. Right. So if somebody comes to us as a startup, you know, we’ll look at different avenues for startups than we would somebody who sees them, who maybe could show. Demonstrate profitability, but they just weren’t, their CPAs didn’t advise ’em correctly and all these shows a negative because they wanted to avoid paying taxes.
Yeah. Right. So then we restructure their taxes to show what they, it needs to show to get ’em approval. Right. Because we go all kinds of different routes and like when I bought my house, like I had to take my wife. Put her on paper. Right. So she had to show $75,000 net. You know, that put a dent in having to pay the IMS.
Right? [00:32:00] But that’s okay because it was part of a book for, we knew that in six months we would have that paid off, and it was just part of getting from one type to the other. Because you gotta show cadence proper, right? So we’ll guide you in that. When you come to us and say, look, I have this scenario, you know, I don’t have.
Two years of, of taxes or a cash flowing business. Like a landscape business that Right. Has, you know, they never did their taxes. They have a lot of cash coming in. Mm-hmm. But can you prove it right? Yeah. But everything’s possible with IS If you bring it out with financials mm-hmm. If you bring it out and know how to deal it strategically.
Yeah. That’s where a lot of people go wrong, is because fear kicks in and they don’t have the proper guidance, so they don’t do nothing and they keep. Then they’ll go and get into ugly lumps. Right. Mca. And we’ve seen those too. We do MCA bailouts and consolidate those and put you in. We go ugly to go pretty sometimes.
Patrick: Yeah. Yeah. You know,
Jimmy: something might be so bad that if we have to leverage that route, we have a plan in [00:33:00] place so they’re not stuck, you know, basically cannibalizing on their business and, and eventually having to bow out and fold their business.
Patrick: Right. And I understand like some of the payday loans and that type of thing.
Can you explain what A MCA is? I’m not familiar with that.
Jimmy: No, no. MCA is a short for merchant cash advance.
Patrick: Mm-hmm.
Jimmy: So what you’ll see is that there are cash flowing businesses that can show deposits
Patrick: Yep.
Jimmy: On the bank states, but. Profitability wise, because they’ve instructed their accountant or bookkeeper to write everything off.
Patrick: Mm-hmm. They,
Jimmy: they show no income. So they’re not fundable in their kids because they can’t even afford to pay on their mortgage.
Patrick: Yep.
Jimmy: On paper. Right. So these MCA companies will lend them a percentage based on deposits and many times they’ve gotta pay on this debt. On a weekly basis.
Patrick: Yep.
Jimmy: So it becomes almost like the payday loan business for businesses.
Patrick: Yeah.
Jimmy: But it’s sad because they’ll put liens on the [00:34:00] business, UCC one lien, and if their lay, they close our accounts. Yep. And you can put, make some major damage to a business where it almost makes you blacklisted to be able to even get anything as BA wise.
Patrick: Yeah.
Jimmy: Or higher lump. Right. So, if. Listen. Listen, we’ve worked with every type of lender out there, so mm-hmm.
There’s not, there’s a place for everything. Mm-hmm. When we recourse and use an MCA loan, it’s very strategic in nature or arbitrage, or the ability to make more than what is being paid out in interest has to be there and it has to be followed because we can get you out of an MCA loan quickly, but we have to pull a path.
Patrick: Yeah. What
Jimmy: most people do is they’ll get an MCA loan. Hedging that their business is gonna produce enough. Mm-hmm. Until it doesn’t. Right. Then it goes backwards. Right.
Patrick: Yeah. Yeah. No, and this is exactly the scenario. I had my friend come to me and say, Hey, I’m thinking about borrowing this money. And it was from [00:35:00] one of the merchant credit.
Right. You know, and they were gonna take like 20% of his revenue, you know, ’cause they’re capturing all the money coming in and I’m. We need to be very careful before we do this because we’ve gotta fix some things that got us into this issue before we are, you know, digging this hole a little deeper. And, you know, ultimately it wasn’t a path they decided to go because it, there’s, it
Jimmy: could be devastating.
Patrick: Yeah. Yeah.
Jimmy: The ones we brought through the program, they had to go that route. Yeah. We had to very systematically use our program to pay off that debt. Right? Mm-hmm. It literally was used. It’s just a very short term solution. Yeah. Right. Because in that 90 days maybe that we paid high interest to get that money.
Mm-hmm. We’ve fixed their credit to put ’em in a better position.
Patrick: Yeah.
Jimmy: To be able to refinance and do the things that we do and paying off that debt.
Patrick: Yeah. And you also highlighted a point too that is, is important we see, we have clients on, you know, I’ll say different ends of the spectrum. There’s some clients that we advise through some of the [00:36:00] materials we produce and whatnot that are trying to keep the tax bill at zero.
And every possible expense. And they’re buying things, you know, to save, to keep the tax bill at zero. Yeah. And it’s like, stop spending all of the money outta the business profit is actually good. Yeah. And we need some of those things to be bankable. And, and at the end of the day, if we want our business to have any enterprise value whatsoever, it has to have ebitda, it has to have bottom line, net income, you know?
And so
Jimmy: your X factor for the valuation of that business is tied. To a profit margin. Yeah. And if you cut it, you’re basically killing your exer.
Patrick: Right? Totally. And so it’s like, okay, you can do this, but your business is going to have no value. And we see business owners get to the end of their career and they think they have this thing that’s worth millions and millions of dollars and it’s like, it’s not worth anything.
’cause you, your financials are a mess. You run every possible expense through there. You buy all this, I’ll say, crap you don’t need. And like, it’s not an effective way to build wealth or cashflow or [00:37:00] any of those other things. I think the, the well, and here’s Mr.
Jimmy: I notice almost every one of ’em do the ones that are positioned like that where rebate two or three years of taxes and every year it’s very the same.
It’s like they came to a number that they feel comfortable, right? Mm-hmm. I just saw one that I think only pays about maybe three or $4,000 a year in, in, in actual owing the IMS. Mm-hmm. But they show still very little profit. Right. And and why is that? Is because. You know, they’re, they’re CPA and not every CPA does this.
Mm-hmm. Not every bookkeeper does this for them. If they’re, but they’re basically, they’re going by what the CPA says. They’re not looking at other strategy. So it’s almost like you need a brain surgery, but you’re just sticking to the recommendation of a general doctor, right, who says, well go take for your headache, but you need a brain surgeon.
Right. We’re not looking at a deeper level to see what options they [00:38:00] have, so they don’t employ a tax strategist that can give them some solutions to be able to keep the profit margin high and still reach the goal of taking care of IRS. Right. So they almost feeding both sides of the picture. Mm-hmm. By stretching yourself properly.
Some of the things we teach, this is how you’re able to gobble it up every month in and month out and not be afraid to do the things we’re doing. Right. Yeah. Because that’s how you structure things. But people need to understand that they’re gonna have to get some guidance and mentorship to get there.
Mm-hmm.
Patrick: Yeah. No, Jimmy, this is great. So I wanna recap a few things that we’ve talked about. That’s a fantastic tool, but it can also be really dangerous. So if you don’t build the proper foundation and really have the underlying skillset and the advisors around you on how to handle this business credit in a way that is going to help you versus hurt you, uh, it can be a problem.
And so I love the things that you’re saying there. I also think [00:39:00] there’s really interesting opportunities that we can. We can utilize to get access to capital and use some of that arbitrage. I’ve always wanted to be a bank in the context of like, if I can borrow money at 2%, loan it out at 4, 5, 6, 7, 12%. Like that’s, that’s exciting to me.
And so, um, you know, if we can think about how we do that in our business, that is a, uh, fantastic, fantastic way to go. And then there’s also just what we’ll call financial management. That’s critical, right? Like, I’ve gotta have good books, I’ve gotta have good. Financial discipline, I’ve gotta have good advisors around me that are telling me good advice on how to sort of manage my financials and my accounting and my tax strategy in a way that is going to be best for me to grow long term.
So this has been, this has been great. Is there anything else we should, we should add to this conversation around business finances and sort of borrowing capital to, to grow. And I
Jimmy: really feel that, um, you know, just touching on that subject though. [00:40:00] Properly having your bookkeeping and your accounting structure, right, having another set of lives to look through, that is utterly important.
You know, because if you’re just being swayed by somebody because they’re only charging you X amount per year for your taxes, and you’re just looking at the bottom dollar as well, I don’t wanna pay more than X, it’s because you’re not doing something behind the scenes that should be done, right? Because if I have 10 or $15,000 sitting in my coffers.
To offset any taxes that may have to be paid. I don’t really care about that because I’m now focused on growing my business and doing other things that need to be done, and I’m not worried about that bottom dollar. So we need to turn things around, like you said earlier, about the mindset. Mm-hmm. Right.
We keep putting so much emphasis on the scarcity mindset and living, you know, as a minimalist instead of thinking big and wanting to achieve more. Well, how do you think. The Rockefellers and the [00:41:00] bigwigs of the world have done it over the year, do you think? Mm-hmm. They were thinking of getting a tax return of X amount just so they could take a vacation, or do you think they put things in place long before then?
Mm-hmm. So taxes were always taken care of. They could take their vacations when they wanted. They always had money in some place. The reserves were there, right. They prepared for contingencies so that, you know, if something happened, they were fully prepared for anything. Yeah. That’s how we’re gonna start thinking, not in a minimalistic way, because if you’re gonna think as a minimalist, that’s what you’re gonna get.
Mm-hmm. Minimal returns. Minimal, minimal results. Right. And, and have strategy in place so you can win at this game that we play. Yeah. And you can do it. Anybody can do it. I mean, I get it. Losing everything. Yeah. I lost everything, came from the bottom and, and worked my way back up. And I live in such a humble place now.
I don’t need the riches of the world.
Patrick: Mm-hmm. Right.
Jimmy: Learn to live with what I have. And when you lose [00:42:00] everything, you become humble to appreciate and be grateful for what you do have. So maybe those TV is just enough for me. Right. Maybe this watch is just enough for me. Mm-hmm. If I want trip to Columbia, hey, let’s go.
Yeah. And I’ll use my points and get the check for free and whatever. I do pay online law. Yeah. So there’s, there’s strategy behind everything I do.
Patrick: I love it. To me, this has been fantastic and I, I do love even the comment and I, I don’t know too many entrepreneurs that have had this nice smooth ride to the top.
I’ve been, uh, at the top and been broke, and then sort of been back again. And you do have a different perspective. All the things that you thought important from a materialistic point of view the first time around, they’re not quite that valuable anymore, and figure out pretty quickly that the most valuable things in life happen to be the, you know, the people and the relationships you have, the experiences, both good and bad.
The learning and growth, the contribution you can make to this world. And then I’ll call it our health, right? Like it could be our spiritual health, our emotional health, our physical health. Those are all, all [00:43:00] critical factors. And it’s like, I’d rather see somebody live a rich life in those things, uh, versus have a hundred million dollars and nobody likes him and they didn’t do anything.
So I think that’s a brilliant point percent. I, I think your website’s a fantastic resource, Rios business funding.com. We’ll have a link to that in the show notes. We’ll also have a link to your. Book on Amazon, but yeah, you get the ebook for free. But,
Jimmy: uh, YouTube channel’s business funding has a ton of videos.
Patrick: Yeah.
Jimmy: That we talk about a lot of these things, a lot of these concepts, the high level to high level program, if you Google high level to high level, you’re gonna get. Tons of nuggets of information, how we’ve taken a structure that never was, never, it was unheard of being able to do it in this fashion.
Yep. And became a pioneer in bringing this to the masses. And I think naturally you become a differentiator when you can bring solutions to the high level and take yourself to the high level,
Patrick: you know? Yeah, yeah. No, this is fantastic. I, I really do appreciate all of the wisdom and [00:44:00] knowledge you’ve given us here today.
You know, when I think about taking action on these things and having access to more. More capital A, it’s just a margin of safety. Mm-hmm. And then second, you know, we think about we, we’ve been on a really nice economic run for, I’ll say since 2008. You know, it’s been up to the right for the most part, and we haven’t been through a real recession.
And I think about those that thrive through a recession have access to dollars. Right. A, to survive and then B, to take advantage of. All of the opportunity now that’s around us when everybody else is struggling, when there’s blood in the streets. I think that’s a Roth Roth child quote. You know, when there’s blood in the streets, that’s the time to go invest.
And I think the things you’re talking about are a fantastic opportunity to position ourselves for those things. And then you think about what happens if we don’t take action on this stuff so we don’t have access to capital? That could mean the end of our business could mean the, you know. Bankruptcy starting over again.
And s so, and I’ve
Jimmy: been a, I’ve been a recipient on that end as well. Mm-hmm. And so that would be the [00:45:00] PTSD that comes from that and has forced me to think differently. The mindset. Mm-hmm. And how I make my day. I always say RP, right? Revenue producing activities. Yeah. And everything that I do. Right. So if it’s investing, I’m thinking like that.
If it’s. Work. I’m thinking like that. Everything from working out to my health, I’m compounding to my love with my wife and my kids. I’m constantly compounding. Right. Compound is called the eighth greatest wonder in the world. Yeah. In more ways than just, you know, money. But if you can, um, understand the concept of it and how we can make it work in your favorite.
You are gonna be liberated in so many more ways than you would ever imagine. And I’m glad that we’re would have this forum to express that because I think there’s more people mm-hmm. That need to be a case study and be able to say, I’m willing to run through, let’s go. What do we gotta do? What’s step one?
Let’s start with step one.
Patrick: Yeah. And Jimmy, I appreciate how you’ve really studied this topic of finance and we’ve looked at everybody [00:46:00] from Dave Ramsey to Kiyosaki. I think both of those guys are brilliant. You know, they take totally different approaches and they both have some wisdom. Now, I lean more towards the Kiyosaki side of the equation versus the Ramsey side, but Right, right.
You know, Ramsey’s probably he’s gonna be, he might be the first person to. Get to a billion dollar net worth without using any debt. And it’s like, that’s an incredible thing. Wait, why
Jimmy: wait? You know what’s funny, man? It’s like I, uh, I listen to all su I listened
Patrick: mm-hmm.
Jimmy: To all, I listen to the, the, the trajectories, but I’ve also looked at Brett Cardone and mm-hmm.
Some of these other people that, that are in the spectrum and. Listen, what I got from almost every single one of them is the ability to, to change their mindset and to think bigger and think differently. They didn’t stay stagnant. They didn’t complain. They were, they went into action. Right. Right. They sought help.
Right. That’s, that’s ultimately the, if you talk to ’em, successful person in the realm, they did it through those channels. Right, right. And there might be [00:47:00] different methodologies and factors that they weighed in putting it together. That’s how I did it too. Yeah. It was like taking the letter from this person, taking a little bit here.
I never claimed to have done any other stuff on my own. All I did was just take little bits and pieces, everybody, and a lot of mistakes. I did make a lot of mistakes in the process, but I never gave up. I wired keep going and escalating and finding ways, and I did go back to work many times to corporate and I hated it, and I was like, that was my motivating factor.
Mm-hmm. To get out and do it again. Some people call it crazy, right? Insanity. But the difference is when you’re in insanity mode, you’re doing the same thing or an and expecting different results. With me. I wasn’t ex I was doing it. I was like, I was going back out of necessity, but I never fooled my cards on the other side.
Right. You know, I looked at it more like innocent, going back to the lab. Mm-hmm. After an explosion, right? Yeah. And say, okay, let’s clean up, [00:48:00] let’s get back to building. And that’s what I would do. I, I had to. That’s also with a precursor to my high level program. Mm-hmm. Was because I need to find another way than going and spending 40 hours a week at somebody else’s job.
Patrick: Yep. I need
Jimmy: to find a way to supplement my income.
Patrick: Yeah. Yeah. And there’s also, the thing I love about what you just said is you’re being responsible. I’ve got responsibilities, I got people that need for me to make sure the lights are still on and food’s still on the table. And so I’m gonna check that box while I’m growing this thing over here and at some point.
It will be too expensive for me to show up to my job anymore ’cause I’m revenue generating activities, you know, that’re talking about
Jimmy: losing money to gonna work, not makings,
Patrick: right? So I love all that. Jimmy, this has been a fantastic conversation. I really appreciate all of the wisdom and insight and, uh, rio’s business funding.com is the place to go learn more about everything that Jimmy’s got going on.
I think leverages a fantastic tool. And even going back to Dave Ramsey, he might not be using. Debt is leverage, but he’s [00:49:00] finding new and different opportunities to leverage with spreading his message and utilizing marketing people to Yep. Marketing to, to get that out there. So, uh, that’s great. Jimmy, I appreciate you, appreciate all of your insight and wisdom.
You, Patrick,
Jimmy: you’ve been awesome. Yeah. You went too fast.
Patrick: All right. Wonderful. I agree with you too fast. For sure. We might have to do it again here soon. Thank you so much for tuning into this episode of the Vital Wealth Strategies Podcast. I hope you found as much value in this conversation with Jimmy Rios as I did.
And you’re walking away with actionable ideas to take your business to the next level. This episode resonated with you. Or if you know another entrepreneur who could benefit from these insights, do me a favor, share this episode with them. You never know how much of an impact it can make. And don’t forget, if you’re ready to start building a personalized tax and financial strategy that supports your growth, head over to vital strategies.com/tax.
It’s the first step towards keeping more of what you make, scaling with confidence and creating lasting wealth. Before we wrap up, just a quick note. Everything we share here is meant to educate and empower you, [00:50:00] but it’s not specific financial, tax or legal advice. Make sure to talk with your own advisors to see how these strategies fit your unique situation.
Especially when it comes to debt. The Bible tells us that we’re slave to the lender, and if we’re not careful, debt can be a problem. And so it can help us absolutely scale our business, but use it wisely. So remember, you’re a vital entrepreneur. You’re vital because you’re the backbone of our economy.
Creating opportunities, driving growth, and making an impact. You’re vital to your family. Creating abundance in every aspect of life. You’re vital to me because you’re committed to growing your wealth, leading with purpose, and creating something truly great. Thank you for being a part of this incredible community of vital entrepreneurs.
I appreciate you and I look forward to having you back here next week on the Vital Wealth Strategies Podcast, where we help entrepreneurs minimize their taxes, master wealth, and optimize their lives.