Eric Inspektor is a Toronto-based executive with more than 30 years of experience in the financial lending industry.
As the co-founder and senior underwriter at CORFinancial Corp., Eric is responsible for deal origination, due diligence, restructuring solutions and serving as a liaison between borrower and lender. Eric’s successes include the restructuring of a number of high-profile Canadian and US corporations through refinancings totaling in excess of $500 million, the building of a successful non-prime automotive leasing company, and establishing a unique financial structure to assist developers survive through the 1990 real estate collapse.
Outside of his professional responsibilities, Eric Inspektor enjoys spending time with his grandchildren and traveling. Eric’s philanthropy work includes raising money for the Jewish National Fund and Starlight Children’s Foundation.
Where did the idea for CORFinancial Corp. come from?
The name reflects what we do and what everyone underwriting credit should be doing. As defined, “if you’re looking for the most essential part or the very center of something, you’re looking for its core”. We then shortened it to COR for the logo. As an aside, COR is British slang for an “exclamation”.
In order to successfully represent our clients and understand what they need, we need to look at and understand the guts of our client’s operations. This is the key in answering the questions “what do you need” and “can we help you”.
A perfect example of what happens when you don’t understand the core is bankers/lenders who constantly offer less funding than what is requested in order to “secure” themselves, only to find that, not long after funding, they are faced with a loan default which results in the destruction of the business and, in most cases, the lender losing money. Just look at the latest financial reporting from our big banks and their provision for loan losses.
What does your typical day look like and how do you make it productive?
When I first started out as a mortgage broker in 1987 I quickly realized that, in order to be successful, I needed to split my time between marketing, processing and closing (getting the deal funded), and I have adhered to this throughout my career.
- I’m an early riser and typically get up at around 5:30am.
- First thing I do is read and respond to all my emails…I never leave clients or funders waiting hours for a response.
- I then review drafts of presentations or other correspondence that I prepared the previous day. I typically like to re-visit funding proposals after “sleeping” on them and usually find that I either missed something or a point needs to be re-articulated.
- Once the world is awake, I make sure to touch base over the phone with all clients and funders on active files.
- Doing these things first thing in the morning is essential as, by 10am, I’m answering calls from new and existing clients, being pushed by funders for additional information, etc. and would not have time to manage current files.
I try to arrange at least 1 business lunch per week with existing and new funders to exchange ideas and perspectives.
- When there is a funding of a transaction, I make myself available either by phone or in person and I participate in discussions between lender and client lawyers to ensure that nothing falls between the cracks.
- I usually try to leave the office by 6pm so that I’m home for dinner.
- Other than the odd call in the evening, I try to put my pen down. I find that, after a full 12 hour day, I’m not productive and need to unwind, hence the review of drafts in the morning.
- I make myself available to my clients and funders 24/7 but do my best to ensure that I’m not on the phone over dinner or when my kids and grandchildren are around. One of my successes is that both my clients and funders respect my commitment to each and every file.
How do you bring ideas to life?
Interesting question…to be clear, my role and that of everyone in our profession is to bring YOUR ideas to life…in order to do this I need to understand you, your ideas/vision and the assets you bring to the table. My strength is my ability to see past the problem and concentrate on the opportunity.
Let’s dissect the underwriting process:
- First questions when reviewing the application are:
- is the ask reasonable
- Will the funder be comfortable with the borrower’s track record (how many years in the industry, historical financials, etc.)
- Am I comfortable with management…does the owner represent his business and opportunity professionally?
- The answers to the above set the stage for step 2 which is the underwriting…the above questions and answers help match a funder to the deal and the type of structure I believe works best.
COMPREHENSIVE ANALYSIS OF THE DEAL AND UNDERSTANDING THE DOWNSIDE FOR BOTH BORROWER AND LENDER IS WHERE I NEED TO MAKE THE DIFFERENCE
- In analyzing the deal, I always look at the downside for both the borrower and lender. It is easy to produce glowing projections and lots of excitement around potential success…I focus on potential risk to both the borrower and the lender. This is essential in putting forward a sustainable structure.
- Once I agree to take on the file, I provide the client with a terms sheet which frames my expectations for the deal. If the client agrees and signs off on the proposed terms, I present the funder with a deal overview for their feedback.
- With buy-in from both borrower and funder, I prepare a full package of documents for the funder to allow the funder to complete the process of credit approval and funding.
What’s one trend that excites you?
Business owners are slowly coming to the realization that our banks are not always good business partners and so they are starting to embrace the secondary market as a legitimate funding source rather than “lenders of last resort”.
What is one habit of yours that makes you more productive as an entrepreneur?
I manage my time carefully, making sure not to get behind on any file. I have also developed a list of “evaluating” questions which I pose to myself and the client, and I take the time to review every application with an open mind, always being respectful of what the client has achieved and what he/she is looking to accomplish.
What advice would you give your younger self?
Embrace technology as an additional tool and not as a replacement for hard work and human interaction, and the need to understand that each unique situation requires a unique solution.
Tell us something that’s true that almost nobody agrees with you on.
Over the past 12 months I’ve been saying that real estate prices, especially in the GTA, are out of control and that something’s got to give. Almost nobody agreed with me. When COVID hit, I said that, due to the economic impact (people being furloughed, businesses forced to close, etc.), real estate prices would soften. Again, not many agreed with me. Based on recent comments by certain bank economists and CMHS suggesting that real estate prices would drop by the end of 2020, I am more convinced than ever that there is going to be a downward correction in the Toronto real estate market. Most people still believe that the real estate market will remain hot.
As an entrepreneur, what is the one thing you do over and over and recommend everyone else do?
I try to stay in touch with all my funding sources on a regular basis to keep up with changes to lending criteria, thoughts on industries, etc. I am a firm believer that, no matter how much you think you know, there is always room to learn and improve.
What is one strategy that has helped you grow your business?
Never prejudge before learning or considering all the facts and think “outside the box”. I don’t give up until I’ve exhausted every alternative.
When looking at restructuring a business, it is always important to consider every possible alternative…some examples:
- Sell off a division or bring in a partner,
- Split the funding requirements between different lenders…mortgage for the real estate, factoring for the receivables, equipment leasing for the assets, etc.
What is one failure you had as an entrepreneur, and how did you overcome it?
Following the 2008 economic crisis, it was almost impossible to get the banks to provide any funding, even to existing clients. My company had invested in a lending business that relied heavily on funding and I supported management’s decision to get funding from a Bay Street asset-based lender. The lender turned out to be predatory with a business model that ensured default and the sale of assets at fire-sale prices. This resulted in the demise of the business and the investors losing their money. Naturally the lender recovered 100 cents in the dollar.
My family helped me overcome the failure by reminding me that we immigrated to Canada and succeeded in building a new life which included building a successful business. If I could do it once, I could do it again.
What is one business idea that you’re willing to give away to our readers?
This is not a new business idea but the revisiting of a discussion that has been going on for some time.
There is an enormous opportunity to set up manufacturing in Canada to produce several plastic products that are currently being produced in China and imported into Canada. These are produced using highly automated machinery and very little labour.
- The benefits are simple – stronger cash flow, higher profits and job creation
- The challenge – The willingness of our Gov’t to create incentive programs and a source of funding for machinery and working capital.
What is the best $100 you recently spent? What and why?
Last month I bought almost $100 worth of pizza from a startup pizza takeout in our area and convinced my kids to bring the grandchildren to a pizza picnic in our back yard where everyone could practice social distancing.
What is one piece of software or a web service that helps you be productive?
Microsoft Excel. Everything in my business revolves around numbers, both analytical and presentation, and I find that Excel works best for me.
What is the one book that you recommend our community should read and why?
Confessions of an Economic Hit Man which is a semi-autobiographical book written by John Perkins. I found it though-provoking because it hi-lites how the US uses its financial power in under-developed countries to gain access to that country’s natural resources.
What is your favorite quote?
Our greatest glory is not in never falling, but in rising every time we fall. (Confucius)
- Manage your time so that you always have time for your clients
- Listen to your clients. They know where they want to go and you need to be the resource that helps get them there.
- Stay in touch with your funders. They are your “inventory.”