What a Collection Agency Taught Me About Lending

Estimated reading time: 9 minutes

My dad started North Coast Collection Services in 1983, and I grew up inside it. Everything I know about private lending starts there. I answered phones before I understood what the calls were about. When I came home from college in the summer of 2010, I went to work there full time. Two years later I understood exactly what those calls were about, and the last job I did for the company was helping him sell it.

A collection agency is an unusual place to learn about money, because nobody calls when things are going well. What you see, day after day, is every reason debt goes bad. The layoff. The divorce. A contractor who never got paid by his own client. The business owner who borrowed against a plan that was never going to work. Some people are hiding, some are embarrassed, and most are simply out of options.

What Debt Looks Like After It Goes Bad

Almost everything we chased was unsecured, and it reached us too late. By the time a file landed on our desk, the credit had been granted poorly and the account had been managed poorly. Usually that had gone on for months. That is why it was in collections. There was no house to foreclose on and no equipment to repossess. All we could do was call, listen, and try to work something out. When it worked, it was usually because someone on our end treated the person on the other end like a person. That was not a strategy. It was just how my dad ran the place, and it turned out to be the thing that got people to pick up the phone.

His larger lesson took years to sink in. You cannot fix a bad loan from the collections desk. You can only learn from it. Every file that landed on us was a mistake someone made upstream. A lender who did not check the cash flow. The salesperson who extended terms to a customer he knew could not pay, because the commission came first. A bank that wanted the yield more than it wanted the truth. The same handful of mistakes came through the door over and over, and if you paid attention, you could stop making them yourself. The real value of the agency was never the recoveries. It was the education.

The Five Cs of Credit

The other half of that education came from a man who had been president of the community bank my grandfather helped found here in Santa Rosa. He was a family friend, retired by then, and he consulted for the agency mostly to keep himself busy. After a career spent deciding who got credit, he taught me the five Cs of it: character, capacity, capital, collateral, and conditions. He also called me Easy Money, a nickname he gave me after a poker win in 2009 and never let go of. It was a joke, and it was also a reminder. Money that comes easy is the kind you have to be most careful with.

When the sale closed, he suggested I not stay in collections. If I wanted to understand why debt fails, he thought I should first go learn how credit gets granted. It was a recommendation, not an instruction, and it was the best one I ever took. He taught me how to read a client and how to read their financials. He showed me the difference between a balance sheet and a story about a balance sheet, and how to ask the questions that get you the truth before you commit capital.

The Handshake and the Financials

Something older came along with all of that. He came up in a time when a banker knew his borrowers by name and walked their property. The decision was made on a handshake before the lawyers ever got involved. The paperwork still mattered, and he was careful about it, but the paper was there to record a decision he had already made about the person. If he did not trust the handshake, no amount of documentation was going to fix it. The financials tell you whether someone can pay. The handshake tells you whether they will.

So I took a credit analyst job at a local bank and started at the bottom. Over the next several years I moved from analyst to assistant vice president to relationship manager, underwriting loans to local businesses and the people behind them. On the credit desk you learn what a good borrower looks like on paper. On the collections desk you learn what a good borrower looks like when the paper stops matching reality. I had seen both, and I started to notice that most lenders had only seen one.

The Cowboy and the Ranch

The loan that taught me this was not one I approved. It was one I could not. A cowboy called the bank wanting to buy a 600 acre ranch. He was well known in his world and sponsored by a national brand. For years he had made real money selling horse training videos on the rodeo circuit. Then streaming arrived and that income disappeared almost overnight. On paper he was a man whose revenue had collapsed, and by the bank’s terms he did not qualify. Most credit desks would have sent him a decline letter and moved on.

What I saw was different, because I had spent two years on the other side of that letter. His debt had not gone bad. His model had. He still had a small ranch, a reputation, fifty years of paying every bill on time, and the most persistence I have ever encountered in a borrower. The man called me every day. He had rental units on the property sitting empty. He was also training four horses at a time, at a couple thousand dollars a month each, with room for ten. So we went to work on the business instead of the loan. He filled the rentals. He filled the barn. Over two years he rebuilt the cash flow until it matched what I already knew about the man, and he qualified for an SBA loan. He bought the ranch for two million dollars. Today it is worth many times that.

Character Comes First

I could not have underwritten that on the numbers alone, and I would not have underwritten it on the handshake alone. It took both. And it took the collections desk to know which one I was looking at. I had spent two years listening to people whose credit had failed. A man with fifty years of paid bills and a barn he was willing to fill did not sound like any of them. Of the five Cs, character is the one that comes first for a reason. Capacity can be rebuilt. Collateral can be found. Character is either there before you meet the borrower or it is not, and no amount of the other four will cover for it.

My dad, meanwhile, had gone to work for the company that bought his agency and learned quickly that he did not want to work for anyone. When his noncompete expired in 2015, we started over together as Tavelli Co. This time we built it together as partners. It is still running today.

Private Lending Was the Last Piece

I eventually left to learn private lending, underwriting bridge loans secured by real estate. That was the last piece. Banking taught me how to analyze a borrower. Collections taught me what happens when the analysis is wrong. Private lending taught me how to structure a loan for the case where the analysis is wrong. When that happens, the collateral makes the lender whole.

In 2025 I started Mayacamas Lending. Today I rent half of a building from my dad, and our neighbor down the hall is Tavelli Co., the agency we started together. The two businesses are built on the same lessons. I underwrite backwards from the default, and it shows up in how Mayacamas approaches private lending.

How Mayacamas Does Private Lending

We stop at 65 percent of value on the loans we fund ourselves, and most of our book sits well under that. Other private lending shops in this market advertise 75, 80, sometimes 90. Our number is lower on purpose, because I have spent years on the phone with the borrowers of lenders who did not stop. We underwrite the person and the property with the questions I was taught to ask before a dollar moves.

We service our own loans rather than selling them. The lender who stays close to the loan is the one who can work with a borrower when a month goes sideways, and the one who can protect the capital when it does not. And the agency next door is one of the investors behind our loans. It puts what it recovers on unsecured debt to work in private lending secured by real estate, with room for something to go wrong.

If you bring a deal to Mayacamas, this is who is looking at it. Someone who has sat on both ends of a loan, who would rather say no now than call you later, and who will still be holding the loan when it pays off.

No Such Thing as Easy Money

The man who called me Easy Money passed away a few years ago. He was private and would not have wanted much said about him here. But his advice is the reason I went into banking, and the reason I came back out of it knowing what I know. The nickname stuck. The lesson underneath it stuck harder. There is no such thing as easy money in credit, and I hear that every day from the office next door.

This article is a personal account and is provided for general information only. It is not legal, tax, or investment advice, and it is not an offer to lend or a commitment to fund any loan. Loan terms depend on the property, the borrower, and market conditions at the time of the request. Mayacamas Lending Inc. is a California licensed real estate broker, CA DRE #02306252.