The last 12 months have been a challenge for us in regards to banking and our long term debt. Last spring the bank we had been doing business with for the past 15 years decided that they didn’t want to do business with us anymore. I admit that we had a couple of years where the numbers didn’t look as good as we would have liked them to be. But we never missed a payment nor were we ever late. And after some tough decisions we felt we were finally on the road to recovery.
Unfortunately most banks really have no idea about the unique aspects of the funeral business. Like the fact that people pre-pay for funerals but the funeral homes can’t touch any of that money until the death occurs. Or the fact that we normally pay for things like Newspaper obituaries, cemetery fees, crematory and church fees out of our pocket and then wait for the family to pay us back. This basically means we loan the family over $1000.00 on a typical funeral, yet we charge no interest for that service.
So every couple of years the bank (which is no longer locally owned or operated) would assign some new young commercial loan officer to my account and I would spend several hours teaching them about the funeral business. And although they usually got the general concepts down, this last time they were unable to convince the upper management that we were still worthy of their business. To the folks at the head office we were just numbers on a page and they didn’t give a rip about us. So I shopped our loans to ten other banks in the area and all of them said the same thing; thanks, but no thanks.
Then last fall my wife, Jodi, ran into our good friend Doug Gober at a meeting. We’ve known Doug for nearly 20 years through relationships with York casket and other funeral companies. Doug had just taken a job with Live Oak Bank, who had decided that the funeral business was a good segment of the market to get into (unlike the rest of the banking world). Doug was their funeral expert on staff and he can look at a funeral home and their books and quickly tell if the business is headed in the right direction. He set us up a meeting with the bank during the NFDA Convention in October. We provided Live Oak with the data they needed and before the convention was over they had made us an offer.
It was a pleasure and a relief to finally talk to banking folks who understood what I had been going through. (please see an earlier blog post – “double whammy”) They also understood that what I needed was a little boost to get me going again. Not unlike a lot of people in America, we had borrowed some money from several places to do some things to improve our business. But when the economy took a dive and the funeral business drastically changed we got caught in the undertow and were working real hard to keep our head above water.
Live Oak Bank is a preferred SBA Lender. That means all their loans go through the SBA which means they are backed by the federal government. They don’t have branches or checking accounts or give away toasters. They only do commercial SBA loans to a few kinds of businesses. And they are really good at what they do. They looked at what we had, they looked at what we needed and they even made some great suggestions for places where we could improve. It was our own little bail-out plan.
The process was not without its challenges. The SBA requires lots of information and records and environmental testing and more. Live Oak walked us through every step and made sure we got what was required to make sure the whole thing would be approved by the SBA. (most banks have very little experience with this) Finally after 4 months we signed the papers and the funds were transferred. It was a big load off my shoulders and I was finally able to get everybody paid off and lower our monthly payments by nearly 50%. Plus the term of the loan was for 25 years which means I don’t have to go through this whole thing again like you do with typical commercial loans with 5 years balloons. Now I can budget and plan and maybe get this thing paid off early too.
Live Oak now has assigned us a personal banker to look at our books quarterly and makes sure we are staying on track. I like that. It means I’m more than just a number on a page. It means Live Oak Bank is invested in helping me succeed.
I’m Dale Clock. Thanks for Listening.