New Firm Looks to Funeral Service Using the SBA Loan Programs


Kenner, La. – After more than 30 years in funeral service, the last 16 or so in a similar capacity, Doug Gober made a significant change at the beginning of this year when he left Matthews to join Carriage Services. Nine months later, Gober changed jobs again. A friend of his remarked, “Can’t you keep a job?”

Gober has been a fixture at funeral service events for decades, delivering a message to funeral directors about the stuff he finds important for the profession. His recent career moves have been defined by one word: opportunity. And the opportunity to become senior loan officer for Live Oak Bank is one Gober said would take full advantage of his decades in funeral service.

And for Gober, it was an interesting road.

Live Oak Bank was established just over four years ago by a group of experienced SBA (U.S. Small Business Administration) lenders. “All of the founders of the bank had been doing SBA lending for other large institutions for years. [Live Oak Bank] doesn’t have traditional branches, tellers, checking accounts or any of the usual trappings that we think of related to banking,” Gober said. “Rather, the company focuses its lending efforts on funding loans for small businesses throughout all 50 states, principally using the SBA loan programs. It also offers money market accounts at very [competitive] rates.”
Gober explained that the FDIC does regulate Live Oak Bank. “We are a North Carolina state-chartered bank. The SBA grants eligible lenders ‘preferred lending status,’” he said. “If you are a preferred lender, that preferred status is not relative to any particular industry but simply means that the loan approval authority is delegated to the bank versus having to obtain SBA’s approval for each loan. It saves a lot of time for the borrower. The SBA actually encourages lenders to apply for Preferred Lender Program status. SBA has a listing of 1,800 different businesses that they recognize and identify.”

The Live Oak principals began the bank by targeting veterinarians and have now expanded into dentists and independent pharmacists. Over the past seven months, the bank had been investigating the merits of adding funeral service professionals to its three industry groups. For many reasons, not the least of which is the SBA’s 10-year successful track record with borrowers in the funeral service business, the decision was made to pursue funeral service at this time. Said Gober: “All that preferred status means is you don’t have to send everything to SBA for approval, wait on everything to come back, find out what SBA needed, then get it from the client, send it to SBA, wait for it to come back, etc. The non-preferred process is very cumbersome when compared to the preferred processing of loan requests. This is the process most familiar to business owners who have historically had undesirable results with the SBA process through their local bank.”

Under the preferred lender status, all of the paperwork and processing is exclusively handled right in the bank. “They have SBA’s approval to handle everything SBA normally would,” said Gober. “They are under the regulatory authority of the FDIC, and they may audit us annually.”

As Gober said, Live Oak began with vet clinics. It expanded two years later into independent pharmacies and independent dentistry. “Those were the three basic lines of business,” he said. “And just in those three lines of business, in a little more than four years, Live Oak is the number-three SBA lender in the country, behind Wells Fargo and Bank of America.”

Why is funeral service attractive to Live Oak Bank? Gober explained that the SBA’s listing of the 1,800 business types in the United States are ranked in different ways. One of these rankings is by default rates. According to Gober, the number- one business with the lowest default rate of all of the SBA’s 1,800 businesses listed is funeral service.

“As they began to explore additional business opportunities to consider for 2011 expansion, they looked at the SBA default rate listing to determine where they might go next,” Gober said. “The model that Live Oak has established with the other three businesses is working very well. We hire industry experts, have a reputation for excellent customer service and transparency throughout the entire loan process. You will know the person making the decision on your loan. We can do in six weeks what other banks can’t do in six months. And we have a Business Advisory Group that continues to maintain our relationship even after the loan closes.”

The early veterinary clinic clients were a business interest of former Service Corporation International executive Jerry Pullins. “Live Oak Bank had actually helped finance some of Pullins’ early consolidation of vet clinics,” Gober said. “When they started to explore the possibility of getting into funeral service, who would they call but Jerry Pullins because
they knew he had an extensive history in funeral service.”

One of the unique aspects of Live Oak is that it employs what it calls a domain expert, who is basically someone within a particular business or someone who knows that business very well. “They have a vet guy, a dental guy and a third-generation independent pharmacist who, just prior to his affiliation with Live Oak Bank, had just sold the pharmacy he and his family had operated for years,” Gober said.

Enter Doug Gober.

“For me, I hadn’t made a job change in 16 years,” Gober said. “I left Batesville Casket to go into partnership with my friend, Alton Doody, in 1994. We immediately went on to work on what became the ‘fractional casket’ idea and other innovations we did for Jerry Pullins for SCI in Europe. Jerry, at the time, was in charge of SCI U.K. and France. That is the connection with Pullins. These innovations later became staples in the U.S. as well.”

Gober had gone from the Doody Group to the York Group when the two units were merged. “Then the York Group was acquired by Matthews, but I had essentially continued to do the same work all those years,” Gober said. “Effectively, there was no change for me, it was just a new company I was doing it for.”

Then, on January 1, 2011, Gober, making his first true job change in 16 years, joined Carriage Services. “I moved from the wholesale side to the retail side of funeral service for the first time,” he said. “Then I make another job change in nine months, which is insane.”

Gober said he never intended to leave Carriage. “I wasn’t looking to leave,” he said. “I had conversations with the Live Oak people. I was recommending people I thought would be a good fit for them should Live Oak decide to get into fu¬neral service.”

However, because of Gober’s association with Jerry Pullins and other key industry operators, his name kept coming up. “The Live Oak Bank officials approached me over the summer and said, ‘Rather than you recommending people to us, why don’t you be the person?’ My first response to them was that I was good where I was, doing what I am supposed to be doing. We were doing great work at Carriage.”

The conversation continued, and Gober looked deeper into the Live Oak offer. “The more I explored, the more I liked,” he said. “As I explored it a little deeper, I found that there is this giant gulf between available financing and desirable financing for pretty much any small business right now, but especially for our guys in funeral service.
“Once I began to look at what they were doing and their offer came across, it was significant to me personally,” Gober continued. “I just saw it as a huge opportunity. All things considered, it made sense. I really felt like this was 32 years worth of energy and effort that was suddenly being recognized and rewarded.”

Gober started hearing a familiar story from his contacts in funeral service. “The big bank buys out the local bank that they had been doing business with for 25 years, and now, all of a sudden, the five-year balloon is up and the funeral homes are operating under big-bank rules even though they are talking to the same guy they have always been talking to,” he said. “The big bank would say, ‘We’d be glad to renew your five-year balloon that’s up for renewal right now, but we will need $150,000 now.’ That deal is not going to be as good because the property isn’t worth what it was five years ago when the original note was written. I can’t tell you how many times I heard that story.

“This changing landscape doesn’t automatically mean that the local bank is not a good alternative for a small-business loan, it just means that Live Oak may be a more desirable alternative.

“Live Oak does things through the SBA process, and most of the time, most of these people would not be interested in moving toward an SBA loan simply because of the perceived hassles that accompany SBA,” Gober said. “If you go to a bank that doesn’t do it very often, the SBA process can be a six- or eight-month ordeal just to get a loan. One of the ad¬vantages of Live Oak is that is effectively all they do, and they can do it in six weeks or less.

“Another advantage is that Live Oak is able to do 100 percent financing, which is huge. They will do it for expansions, acquisitions, refinancing. If a guy wants to build a crematory and wants to build a building to put the crematory in, they will do all of those things,” Gober added.

There are some interesting things that have taken place within the SBA in the last two years. It has gone from a $2 million limit on these loans to $5 million, and that opens up some options for small businesses.

The bank’s SBA loan offerings focus on four areas: expansion, acquisition, refinancing and construction. “Right now, I have projects in all four of those categories going on,” Gober said. “We’re already making loans, we are having people already approach us and I have yet to begin to seriously market what we’re doing. We’re trying to make sure we have our infrastructure in place.”

Gober’s experience in funeral service was key to Live Oak’s entry into the funeral service market. The bank will not make a loan to anyone they don’t know. “I am going to go on a site visit and I am going to take the underwriter with me who will actually be making the loan,” said Gober, who formerly worked as a CPA prior to entering funeral service. “One of the unique things about this situation is that you are actually going to meet and talk to the person who is making the decision on whether or not you are going to get this loan.”

According to Gober, Live Oak offers competitive rates, but admittedly, they are not the lowest in the market. “The biggest thing we offer is up to 100 percent financing for these projects on 25-year, no-balloon loans,” he said. “And the only time you’ll hear from us is if you are not paying [the loan] or when the Business Advisory Group calls just to check in with you. That is a very different position than anyone gets from banks, with the covenants and other things attached to loans these days. Those do not exist with Live Oak.”

And that is Live Oak’s competitive strategy. A funeral director seeking a loan could probably find a rate at 5 or 6 per¬cent from a local bank. “But it is going to have a five-year balloon on it or maybe a seven-year,” Gober said. “With Live Oak, that 5 or 6 percent rate could be quarterly adjustable. We have both flexible rates and fixed rates. Rates are not likely to move over the next three years,” he said. “Our permanent rate is currently as low as 7.5 percent. The question might be, ‘Would you rather have a 6 percent loan for five years, knowing you will have to go through this process again in five years? Or would you rather have a 7.5 percent loan for 25 years fixed that never moves and you can’t have it called?’”

Since its birth, Live Oak has made an impact in the banking arena. “Live Oak Bank has come out of nowhere to be a big player in the SBA market, and now the big banks are watching Live Oak to see where it goes next,” he said. “And when they find out where we would go next, the big banks would make their own push into that business.”

Although the bank is headquartered in Wilmington, North Carolina, Gober’s office is in Kenner, Louisiana. “I’m all over the country anyway. Most prospective clients’ first contact with Live Oak is going to be through me,” he said.

Does Live Oak’s interest in funeral service also speak to a bigger economic picture? Gober says yes. In just the short time he has been with Live Oak Bank, he has seen a number of funeral directors looking to invest and reinvest in their business.

“It’s a real good sign,” he explained. “There are two camps in this business – there are the guys who are hanging on and there are the guys who are moving ahead. We’re not trying to save the 60-calls-a-year business out in a remote area that has been on the decline for the last 15 years because he hasn’t done anything different and hasn’t reinvested a nickel in his place.

“What attracted me to this was the opportunity for the business; it is a real opportunity for me personally to be in a position to help people I really care about and have known for a long time,” Gober said. “For years, I have been the kind of guy who stood up and screamed the agent of change message, and to me, that fits in so perfectly with this. If you are going to make these changes to your service level, in some cases it requires a restructuring of finances or a reallocation of space. It may involve the expansion of your operation to another location, and these are the things I can help with now.

“I see it as a tremendous opportunity. I am excited about it,” Gober added. “Our exposure at the NFDA Convention & Expo was very positive. We were just going there as a new entry into the marketplace, and I am optimistic that we are off to a good start.”

OSHA Offers Top 10 List of 2011 Work Place Violations

By Edward M. Ranier 
NFDA Special Counsel for OSHA

Washington, D.C. – OSHA recently announced its top 10 most recently cited standards following inspections of workplaces during federal OSHA inspections for fiscal year 2011.

Of the listed safety and health violations, those most affecting funeral service would be number three, hazard communication, and number four, respiratory protection. Funeral directors have also been cited for violations of number six, electrical: wiring. In this last category, the most cited violations for funeral directors would be the impermissible use of extension cords where permanent wiring is required and electrical grounding violations.
For funeral service, the violations issued under the Hazard Communication Standard usually include a failure to have a written and annually updated hazard communication program and a failure to obtain and have on site the required ma¬terial safety data sheets for hazardous and toxic chemicals. Funeral directors have also been cited, under this standard, for failure to do required employee training.

For respiratory protection, violations issued against funeral service usually involve the voluntary use of respirators, usually for protection against formaldehyde, when no respirator is actually required due to acceptable measured levels of formaldehyde in the preparation room. The violations under the Respiratory Protection Standard issued against funeral homes usually involve a failure to have a medical evaluation of the employee before allowing the employee to voluntarily use a respirator, and a failure to provide the employee and train the employee with compliance of Appendix D of the Respiratory Protection Standard, which requires that after an employee has been medically cleared to voluntarily use a respirator that the employee read and heed all of the instructions provided by the respirator manufacturer regarding the use, maintenance, cleaning and care of the respirator. The respirator must also be actually certified for use against the contaminant of concern, the user must not wear the respirator into atmospheres containing contaminants for which it is not designed to protect against, and the employee user of the respirator must keep tract of his or her respirator so that he or she does not mistakenly use someone else’s respirator. Appendix D goes on to state that the respirator itself can become a hazard to the worker if it is not used properly and kept clean.

While not in OSHA’s top 10 most frequently cited violations, funeral service also receives, as we have seen in the past, citations for violations of the Formaldehyde Standard and the Bloodborne Pathogen Standard.

Crash Kills Life Appreciation Training Founder Bill Bates
Vero Beach, Fla. – Bill Bates, president of Life Appreciation Training, died Nov. 25 in a one-car crash west of Vero Beach, Fla. According to the Florida Highway Patrol, Bates car crashed into a front-end loader near a rural intersection where the road is closed to replace a bridge crossing a canal.

There were no other passengers in the vehicle.

The front-end loader was blocking the roadway because the bridge was out, troopers said.

Bates founded Life Appreciation Training in 1974, which stressed personalized funeral practices. Its training programs are designed to prepare funeral arrangers with the latest insights and abilities to serve a dramatically changing consumer. LAT’s mission was “maintaining the belief in funeral service through the creation of highly innovative, individualized funerals.”

A memorial service for Bates is scheduled for Dec. 3 at noon in the chapel of the Unity Center of Vero Beach.

The Notebook

Lemasters Consulting, Cincinnati, is holding its third annual coat drive. Owner Poul Lemasters has donated new Old Navy coats to local Cincinnati-area adults and children in need for the past two years, but this year, there is added incentive to join his efforts. “A new winter coat might seem like such a small thing, but to someone who does not have a coat, it often equates to more than just warmth,” said Lemasters. Lemasters Consulting clients can receive a discount on their bill of up to $200 if they purchase a gift card at Old Navy and send it to Lemasters Consulting by December 5. Poul Le¬masters will then purchase coats from Old Navy using the gift card and match the dollar amount contributed to double the number of coats. Donations will go to Cincinnati adults and kids through the Cincinnati Chapter of the Society of St. Vincent DePaul. Friends of Lemasters Consulting are also welcome to send in gift cards, and Lemasters will match the donation amount up to the $200 for a total of $5,000, which is this year’s goal. “We’ve purchased coats through Old Navy each year because they are so great about supporting our efforts so we can buy even more coats,” Lemasters said. The coat drive runs through December 5. Gift cards may be mailed to 142 Spyglass Ct., Cincinnati, OH 45238.

Distracted driving continues to be a public safety issue that costs business owners millions of dollars each year. A 2011 study by Federated Mutual Insurance Company, Owatonna, Minnesota, revealed that 50 percent of commercial driving accidents included distraction as a contributing factor – more than weather, failure to yield and following too closely combined. Federated has created a comprehensive program called “Distracted Driving – In the Blink of an Eye” to help businesses address the risk exposure distracted driving can have on their companies. The program is designed to help Federated clients reduce claims and the related costs of distracted driving by setting high standards for driving company vehicles. This program includes a compelling DVD and packet of materials with everything a business needs to conduct an impressive employee distracted driving safety meeting and new-employee orientation. Federated marketing representatives will deliver a copy of the DVD and support materials to insured clients beginning in early 2012.

Accubuilt Inc. manufacturer of specialty-built funeral coaches and limousines, presented its annual top dealer awards at the company’s dealer sales meeting October 24 at the Hyatt Regency in Chicago. The dealer awards are separated into three unique categories. The award for the 2011 Dealer of the Year was presented to Vaughan Specialty Auto from Al¬varado, Texas. Criteria for this award include overall market performance, sales performance and salesperson hiring and retention. The 2011 Top Volume award went to Specialty Hearse and Ambulance Sales Corporation of Plainview, New York, for its sales volume achievements. The 2011 Top Performer in Commercial Glass category was won by Ambulance and Coach Sales of Nashville, Tennessee, which sold the most commercial glass of all dealers with its one-of-a-kind hearse application.

The Pittsburgh Institute of Mortuary Science has announced that Spencer Jones of Verona, Pennsylvania, who is presently in the school’s associate degree program, was awarded the Fred Donatelli Scholarship after writing a paper on “Marketing Cremation in the New Millennium.” Fred Donatelli, owner of Pittsburgh Cremation Services and F. Donatelli Memorials, established the scholarship for students from PIMS who wish to continue their education and earn the associate in specialized business degree in funeral service management.

From the Editor’s Desk…Remarkable Consistency

Last week, we reported two recent OSHA citations and penalties issued against funeral homes. The first was issued against a Pennsylvania funeral home as a result of an inspection made under a local emphasis program for bloodborne pathogen compliance. The initial total penalty was $5,400. All three issued citations and pen¬alties in this case were issued under Bloodborne Pathogen Standard 1910.1030 and all were categorized as serious violations.

The second OSHA case involved citations against a Georgia funeral home and was the result of a formaldehyde-emphasis inspection. As a result of that inspection, two serious violations and one other-than-serious violation were issued by OSHA, with a total initial penalty of $7,800.

As reported by Edward Ranier, NFDA OSHA special counsel, these citations and penalties, along with the ones previously reported, confirm that “OSHA is serious in its enforcement of its standards and regulations against funeral service and con¬firms the existence of local emphasis programs for both formaldehyde and blood¬borne pathogens.”

This week, Ranier reports on OSHA’s top 10 list. Not to be confused with any¬thing David Letterman reads on TV, the OSHA list cites standards violations fol¬lowing inspections of workplaces during federal OSHA inspections for fiscal year 2011. Of the listed top 10 workplace safety and health violations, those most affect¬ing funeral service would be number three, hazard communication, and number four, respiratory protection. Funeral directors have also been cited for violations of number six, electrical: wiring. In this last category, the most cited violations for fu¬neral directors would be the impermissible use of extension cords where permanent wiring is required, and electrical grounding violations

Here is the 2011 list (
1. Scaffolding; 2. Fall Protection; 3. Hazard Communication; 4. Respiratory Pro¬tection; 5. Lockout/Tagout; 6. Electrical, Wiring Methods; 7. Powered Industrial Trucks; 8. Ladders; 9. Electrical, General Requirements; 10. Machine Guarding.
If there is one thing this list points out, it is that OSHA is consistent. Here is the 2010 list:
1. Scaffolding; 2. Fall Protection; 3. Hazard Communication; 4. Respiratory Pro¬tection; 5. Ladders; 6. Control of Hazardous Energy – Lockout/Tagout; 7. Electri¬cal, Wiring Methods; 8. Powered Industrial Trucks; 9. Electrical, General; 10. Ma¬chine Guarding.
In 2009, the list went something like this:
1. Scaffolding; 2. Fall Protection; 3. Hazard Communication; 4. Respiratory Pro¬tection; 5. Lockout/Tagout; 6. Electrical Wiring; 7. Ladders; 8. Powered Industrial Trucks; 9. Electrical, General; 10. Machine Guarding.
Back in 2008, the only change to the top three was that hazard communication was the second most cited violation, while fall protection was in third place.
While these lists clearly show what OSHA is looking for, they should also serve as a warning on what you should be aware of in your operation.