Funeral homes and cemeteries have changed vastly over the last few decades, with continued evolution expected as the purchasing and decision-making power of the millennial generation increases. In turn, funeral home and cemetery owners, like yourselves, are evolving their businesses to stay relevant. But where, and how, do you get started?
At Live Oak Bank, it was evolving industry changes and witnessing the increasing pressure on funeral home owners to stay relevant that prompted us to enter the funeral profession many years ago.
Our Funeral Home and Cemetery Lending team understands the funeral profession and what funeral business owners need to succeed. Our team is comprised of individuals who are experts in the funeral profession and finance, which allows them to work closely with owners and operators to help them improve cash flow and grow their businesses.
How we work with customers
Our customers are the reason we are in this business. We understand that our customers are dedicated to seeing families through the hardest of times. As a result, Live Oak is dedicated to serving our clients so they may focus on each family who walks in the door.
As the general manager for Funeral Home and Cemetery Lending, Tim Bridgers is focused on leading his team to understand and meet the business and financial needs of each funeral business owner. Tim joined the bank in 2014 with more than ten years of valuable business and entrepreneurial experience. He is a former business owner and developer of two successful companies, and he understands the challenges business owners face. He is dedicated to ensuring that small business owners in the funeral profession become and remain successful.
Live Oak encourages its employees to be entrepreneurial-minded while constantly keeping the customer at the center of their attention – treating every customer like the only customer.
That’s an idea that Tim consistently promotes with his team and with each of his customers. Legacy also means a great deal to Tim. He enjoys lending money to funeral homes and cemeteries on behalf of Live Oak Bank and preserving the legacy of businesses that have been in operation for over 100 years.
Each business is a different story – how Live Oak approaches refinancing
When determining the price tag on a loan, lenders should consider more than tangible assets or real estate value. The goodwill of a business is also an important part of the equation.
At Live Oak, Loan Officer Nick Padlo recognizes how vital it is to consider every aspect of the business along with the nuances that make each funeral business unique.
Nick joined Live Oak Bank in 2014 and works closely with funeral home and cemetery owners to find financing solutions that fit each borrower’s unique situation. One great example of Nick’s work came when he was approached by a customer to refinance debt originally allocated toward real estate. Working closely with the customer, Nick identified that the original loan proceeds warranted a fully amortizing 25-year loan. The customer previously struggled to make loan payments due to the short amortization period. After working with Nick and Live Oak, the business has an improved cash flow, allowing the owners to reinvest in the funeral home.
In addition to Nick’s financing expertise, he supported several different customer segments prior to joining his current team. He served as a relationship manager where he assisted healthcare customers in the Northeast and worked as an underwriter for Live Oak’s Agriculture team. Nick understands the challenges of small business owners and is inspired daily to help funeral business owners seeking ways to grow.
Funeral home acquisitions: From plans to reality
Acquiring a business is just one of the many things that Live Oak helps its customers do every day through financing and industry-focused support.
No one on the team is more familiar with this process than Loan Officer Sarah Andrews.
Sarah was working closely with a customer who was interested in acquiring a funeral home business with two locations. The purchase price was $1.6 million, and Live Oak was able to provide financing for the purchase of the business assets, real estate, working capital and closing and soft costs. The new funeral home owner worked with Sarah on a seller carry note which saved him a 10 percent equity request and provided a reduction in capital gains tax. Ultimately, the borrower was able to fund the project and maximize his investment fully.
As a member of the funeral home and cemetery lending team, Sarah evaluates loan applications for cash flow, credit and competency of the borrower to originate new loans daily. Before joining Live Oak, she worked as an accountant for a tax consultant and forensic accounting firm, as well as in finance at a property management firm in the Southeast. She also holds her North Carolina CPA license, which is valuable for evaluating financial statements with customers and determining loan programs that can improve their financial performance.
Funding expansion: Building on success
One funeral home owner, whose business was established over a century ago and maintained by his family for over half that time, realized that his three locations were no longer enough. Given the growth experienced over time, the owner sought to improve business and better serve the community with the addition of a fourth location. Understanding the unique needs of the specific market, the funeral home owner wanted the new location to offer an on-site crematory to accommodate the rising cremation rate in the area.
As a loan officer specializing in the funeral profession, Live Oak’s Meghan Cowan worked hand in hand with the owner to calculate what it would take for the new location to break even as well as refinance existing debt in a way that provided a longer loan term at a more favorable rate.
By understanding the new market and improving the cash flow of the business, Meghan helped the funeral home expand, ensuring continued successful operations.
Ultimately, Live Oak will be able to save the owner over $35,000 per year by providing a longer term and more favorable rate, substantially increasing the cash flow of the business. The improved cash flow combined with additional financing for construction of the fourth location will allow the funeral home to expand, obtaining greater market share and ensuring continued successful operations.
Meghan joined Live Oak Bank in 2010 as a relationship manager in the bank’s servicing department. Meghan has also served as an underwriter and credit officer, providing her a thorough understanding of the loan process. As a loan officer on the Funeral Home and Cemetery Lending team, she evaluates loan applications for cash flow, credit and competency to determine the best financing options that will ensure continued success within the funeral business operation.
For Meghan, the most enjoyable part of her role at Live Oak Bank is working directly with small business owners. There she finds a unique level of passion which is characteristic of someone building a legacy. She recognizes that her customers are committed to something greater than themselves and devoted to their clients, who have come to them in their darkest hour. Like the rest of her team, Meghan finds it rewarding to work alongside such selfless people in the funeral and cemetery profession.
Pictured from left to right: Nick Padlo, Sarah Andrews, Tim Bridgers & Meghan Cowan
Now that you have met the Live Oak team and have had a glimpse of what the team can offer, we’d love to meet you! Visit our funeral home and cemetery loans page to learn more or contact us to discuss your specific growth needs.