July 1, 2024 • 36 mins
In this episode of the Prime Partners Podcast, Jordan Cordero of Live Oak Bank shares the importance of strategic succession planning for small business owners and how leveraging business loan options can facilitate the smooth transfer of business ownership.
The conversation highlights key insights into how proper financial planning and understanding different loan structures can significantly broaden potential buyer pools, making the transition more manageable for sellers and buyers. Whether you’re currently contemplating the future sale of your business or just want to be prepared for when the day arrives, learn how staying on top of business loan options can position you to one day make a smooth exit from your business.
Time Stamps- 00:00 - Introduction
- 03:16 - The importance of succession planning
- 09:00 - The economic impact on succession planning
- 11:35 - Pain points in obtaining business loans
- 25:05 - What sets Live Oak Bank apart?
- 32:31 - The first step in proactive succession planning
- 35:14 - Closing remarks
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:05):
Bd r prime partners podcast
delivers insight on services,
resources and business practices that can help your
company succeed faster.
Listen and learn for ways to take your
company forward.
Welcome to the Prime partners podcast.
I'm Tyler Gun who's Bd Senior Marketing
communication specialist.
(00:25):
Excited about our episode today, and our guests
that we have joining us today. We are
talking
strengthening your silly session plan with knowledge of
business loan options. And we are joined by
Jordan Cord. He's a loan officer of service
contractors at Live Oak Bank. Jordan welcome to
the podcast.
(00:47):
Appreciate you got having me. I'm a I'm
I'm excited for it. I think this is
a a huge topic within our industry now.
So I always get excited about these types
of conversations I'm glad to be here.
I'm excited as well. I think this is
gonna be a great insightful
conversation for
a lot of contractors out there, a lot
of people who are are looking down the
road, looking at their future.
(01:09):
So before we jump in, would love to
have a you just kinda give a little
bit of background on on yourself and,
what you do and and the role they
both you and Live oak play in our
end into tree.
Yep. Absolutely.
So I... Like you said already, My name
is Jordan, and I'm a loan officer on
our service contractor team Lottery oak bank. I
(01:31):
mean, we've been we've been a partner with
B since 2019.
So it's been a great partnership been able
to work with 5 work with a lot
of, a lot of y'all members and it's
really been a great experience with you guys
overall.
But really, the the
this place that we play within the home
service market is,
we are a bank that is focused on
helping small business owners grow.
(01:53):
And here at Live oak Bank. We
we make ourselves unique because we have industry
specific lending teams at the bank. So we
have a team at the bank balance to
veterinary practices
team of the bank owns self storage facilities,
investment advisor, Cpa,
a little over 30 different industries specifically.
But my team at the bank we've focused
on providing business financing for home service companies.
(02:16):
So home service companies and business owners want
to grow their company. Maybe they want to
acquire another company or maybe they wanna buy
a piece of commercial property that they operate
out of. But let's say they want some
working capital was to invest back in marketing,
tech training there things like that.
We help with those situations, but a big
thing that we help folks with is
succession plan financing.
(02:37):
So how can you as a business owner
successfully
transition your business to the next generation.
Maybe that's your general manager? Maybe that's your
family member, another internal employee.
We help, facilitate that transaction and help you
the business owner get paid and we help
that new owner who wants to acquire the
company purchase it else with with bank financing.
(02:59):
So that's the that's the place that we
play within the home service market.
I love it. And and that second part
that we talked about, which we're gonna spend
today's conversation. Mostly focus on that,
succession. When you and I first started talking,
we're gonna record an episode and,
we're, like, what what can we focus on
(03:19):
with
bank loan financing and and some of the
roles that you guys play in the industry.
This succession planning side was was newer to
me.
And and I think it would be newer
to a lot of people out there who
just say, well, I just wanna grow my
business and then I wanna sell it and
and be done with it.
(03:39):
But but it sounds like there's a really
critical part where you can be proactive
in this process,
not just waiting for somebody to either go
out and get
the loan that they need to acquire your
business when you're ready to sell and, move
on,
but but rather, you can you can kinda
take to an active role in that process.
(04:01):
And I thought that was so interesting. So
I'm I'm really excited that we're gonna dive
into this today. But
but the first question I think I have
for you is an,
you know,
why should business owners who are
kinda starting to think about that process.
At transferring, selling their business,
why should they be
(04:22):
involved, think like, what's the benefit of their
involvement and and them starting the process of
thinking about succession planning and and and collaborating
with with a a great group, like Live
oak bank on. Yeah.
So I think going going off your point
before you before you state to the question,
like you said, most most break people within
our industry. They're focused on her own the
(04:45):
company. They wanna grow their business as as
big as they can,
they wanna focus on treating their customer right,
focus on their employees and things like that
and they get so stuck in that. That
they're not thinking about what their next...
Their next
career change is gonna look like hers what
their next step is gonna be when they
get to a point where it's a, you
know, I it's it's my time. I've... I've
(05:06):
done my time within this business, and
I wanna transition it to the next or
to the next generation. People aren't really thinking
about that. But it's so important it because
what we've see in our industry now is
that people will spend their whole life building
up the brand in their,
building up their customer list. Their employee base,
their revenues, their cash flows. And business owners
(05:26):
will pour blood sweat and tears into these
companies
often at the end of the day, when
they get to an age where it's time
to retire, they don't know how to how
to facilitate that change of ownership.
Obviously, you now in our space right now
is... And private equity groups are the ones
that are coming in with with cash and
they're they're buying out,
buying out companies, which is a great option.
(05:46):
A great option to some folks, but some
folks wanna sell to their internal employer or
wanna sell to their their family number or
something like that,
which person probably doesn't have if you got
a business owner that wants to sell for
a million bucks.
That person probably doesn't have... The knowing bucks
in cash. Sitting on the side for them
to just, hey, pay you. You go off
into the sunset, you fly out to Hawaii
(06:08):
drinking, you know, in drinking Out on the
beach. It's doesn't really it doesn't really work
work like that. So by understanding different loan
options as a business owner, you open up
your pool of buyers so much more because
are a ton of qualified buyers out there
that have to utilize some sort of loan
to take over to take over your business.
(06:28):
And that person could be, like I said
that Gm or the internal employee, qualified buyer,
they have to understand the loan options if
they had because if that's somebody that you
ultimately wanna transition your business to, that is
how you were going to get paid to
exit your company.
Right? It's either that option or it's the
option where you hold back a seller note,
(06:48):
and let's just say, hey. You sell your
business to that general manager or that internal
employee for a million bucks, and you say,
hey, just pay me over the next 10
years.
Well, you're you're taking on that risk there.
You're not getting your full 1000000 bucks up
upfront, and that person is having if pay
you over time,
which could be really risky to to a
seller.
So very long winded answer to say that,
(07:10):
hey, understanding the loan options is gonna be
crew, when you're thinking about
planning for your next career remover or planning
for that transition to the next generation. Typical
Awesome. Yeah. That's a a lot of great
information there.
I think 1 of the big things that
you hit on there at the end too
is
(07:30):
you know, some of the different routes that
business owners will go
in
transferring their business. In succession planning.
First off, I I think most people dealt.
We use the term succession planning, but there
really isn't a plan sometimes and till... Yeah.
You know, we get that point, and it's...
You know, we we at Bd in the
(07:50):
coaching and training space of experience this where
don't always have a plan. We're just, you
know, we're kinda going along and and all
of a sudden, it's like, maybe else, you
know, maybe I'm ready to sell or maybe,
you know, we very few people are are
structured and and laid out where they're thinking.
Alright. I'm I've got this target date or
I've got this gold. To to look out
there. And so
(08:11):
what I love you sharing about that is
the the different ways that people can think
about that, the
and and the the seller note that you
mentioned, the the,
basically, the owner finance,
version of this where... Alright, I'm gonna get
paid.
There's more risk there. There's more
(08:31):
you know, there's
a lot of things that could go wrong,
there's strange
relationships.
And I love what you introduced here is
that if you as an owner take a
proactive approach,
in in starting this process,
then you have the opportunity not only to
get what you are looking to get up
upfront But you just set your... You set
(08:51):
the next person up to be successful in
that role as well because there's not, you
know, the former owner kinda peeking over your
shoulder the entire time or,
you know, it's it's kind of a clean
slate forever every. Everyone well, And I think
that's probably 1 of the other great benefits
about going this route is is you just...
You start and you head in a direction
that that can be... That's what everybody is
(09:14):
looking for. Yeah. We look at it too
is it whenever you're going to transition transition
your business.
There's 3 ways you can get it done.
You have the person that's coming in, and
you have the person that's paying cash for
the business. So think about it like you're
your private equity group or say, hey. Wire
your company, We'll cut you a check. And
in 7 days, you'll be able to
(09:34):
collect on your money maybe they have you
stick around for a little bit or maybe
they have you completely exit the business.
That's the first wave. The second way is
you can sell our no for any it.
So the seller, you want, again, you wanna
sell your business for a million bucks. You
hold back that note and whoever you sell
your business to, just pays you over time
for whatever terms you agree to.
Which is really like I kinda alluded to
(09:56):
previously, that's really risky because if you don't
really know the person you're selling to, Like
yeah. You sell it to your general manager
or your family member. It's a little bit
easier because you probably have some trust within
that... That person already, You have a relationship.
But if you sell our. No finance your
business to somebody you have no idea who
you're selling to, could be really risky for
you because what if that come... That what
(10:17):
if that person takes over the business
or and they run into the ground. And
now you're having to come out of retirement,
step back into the business, turn it back
around, and you don't have anything to show
for what you've previously built.
That can get risky, but people do transition
a business that way. But then you have
the... Again, the third person, or the third
buyer pool where the ones that very qualified,
(10:39):
understand what comes with running a business, what
comes with running a home service company,
but they don't have a ton of money
to put into it. They can take out
a loan. They only have to come in
with as little as 2 and a half
percent to the project,
and then they can seller gets paid at
closing. They can stick around for a little
bit to help with the change of ownership,
but they're paid, they can kinda just work
(11:01):
the business as them in the... Or them
and the buyer agree on,
but they've got their money. So there's really
no no risk to them now if something
does go wrong with a new buyer, banks
taking on all the risk for that situation.
Yeah. So
Love how you outline there the the different
options so that that people have. And
obviously, different things are gonna work for... Different
(11:23):
people, but it sounds like
if if you're an owner,
and you're you're looking down the road as
you can start that
conversation and thinking about those loan options, it's
going to benefit the person coming in, it's
gonna benefit you,
and a there's just gonna be a lot
of really,
(11:43):
potentially... You're you're gonna be well set up
in this situation to have a successful. Transfer.
So... Absolutely. Yeah.
So, Jordan, I wanna get into a little
bit of this because you're... I mean, your
your finance guy, your bank guy?
And what, you know, just like the the
guy who
is
in, you know, what
(12:04):
I'm I'm I'm in the marketing field. So
I'd I get a lot of questions from
people about, like, social media and marketing. I
would imagine you as a bank person. Get
a lot of questions about the economy right
now and and where we're at and where
things are heading, but
wanna know kind of from your standpoint, complaints?
What you are seeing what Live oak bank
is seeing and and what's taking place right
(12:26):
now.
How much is the impact of the economy
over the last 12 months,
between interest rates and and the changes in
private equity, How has that change the market
and how
contractors should think about moving forward
in this succession planning process.
Yeah. So I think to to start with
that. Should we all wish we had a
(12:47):
crystal ball we could sell over the next
6 to 12 months look like.
We're hoping as a... Bang. We're hoping that
we're at the peak of the interest rate
environment. That things are starting to starting to
climb down a little bit see... We'll see
what that looks like, but
we've heard Dennis supposed to come down a
little bit by the end of year. So
I think that's been the biggest thing. Is
(13:08):
the rise the rise in interest rates has
obviously had everybody thinking about
thinking about when the right time, not even
just about... Business or to transition their business,
but think about the the mortgage mortgage rates
too.
Like, just interest rates are up in general,
by So people obviously think about those things
all the time and
really to put it in to put it
(13:29):
into perspective, I guess, just to say to
start,
the interest rates have
obviously, rose significantly,
over the past 3 years.
Now all all all the loans that we
do from... We use an Sba product, which
is a government guaranteed loan. And all of
the loans that we do we're gonna be
based around the Wall Street Journal prime,
(13:50):
which to put that in perspective Right now,
that rate is 8 and a half percent.
So which is significantly higher than what it
has been the last couple years. So I
would say about a year ago, the rate
was about 7 and a half percent. Early
20 20, they're rate was as low as
3.25
percent.
So you can you can see what the
changes look like and its increased.
(14:14):
Now what's what's really happened within our markets
since we since we really focus on this
space is
we thought that, things were gonna slow down
from an acquisition standpoint or from a succession
succession planning standpoint. Maybe people were gonna wait
to transition their business or maybe people were
gonna wait to acquire another company because rates
were higher.
We are
(14:35):
busier now than we have been since we
started providing financing in this space in 20
19.
I would say 1 thing that it is
really affected is the commercial real date side.
People people will price shop a
mortgage per s, a little bit more than
they wait for business.
So we still doing... We have tons of
(14:57):
people that are still
transitioning their business tons of people that are
still growing through acquisition. I think 1 thing
that it is really affected.
It's affected the price that somebody is able
to pay for a company.
Or the amount of debt that somebody is
able to take out on an existing company.
So for example,
if you were to buy a million dollar
(15:18):
company
a year ago at, let's just say or
let's just say 2 years ago in early
20 20 at a 4 percent rate versus
if you bought a million dollar company now
at a 9 percent rate. Your difference in
a yearly payment is about 30000 bucks.
So it's pretty significant. So the amount of
the amount of debt that somebody is able
(15:39):
to take on that same company now.
Is going to be lower than what it
was in early 20 20.
So now people are still wanting to get
deals done, and they're still wanting to acquire
a cup and trans in their business.
But now we're having to get a little
bit more creative with the structure.
Meaning, hey, maybe previously we could give somebody
alone for 90 percent of the business purchase,
(16:01):
and they only had to come in with
about 10 percent. Or now maybe as we
can only do 85 percent and that person
has to in with 15 percent.
Or maybe is a situation where we still
do the 90 percent loan,
but maybe the seller holds back all of
it. Maybe if you're selling a million dollar
business,
maybe the seller holds back a hundred thousand
bucks of that because we have to get
(16:23):
a little bit creative with it. So I
think both buyers and sellers and banks are
getting creative with how they can structure a
loan, but ultimately,
people are still looking to acquire home service
companies.
You have non industry folks that are getting
into our industry now.
You existing people who are still looking to
grow. I think ultimately, folks are still looking
(16:44):
to do it. It's just a matter of,
how they're able to get that deal done
now and they're having to get a little
bit more I love the the creativity
that that comes into play there and and,
obviously obviously, it's probably not the ideal situation
with where. Interest rates are at. The reality
is,
that is the reality of where things are
(17:04):
at. And and so we either have a
choice of we're just gonna sit back do
nothing, which is not going to be
not gonna be the case on how things
move forward or we just have to look
at things from a different angle and a
different perspective. And I I love that hit
on that. I think that's such a such
a
hopefully, a reassuring thing for people out there,
(17:25):
knowing that, you know, if I had this
plan,
talk about this all the time. I've I've
had some conversation with my financial Adviser. And,
you know, we talk about as you... How
you structure
your
individual
financial situation as your prize that retirement age,
and you you position yourself so that if
the market were to
(17:45):
decline or
or go into a recession, like, you're still
protected your search still covered. It's not like
I'm going into retirement. Well, now I can't
retire because if how this things has what
the economy has done. And I feel like
you kinda wait you're saying here too is
that
people shouldn't feel like they missed out on
the opportunity to sell the business when they
(18:06):
did. You're when interest rates are low,
when private equity was just going nuts, knocking
down people's doors
over the last 2 and a half, 3
years. Like there are still opportunities now, and
there is still going to be those opportunities
going forward. It just... Requires a little bit
more creativity
from both the buyer, the seller and the
(18:28):
finance.
Absolutely. I think you hit that. You hit
the nail on the head there. It's...
People are still looking for these opportunities and
people are
people are finding that they're hard to come
by. Like, I have a lot of existing
customers who wanna acquire a company. They're like,
man. I can't... I just can't find a
find a business. I can't find a a
quality business to buy.
(18:49):
So, like, if you're if you're a... If
you're a quality company, you were gonna have
those, you're going to have those opportunities whether
whether the rates are higher, what the rates
are low. They're they're gonna be there. It's
just a matter of finding the right buyer.
We we think a lot of times it's
easy for us to finance the a general
manager who's already running the company, that change
of ownership is fairly easy for us.
(19:11):
Just a matter of finding that right person
and being willing to get a little bit
creative with the structure to get to that
purchase. Price that you want. Those are some
some big things.
Absolutely.
So I wanna I wanna kinda talk here
to about
price
1 of the 1 of the things that
you and I had talked about in in
(19:32):
some of our conversations, and we
saw each other at Spire work this year
and had had couple of other places that
we interacted with. But great event by the
way. Spark. Also. I... 1 of the talk
events in the industry. Love it. Love having
you guys there every year and getting to
connect with you there is is really exciting.
But
the up
(19:53):
1 of the things that you've really that,
like, really kinda poked the bear inside of
me
was we we talked about the experience that
most contractors have. You know, whether they're looking
at succession planning, whether they're looking at acquisition
and growth,
there are some real challenges and some real
pains
(20:13):
that can come
with
growth, expansion,
acquisition, 6 challenges and planning,
when trying to
obtain financing or work or bank loan financing
or work through that process assess.
And what you were kinda telling me is
somebody who's never bought an Hvac business who's
never actually
(20:34):
sold an Hvac business either
those experiences that contractors can have and unless
you've been in that
situation you wouldn't have experienced it before. It
kinda makes you like... Oh, that's kind of
frustrating. But what are some of those pain
points that you see when contractors come to
you that they mentioned that they've experienced when
trying to navigate
(20:55):
frustrating the business loan process.
Yeah.
I was... The biggest
how we always,
related is all these contractors have a relationship
with their local banks.
The person who holds their operating account, they're
checking accounts, savings accounts and things like that.
(21:16):
A lot of these local banks, they won't
specialize
small business lending. Like, they have a team
that might do a couple of small business
loans. But whenever they're trying to get and
do an Sba loan. It's not something that
they have expertise in.
So whenever you have... I relate it back
to
changing out a heating and air unit. If
(21:37):
I have to get my my ace my
Hvac system replaced.
I only know what needs to be done
based off what that tech comes out and
tells me it needs to be done. I
don't have any
expertise on
changing out an Hvac system.
Outside that back to banking.
If a... If contractor is looking to obtain
a business loan.
(21:59):
They go to their local bank who doesn't
have any sort of banks expertise and small
business financing.
They only know what they're being told from
their banker.
So if they're not being presented all their
options, they don't even know there's options available
to them.
So that's that's the 1 of the that's
1 of the biggest things. And
I think another big thing that folks will
(22:19):
run into within art space is that
if you do find a lender that that
focus is on business financing.
9 times out of 10, that person is
going to be a general lender.
Where they might look at your home service
company and next day, they might be looking
at a car wash or next day they
might be looking at a veterinary clinic. They
have no real focus on the industry, and
(22:40):
they have
no true understanding of our space. So whenever
you go to that person and you're trying
to get... You're trying to get a loan
for an Hvac company, to acquire an Hvac
company.
First thing that person gonna tell you is,
like,
What type of collateral do you have to
to secure this loan? Like, there's not a
lot of value within the customer list, the
(23:00):
employee base, the revenues and things like that?
They want like collateral to secure loan.
And we know within these Hvac companies,
the tangible value that hard collateral is like
the trucks.
Saw a million dollar business, you might have
a hundred thousand dollars in t say you
could pledge just collateral per s,
which a lot of times of local lending
doesn't have any interest in that. So they
(23:22):
can't push it away,
where
we see that being a a big pain
point because they don't understand the the home
sir service industry. You're having to explain to
them once your business model is every time
you go in, you go and talk to
them. So you're having to explain the difference
from a new construction company and a service
company. If they group it all into 1.
(23:43):
They don't they don't understand it or maybe
you're having to explain the seasonality that you're
that your company sees.
Common thing.
So I think when you're dealing with somebody
who doesn't necessarily have a focus on that,
It can it can be a little bit...
They can be tough on a contractor
because they're feeling like they're talking to somebody
who they can't really relate to.
(24:04):
So that'll be a that'll be a big
thing and a big pain point that we
see where
we try to bridge the gap. We have
a have industry specific teams. If I'm talking
to a home service company, that's the only
type of company I've been talking to this
whole week. We So I can I can
relate to you? I understand what you're what
your pain points are as a business center.
I understand the seasonality that you see. And
(24:25):
just by
that type of,
understanding and that type of knowledge on the
specific industry, you're able to talk to these
people a little bit easier.
You're able to connect with him a little
bit. A little bit more versus how they
would be able to. It's somebody who doesn't
really understand it.
So really long winded it answer it to
say that, hey, I think it's... The pain
points are 1,
(24:47):
they're they're probably talking to somebody who doesn't
necessarily understand their industry so they might not
being... They might... They're not being presented to
all the options that they that they have.
And then,
Theresa 2, again, it's... You're not... I guess
there's 1... I guess that's my main point
is
they're not industry focused. They're not able to
(25:09):
present you have what you what you need
to to understand whenever ever you're looking to
obtain business financing.
You
I think that's some great points that that
you hit on there. And
you know, this is a,
if if you're if you're looking to grow
your business and you wanna,
you know, go out and acquire another company
(25:30):
and you're gonna be using,
but,
a bank and and a alone to do
that or if you're planning for your succession,
that's a big decision that you're making. That's
a big step that you're taking.
I always an equate this back to my...
Or, think about it in the terms of,
when my wife and I were preparing to
buy a house.
(25:51):
We remember we were talk with some friends.
And we're asking about, like, realtors and and
and
we're trying to find somebody. We we felt
like it was gonna be a good fit
for us. And and they had bought and
sold a number of properties and the number
1 thing that they told us is,
you know, del don't bring on you your,
you know, know, your cousins,
(26:13):
sisters niece,
who just got her real estate license,
you know, people people wanna have opportunities to
to learn and to grow, but this is
1 of the biggest decisions that you're going
to make.
You you can't afford to
put yourself in a position where you don't
have somebody who's prepared to
go to bat for you to to fight
(26:34):
for you to to get you, present you
with the options, the different offers, everything that's
going on during that process.
And every... From everything that you've told me
too, it it feels like it's the same
way with,
when we're looking to secure a loan for
our growth for our succession planning. We can't
afford.
To be in a situation where we're dealing
with somebody who doesn't understand our business,
(26:57):
who doesn't understand the market, who doesn't understand
the process,
but
at all.
I love I love that point because you
really gotta get... Like you're saying this for
for a lot of people this is going
to be the biggest
the biggest transaction in their life. They have
worked their whole life building up the brand
of this company.
(27:17):
They have poured everything into this company. And
you've gotta get people that are that are
on your team, people that are in your
corner and want want to genuinely help you
and have experience to help you facilitate that
that change of ownership. So there's a lot
of folks that we work with within industry
that we look at as a team. Like,
you've got the people that can give you
a good... There's a good valuation for your
(27:38):
company. Run the numbers for you. You got
the attorneys that can help you with a
specific structure. You've got the bank that can
say, hey, we can help provide the financing
for a situation like this. So at the
end of the day, you've just got a
have experienced people in your corner because this
is not a... This is the biggest... The
biggest transaction in your life. You wanna make
sure it's done right and you might be
the only time he get to do it.
(28:00):
Absolutely. Well, speaking of doing it right, I
wanna give us the, transition and give us
some time here.
To just talk about Live oak bank.
You kinda highlighted there at the beginning,
what you guys do and the role that
you play in the... Industry, But I I
think 1 of the big questions that I
would ask for you is, what what do
you believe it is that sets
(28:23):
you apart and sets the live oak bank
apart from other banks and institutions
that when it comes to business loans.
Yeah. So we we hear a lot of
banks. We've
we've been in business since 2008.
So we're we're a publicly traded company, We're
a large company.
We've... But we what we focus on is
small business financing. So how we really make
(28:45):
ourselves unique like I told you is that
we have we have industry specific lending teams
at the bank, which I can guarantee no
other lender in this country is going to
be focused on industry specifically. They might have
industries that they like Lending to, but they
are not gonna have a hard focus on
that industry and teams built around that industry.
So that's where we make ourselves unique is
(29:05):
we...
This is all I do. All day every
day, Myself and 1 other guy,
we focus on providing home service loans.
That's what we do.
And
I would say too what the product that
we use. We use what's called an Sba
loan. And it's a it's a government guaranteed
loan.
And it can be really
(29:26):
really time consuming if you're working with a
bank that doesn't do a lot of those
types of loans. But we've really streamlined the
process. We know what it takes to get
1 of these loans done, and we're we're
actually the a nation's number 1 Sba lender.
So we've done a ton of the... We've
done a ton of these ones since 2008,
so we have really,
we've really str mind the process. So
I would say that's the biggest thing is
(29:48):
we know what your business needs. We work
specifically when we this industry,
and
we've been working with Bd since 2019.
So we worked with a lot of a
lot of members. We've had a lot of,
you know, this growth financing
acquisitions, working capital, succession plans.
We've we've probably worked with 1 of your,
1 of your colleagues or for this that's
(30:09):
affiliated with Bd. So have a lot of
a lot of good customer customer testimonies as
well.
For yeah. A lot of lot of great
crossover
between the Bd and the Live oak teams
and
you know, what what we are committed to
and
this industry and the contractors we serve and
just really good alignment
(30:29):
between us and and between you guys and
it's been cool to see some of those
stories come out here over the last couple
of years about.
You know, we're we're we're going on. We're
we're 26 years now and now. And so
we've seen a couple of cycles of generations
coming into businesses,
selling businesses,
acquiring businesses,
(30:49):
and and to hear those those stories of
how how they were able to do it
right.
Was was a...
It's 1 of the, kind happiest moments for
us when we crucial and we hear that
that person got to take the next step
in their business.
And fulfilling. I... Yeah. It is fulfilling with
that is. Yeah.
So... Or well, Jordan, this has been an
(31:11):
incredibly insightful conversation. And, I hope some of
our listeners out that have have
the wheels started to turn in their minds
as they start to think about their future,
potential succession planning, But also even just in
the acquisition side, look like you talked about
or early on in the episode, you guys
do a lot in the market if if
(31:31):
people are looking to grow their business if
they wanna,
acquire, you know, another person in their market.
You guys work in that space as well.
We do. Yeah. Anything
any any ways that we can help a
home service service company grow. Working capital, grow
through acquisition, buying a piece of property,
that's what we. Specialize, and that's what we've
(31:53):
gotten really good at. So we're we're here
to help. We wanna... We've seen we've worked
with Bd members who we've seen at 3000000
bucks go to 10000000 bucks.
We've seen folks that are running its 10000000
dollar company that wanna sell to their internal
employees. So this is... These are real time
things that are happening. This that we we
get so excited to help with.
Yes. Absolutely. So I what I would I
(32:14):
would say in in closing out our our
time together here. I've got 1 final question
for You.
And you, you know, just like you said,
you... This is what you deal with all
day,
everyday,
serve contractors,
and and businesses,
what would be that first step for a
business owner that wants to be proactive,
(32:37):
with their succession planning when it comes to
to to utilizing business loan options.
Net.
It's never it's never too early to loop
me in on something.
If you've gone... Even if your plan is
you're thinking 5 years out, and you wanna
understand,
how you should prepare your business to be
in the best position
(32:58):
to get approved for a bank loan.
Is now too early to loop myself in.
I'm able to paint the picture for you
on what your business should look like what
you should be targeting.
B probably coaches on this a lot too
when she should meet targeting from a gross
profit standpoint, a profit margin standpoint,
how we how we would analyze your business
(33:19):
and how we would get you approved. I'll
be able to walk you through that situation,
but also as well, I'm able to paint
the picture for you on what the the
person buying your business to look like.
Because really, if you've identified that person that
she wants to sell your company, to, you're
able to understand what that person... What that
personal profile move like from that person
(33:40):
far as say, what should their credit score
look like?
Hey, how much money should they have to
put down. And when you think about that
years in advance, you're able to prepare for
that? As that person's able to start
saving up that money. Start working on their
credit score. You as your business, You're able
to clean up your financials. You're able to
show a bank and true picture. Of what
your business is actually doing from a profitability
(34:00):
standpoint.
So we always encourage encourage folks. We completely
free for people to reach out. We don't
charge a fee or review, to review your
business or or talk with you over the
phone.
We encourage people to reach out as early
as they want, and we can help paint
the picture form what they should be looking
for as they do approach, or as they
do think about, taking that next step in
(34:21):
their career?
Awesome. Yep. Never too early to to start
thinking about
any step in this process, whether you're looking
too
start planning your succession,
your exit strategy,
or even even acquisition, Maybe you've got dreams
of of how you want to grow your
(34:42):
business.
Never too early to reach out and start
having that conversation with a a team at
Live oak bank. Self
Jordan, I wanna thank you so much for
taking some time to to talk with us
and give us some some insights on on
L oak Bank and end this topic.
What are some good ways people could could
get into contact with you or or reach
(35:04):
out and get connected with live oak bank?
Yeah. So anybody can give me a call
on my cell phone number. My number is
9 01:03
584588.
My direct line, text. Call, whatever's is easiest
is. Also, my email is my first and
last name, jordan dot cord at live oak
dot bank.
So anybody, give me give me a shout.
(35:24):
I'm always happy chat.
Awesome, and
we will
continue the amazing partnership that we've had and
and being able to... Foster those relationships with
contractors both on the coaching and training side
as we do and on the
acquisition growth and and develop side as Live
oak bank does. So...
(35:45):
We appreciate appreciate you guys Bd so much.
You guys have a a great group of
people over there. Genuine, and you guys genuinely
wanna help contractors grow as well. And we
we appreciate the partnership with you.
Very cool. Well, Jordan, thank you again for
joining us on the to the podcast.
And to those of you listening out there,
thank you as well for joining us for
(36:05):
another episode of the prime partners podcast, if
you're listening over on Apple or Spotify, make
sure to subscribe so that you get those
new episodes hanging straight to your phone. That
was fun. I I forgot that we had
1 coming out an when we did yesterday,
and I got a little notification on my
phone. And so it was a fun little
surprise. So make sure you turn on those
fun little surprises well. If you are listening
(36:28):
on... Or if you're watching on Youtube, make
sure to subscribe here as well.
As always, thank you so much for listening,
we'll catch you again next time.
Bd r prime partners podcast
delivers insight on services,
resources and business practices that can help your
company succeed faster.
Listen and learn for ways to take your
company forward.
Welcome to the Prime partners podcast.
I'm Tyler Gun who's Bd Senior Marketing
communication specialist.
(00:25):
Excited about our episode today, and our guests
that we have joining us today. We are
talking
strengthening your silly session plan with knowledge of
business loan options. And we are joined by
Jordan Cord. He's a loan officer of service
contractors at Live Oak Bank. Jordan welcome to
the podcast.
(00:47):
Appreciate you got having me. I'm a I'm
I'm excited for it. I think this is
a a huge topic within our industry now.
So I always get excited about these types
of conversations I'm glad to be here.
I'm excited as well. I think this is
gonna be a great insightful
conversation for
a lot of contractors out there, a lot
of people who are are looking down the
road, looking at their future.
(01:09):
So before we jump in, would love to
have a you just kinda give a little
bit of background on on yourself and,
what you do and and the role they
both you and Live oak play in our
end into tree.
Yep. Absolutely.
So I... Like you said already, My name
is Jordan, and I'm a loan officer on
our service contractor team Lottery oak bank. I
(01:31):
mean, we've been we've been a partner with
B since 2019.
So it's been a great partnership been able
to work with 5 work with a lot
of, a lot of y'all members and it's
really been a great experience with you guys
overall.
But really, the the
this place that we play within the home
service market is,
we are a bank that is focused on
helping small business owners grow.
(01:53):
And here at Live oak Bank. We
we make ourselves unique because we have industry
specific lending teams at the bank. So we
have a team at the bank balance to
veterinary practices
team of the bank owns self storage facilities,
investment advisor, Cpa,
a little over 30 different industries specifically.
But my team at the bank we've focused
on providing business financing for home service companies.
(02:16):
So home service companies and business owners want
to grow their company. Maybe they want to
acquire another company or maybe they wanna buy
a piece of commercial property that they operate
out of. But let's say they want some
working capital was to invest back in marketing,
tech training there things like that.
We help with those situations, but a big
thing that we help folks with is
succession plan financing.
(02:37):
So how can you as a business owner
successfully
transition your business to the next generation.
Maybe that's your general manager? Maybe that's your
family member, another internal employee.
We help, facilitate that transaction and help you
the business owner get paid and we help
that new owner who wants to acquire the
company purchase it else with with bank financing.
(02:59):
So that's the that's the place that we
play within the home service market.
I love it. And and that second part
that we talked about, which we're gonna spend
today's conversation. Mostly focus on that,
succession. When you and I first started talking,
we're gonna record an episode and,
we're, like, what what can we focus on
(03:19):
with
bank loan financing and and some of the
roles that you guys play in the industry.
This succession planning side was was newer to
me.
And and I think it would be newer
to a lot of people out there who
just say, well, I just wanna grow my
business and then I wanna sell it and
and be done with it.
(03:39):
But but it sounds like there's a really
critical part where you can be proactive
in this process,
not just waiting for somebody to either go
out and get
the loan that they need to acquire your
business when you're ready to sell and, move
on,
but but rather, you can you can kinda
take to an active role in that process.
(04:01):
And I thought that was so interesting. So
I'm I'm really excited that we're gonna dive
into this today. But
but the first question I think I have
for you is an,
you know,
why should business owners who are
kinda starting to think about that process.
At transferring, selling their business,
why should they be
(04:22):
involved, think like, what's the benefit of their
involvement and and them starting the process of
thinking about succession planning and and and collaborating
with with a a great group, like Live
oak bank on. Yeah.
So I think going going off your point
before you before you state to the question,
like you said, most most break people within
our industry. They're focused on her own the
(04:45):
company. They wanna grow their business as as
big as they can,
they wanna focus on treating their customer right,
focus on their employees and things like that
and they get so stuck in that. That
they're not thinking about what their next...
Their next
career change is gonna look like hers what
their next step is gonna be when they
get to a point where it's a, you
know, I it's it's my time. I've... I've
(05:06):
done my time within this business, and
I wanna transition it to the next or
to the next generation. People aren't really thinking
about that. But it's so important it because
what we've see in our industry now is
that people will spend their whole life building
up the brand in their,
building up their customer list. Their employee base,
their revenues, their cash flows. And business owners
(05:26):
will pour blood sweat and tears into these
companies
often at the end of the day, when
they get to an age where it's time
to retire, they don't know how to how
to facilitate that change of ownership.
Obviously, you now in our space right now
is... And private equity groups are the ones
that are coming in with with cash and
they're they're buying out,
buying out companies, which is a great option.
(05:46):
A great option to some folks, but some
folks wanna sell to their internal employer or
wanna sell to their their family number or
something like that,
which person probably doesn't have if you got
a business owner that wants to sell for
a million bucks.
That person probably doesn't have... The knowing bucks
in cash. Sitting on the side for them
to just, hey, pay you. You go off
into the sunset, you fly out to Hawaii
(06:08):
drinking, you know, in drinking Out on the
beach. It's doesn't really it doesn't really work
work like that. So by understanding different loan
options as a business owner, you open up
your pool of buyers so much more because
are a ton of qualified buyers out there
that have to utilize some sort of loan
to take over to take over your business.
(06:28):
And that person could be, like I said
that Gm or the internal employee, qualified buyer,
they have to understand the loan options if
they had because if that's somebody that you
ultimately wanna transition your business to, that is
how you were going to get paid to
exit your company.
Right? It's either that option or it's the
option where you hold back a seller note,
(06:48):
and let's just say, hey. You sell your
business to that general manager or that internal
employee for a million bucks, and you say,
hey, just pay me over the next 10
years.
Well, you're you're taking on that risk there.
You're not getting your full 1000000 bucks up
upfront, and that person is having if pay
you over time,
which could be really risky to to a
seller.
So very long winded answer to say that,
(07:10):
hey, understanding the loan options is gonna be
crew, when you're thinking about
planning for your next career remover or planning
for that transition to the next generation. Typical
Awesome. Yeah. That's a a lot of great
information there.
I think 1 of the big things that
you hit on there at the end too
is
(07:30):
you know, some of the different routes that
business owners will go
in
transferring their business. In succession planning.
First off, I I think most people dealt.
We use the term succession planning, but there
really isn't a plan sometimes and till... Yeah.
You know, we get that point, and it's...
You know, we we at Bd in the
(07:50):
coaching and training space of experience this where
don't always have a plan. We're just, you
know, we're kinda going along and and all
of a sudden, it's like, maybe else, you
know, maybe I'm ready to sell or maybe,
you know, we very few people are are
structured and and laid out where they're thinking.
Alright. I'm I've got this target date or
I've got this gold. To to look out
there. And so
(08:11):
what I love you sharing about that is
the the different ways that people can think
about that, the
and and the the seller note that you
mentioned, the the,
basically, the owner finance,
version of this where... Alright, I'm gonna get
paid.
There's more risk there. There's more
(08:31):
you know, there's
a lot of things that could go wrong,
there's strange
relationships.
And I love what you introduced here is
that if you as an owner take a
proactive approach,
in in starting this process,
then you have the opportunity not only to
get what you are looking to get up
upfront But you just set your... You set
(08:51):
the next person up to be successful in
that role as well because there's not, you
know, the former owner kinda peeking over your
shoulder the entire time or,
you know, it's it's kind of a clean
slate forever every. Everyone well, And I think
that's probably 1 of the other great benefits
about going this route is is you just...
You start and you head in a direction
that that can be... That's what everybody is
(09:14):
looking for. Yeah. We look at it too
is it whenever you're going to transition transition
your business.
There's 3 ways you can get it done.
You have the person that's coming in, and
you have the person that's paying cash for
the business. So think about it like you're
your private equity group or say, hey. Wire
your company, We'll cut you a check. And
in 7 days, you'll be able to
(09:34):
collect on your money maybe they have you
stick around for a little bit or maybe
they have you completely exit the business.
That's the first wave. The second way is
you can sell our no for any it.
So the seller, you want, again, you wanna
sell your business for a million bucks. You
hold back that note and whoever you sell
your business to, just pays you over time
for whatever terms you agree to.
Which is really like I kinda alluded to
(09:56):
previously, that's really risky because if you don't
really know the person you're selling to, Like
yeah. You sell it to your general manager
or your family member. It's a little bit
easier because you probably have some trust within
that... That person already, You have a relationship.
But if you sell our. No finance your
business to somebody you have no idea who
you're selling to, could be really risky for
you because what if that come... That what
(10:17):
if that person takes over the business
or and they run into the ground. And
now you're having to come out of retirement,
step back into the business, turn it back
around, and you don't have anything to show
for what you've previously built.
That can get risky, but people do transition
a business that way. But then you have
the... Again, the third person, or the third
buyer pool where the ones that very qualified,
(10:39):
understand what comes with running a business, what
comes with running a home service company,
but they don't have a ton of money
to put into it. They can take out
a loan. They only have to come in
with as little as 2 and a half
percent to the project,
and then they can seller gets paid at
closing. They can stick around for a little
bit to help with the change of ownership,
but they're paid, they can kinda just work
(11:01):
the business as them in the... Or them
and the buyer agree on,
but they've got their money. So there's really
no no risk to them now if something
does go wrong with a new buyer, banks
taking on all the risk for that situation.
Yeah. So
Love how you outline there the the different
options so that that people have. And
obviously, different things are gonna work for... Different
(11:23):
people, but it sounds like
if if you're an owner,
and you're you're looking down the road as
you can start that
conversation and thinking about those loan options, it's
going to benefit the person coming in, it's
gonna benefit you,
and a there's just gonna be a lot
of really,
(11:43):
potentially... You're you're gonna be well set up
in this situation to have a successful. Transfer.
So... Absolutely. Yeah.
So, Jordan, I wanna get into a little
bit of this because you're... I mean, your
your finance guy, your bank guy?
And what, you know, just like the the
guy who
is
in, you know, what
(12:04):
I'm I'm I'm in the marketing field. So
I'd I get a lot of questions from
people about, like, social media and marketing. I
would imagine you as a bank person. Get
a lot of questions about the economy right
now and and where we're at and where
things are heading, but
wanna know kind of from your standpoint, complaints?
What you are seeing what Live oak bank
is seeing and and what's taking place right
(12:26):
now.
How much is the impact of the economy
over the last 12 months,
between interest rates and and the changes in
private equity, How has that change the market
and how
contractors should think about moving forward
in this succession planning process.
Yeah. So I think to to start with
that. Should we all wish we had a
(12:47):
crystal ball we could sell over the next
6 to 12 months look like.
We're hoping as a... Bang. We're hoping that
we're at the peak of the interest rate
environment. That things are starting to starting to
climb down a little bit see... We'll see
what that looks like, but
we've heard Dennis supposed to come down a
little bit by the end of year. So
I think that's been the biggest thing. Is
(13:08):
the rise the rise in interest rates has
obviously had everybody thinking about
thinking about when the right time, not even
just about... Business or to transition their business,
but think about the the mortgage mortgage rates
too.
Like, just interest rates are up in general,
by So people obviously think about those things
all the time and
really to put it in to put it
(13:29):
into perspective, I guess, just to say to
start,
the interest rates have
obviously, rose significantly,
over the past 3 years.
Now all all all the loans that we
do from... We use an Sba product, which
is a government guaranteed loan. And all of
the loans that we do we're gonna be
based around the Wall Street Journal prime,
(13:50):
which to put that in perspective Right now,
that rate is 8 and a half percent.
So which is significantly higher than what it
has been the last couple years. So I
would say about a year ago, the rate
was about 7 and a half percent. Early
20 20, they're rate was as low as
3.25
percent.
So you can you can see what the
changes look like and its increased.
(14:14):
Now what's what's really happened within our markets
since we since we really focus on this
space is
we thought that, things were gonna slow down
from an acquisition standpoint or from a succession
succession planning standpoint. Maybe people were gonna wait
to transition their business or maybe people were
gonna wait to acquire another company because rates
were higher.
We are
(14:35):
busier now than we have been since we
started providing financing in this space in 20
19.
I would say 1 thing that it is
really affected is the commercial real date side.
People people will price shop a
mortgage per s, a little bit more than
they wait for business.
So we still doing... We have tons of
(14:57):
people that are still
transitioning their business tons of people that are
still growing through acquisition. I think 1 thing
that it is really affected.
It's affected the price that somebody is able
to pay for a company.
Or the amount of debt that somebody is
able to take out on an existing company.
So for example,
if you were to buy a million dollar
(15:18):
company
a year ago at, let's just say or
let's just say 2 years ago in early
20 20 at a 4 percent rate versus
if you bought a million dollar company now
at a 9 percent rate. Your difference in
a yearly payment is about 30000 bucks.
So it's pretty significant. So the amount of
the amount of debt that somebody is able
(15:39):
to take on that same company now.
Is going to be lower than what it
was in early 20 20.
So now people are still wanting to get
deals done, and they're still wanting to acquire
a cup and trans in their business.
But now we're having to get a little
bit more creative with the structure.
Meaning, hey, maybe previously we could give somebody
alone for 90 percent of the business purchase,
(16:01):
and they only had to come in with
about 10 percent. Or now maybe as we
can only do 85 percent and that person
has to in with 15 percent.
Or maybe is a situation where we still
do the 90 percent loan,
but maybe the seller holds back all of
it. Maybe if you're selling a million dollar
business,
maybe the seller holds back a hundred thousand
bucks of that because we have to get
(16:23):
a little bit creative with it. So I
think both buyers and sellers and banks are
getting creative with how they can structure a
loan, but ultimately,
people are still looking to acquire home service
companies.
You have non industry folks that are getting
into our industry now.
You existing people who are still looking to
grow. I think ultimately, folks are still looking
(16:44):
to do it. It's just a matter of,
how they're able to get that deal done
now and they're having to get a little
bit more I love the the creativity
that that comes into play there and and,
obviously obviously, it's probably not the ideal situation
with where. Interest rates are at. The reality
is,
that is the reality of where things are
(17:04):
at. And and so we either have a
choice of we're just gonna sit back do
nothing, which is not going to be
not gonna be the case on how things
move forward or we just have to look
at things from a different angle and a
different perspective. And I I love that hit
on that. I think that's such a such
a
hopefully, a reassuring thing for people out there,
(17:25):
knowing that, you know, if I had this
plan,
talk about this all the time. I've I've
had some conversation with my financial Adviser. And,
you know, we talk about as you... How
you structure
your
individual
financial situation as your prize that retirement age,
and you you position yourself so that if
the market were to
(17:45):
decline or
or go into a recession, like, you're still
protected your search still covered. It's not like
I'm going into retirement. Well, now I can't
retire because if how this things has what
the economy has done. And I feel like
you kinda wait you're saying here too is
that
people shouldn't feel like they missed out on
the opportunity to sell the business when they
(18:06):
did. You're when interest rates are low,
when private equity was just going nuts, knocking
down people's doors
over the last 2 and a half, 3
years. Like there are still opportunities now, and
there is still going to be those opportunities
going forward. It just... Requires a little bit
more creativity
from both the buyer, the seller and the
(18:28):
finance.
Absolutely. I think you hit that. You hit
the nail on the head there. It's...
People are still looking for these opportunities and
people are
people are finding that they're hard to come
by. Like, I have a lot of existing
customers who wanna acquire a company. They're like,
man. I can't... I just can't find a
find a business. I can't find a a
quality business to buy.
(18:49):
So, like, if you're if you're a... If
you're a quality company, you were gonna have
those, you're going to have those opportunities whether
whether the rates are higher, what the rates
are low. They're they're gonna be there. It's
just a matter of finding the right buyer.
We we think a lot of times it's
easy for us to finance the a general
manager who's already running the company, that change
of ownership is fairly easy for us.
(19:11):
Just a matter of finding that right person
and being willing to get a little bit
creative with the structure to get to that
purchase. Price that you want. Those are some
some big things.
Absolutely.
So I wanna I wanna kinda talk here
to about
price
1 of the 1 of the things that
you and I had talked about in in
(19:32):
some of our conversations, and we
saw each other at Spire work this year
and had had couple of other places that
we interacted with. But great event by the
way. Spark. Also. I... 1 of the talk
events in the industry. Love it. Love having
you guys there every year and getting to
connect with you there is is really exciting.
But
the up
(19:53):
1 of the things that you've really that,
like, really kinda poked the bear inside of
me
was we we talked about the experience that
most contractors have. You know, whether they're looking
at succession planning, whether they're looking at acquisition
and growth,
there are some real challenges and some real
pains
(20:13):
that can come
with
growth, expansion,
acquisition, 6 challenges and planning,
when trying to
obtain financing or work or bank loan financing
or work through that process assess.
And what you were kinda telling me is
somebody who's never bought an Hvac business who's
never actually
(20:34):
sold an Hvac business either
those experiences that contractors can have and unless
you've been in that
situation you wouldn't have experienced it before. It
kinda makes you like... Oh, that's kind of
frustrating. But what are some of those pain
points that you see when contractors come to
you that they mentioned that they've experienced when
trying to navigate
(20:55):
frustrating the business loan process.
Yeah.
I was... The biggest
how we always,
related is all these contractors have a relationship
with their local banks.
The person who holds their operating account, they're
checking accounts, savings accounts and things like that.
(21:16):
A lot of these local banks, they won't
specialize
small business lending. Like, they have a team
that might do a couple of small business
loans. But whenever they're trying to get and
do an Sba loan. It's not something that
they have expertise in.
So whenever you have... I relate it back
to
changing out a heating and air unit. If
(21:37):
I have to get my my ace my
Hvac system replaced.
I only know what needs to be done
based off what that tech comes out and
tells me it needs to be done. I
don't have any
expertise on
changing out an Hvac system.
Outside that back to banking.
If a... If contractor is looking to obtain
a business loan.
(21:59):
They go to their local bank who doesn't
have any sort of banks expertise and small
business financing.
They only know what they're being told from
their banker.
So if they're not being presented all their
options, they don't even know there's options available
to them.
So that's that's the 1 of the that's
1 of the biggest things. And
I think another big thing that folks will
(22:19):
run into within art space is that
if you do find a lender that that
focus is on business financing.
9 times out of 10, that person is
going to be a general lender.
Where they might look at your home service
company and next day, they might be looking
at a car wash or next day they
might be looking at a veterinary clinic. They
have no real focus on the industry, and
(22:40):
they have
no true understanding of our space. So whenever
you go to that person and you're trying
to get... You're trying to get a loan
for an Hvac company, to acquire an Hvac
company.
First thing that person gonna tell you is,
like,
What type of collateral do you have to
to secure this loan? Like, there's not a
lot of value within the customer list, the
(23:00):
employee base, the revenues and things like that?
They want like collateral to secure loan.
And we know within these Hvac companies,
the tangible value that hard collateral is like
the trucks.
Saw a million dollar business, you might have
a hundred thousand dollars in t say you
could pledge just collateral per s,
which a lot of times of local lending
doesn't have any interest in that. So they
(23:22):
can't push it away,
where
we see that being a a big pain
point because they don't understand the the home
sir service industry. You're having to explain to
them once your business model is every time
you go in, you go and talk to
them. So you're having to explain the difference
from a new construction company and a service
company. If they group it all into 1.
(23:43):
They don't they don't understand it or maybe
you're having to explain the seasonality that you're
that your company sees.
Common thing.
So I think when you're dealing with somebody
who doesn't necessarily have a focus on that,
It can it can be a little bit...
They can be tough on a contractor
because they're feeling like they're talking to somebody
who they can't really relate to.
(24:04):
So that'll be a that'll be a big
thing and a big pain point that we
see where
we try to bridge the gap. We have
a have industry specific teams. If I'm talking
to a home service company, that's the only
type of company I've been talking to this
whole week. We So I can I can
relate to you? I understand what you're what
your pain points are as a business center.
I understand the seasonality that you see. And
(24:25):
just by
that type of,
understanding and that type of knowledge on the
specific industry, you're able to talk to these
people a little bit easier.
You're able to connect with him a little
bit. A little bit more versus how they
would be able to. It's somebody who doesn't
really understand it.
So really long winded it answer it to
say that, hey, I think it's... The pain
points are 1,
(24:47):
they're they're probably talking to somebody who doesn't
necessarily understand their industry so they might not
being... They might... They're not being presented to
all the options that they that they have.
And then,
Theresa 2, again, it's... You're not... I guess
there's 1... I guess that's my main point
is
they're not industry focused. They're not able to
(25:09):
present you have what you what you need
to to understand whenever ever you're looking to
obtain business financing.
You
I think that's some great points that that
you hit on there. And
you know, this is a,
if if you're if you're looking to grow
your business and you wanna,
you know, go out and acquire another company
(25:30):
and you're gonna be using,
but,
a bank and and a alone to do
that or if you're planning for your succession,
that's a big decision that you're making. That's
a big step that you're taking.
I always an equate this back to my...
Or, think about it in the terms of,
when my wife and I were preparing to
buy a house.
(25:51):
We remember we were talk with some friends.
And we're asking about, like, realtors and and
and
we're trying to find somebody. We we felt
like it was gonna be a good fit
for us. And and they had bought and
sold a number of properties and the number
1 thing that they told us is,
you know, del don't bring on you your,
you know, know, your cousins,
(26:13):
sisters niece,
who just got her real estate license,
you know, people people wanna have opportunities to
to learn and to grow, but this is
1 of the biggest decisions that you're going
to make.
You you can't afford to
put yourself in a position where you don't
have somebody who's prepared to
go to bat for you to to fight
(26:34):
for you to to get you, present you
with the options, the different offers, everything that's
going on during that process.
And every... From everything that you've told me
too, it it feels like it's the same
way with,
when we're looking to secure a loan for
our growth for our succession planning. We can't
afford.
To be in a situation where we're dealing
with somebody who doesn't understand our business,
(26:57):
who doesn't understand the market, who doesn't understand
the process,
but
at all.
I love I love that point because you
really gotta get... Like you're saying this for
for a lot of people this is going
to be the biggest
the biggest transaction in their life. They have
worked their whole life building up the brand
of this company.
(27:17):
They have poured everything into this company. And
you've gotta get people that are that are
on your team, people that are in your
corner and want want to genuinely help you
and have experience to help you facilitate that
that change of ownership. So there's a lot
of folks that we work with within industry
that we look at as a team. Like,
you've got the people that can give you
a good... There's a good valuation for your
(27:38):
company. Run the numbers for you. You got
the attorneys that can help you with a
specific structure. You've got the bank that can
say, hey, we can help provide the financing
for a situation like this. So at the
end of the day, you've just got a
have experienced people in your corner because this
is not a... This is the biggest... The
biggest transaction in your life. You wanna make
sure it's done right and you might be
the only time he get to do it.
(28:00):
Absolutely. Well, speaking of doing it right, I
wanna give us the, transition and give us
some time here.
To just talk about Live oak bank.
You kinda highlighted there at the beginning,
what you guys do and the role that
you play in the... Industry, But I I
think 1 of the big questions that I
would ask for you is, what what do
you believe it is that sets
(28:23):
you apart and sets the live oak bank
apart from other banks and institutions
that when it comes to business loans.
Yeah. So we we hear a lot of
banks. We've
we've been in business since 2008.
So we're we're a publicly traded company, We're
a large company.
We've... But we what we focus on is
small business financing. So how we really make
(28:45):
ourselves unique like I told you is that
we have we have industry specific lending teams
at the bank, which I can guarantee no
other lender in this country is going to
be focused on industry specifically. They might have
industries that they like Lending to, but they
are not gonna have a hard focus on
that industry and teams built around that industry.
So that's where we make ourselves unique is
(29:05):
we...
This is all I do. All day every
day, Myself and 1 other guy,
we focus on providing home service loans.
That's what we do.
And
I would say too what the product that
we use. We use what's called an Sba
loan. And it's a it's a government guaranteed
loan.
And it can be really
(29:26):
really time consuming if you're working with a
bank that doesn't do a lot of those
types of loans. But we've really streamlined the
process. We know what it takes to get
1 of these loans done, and we're we're
actually the a nation's number 1 Sba lender.
So we've done a ton of the... We've
done a ton of these ones since 2008,
so we have really,
we've really str mind the process. So
I would say that's the biggest thing is
(29:48):
we know what your business needs. We work
specifically when we this industry,
and
we've been working with Bd since 2019.
So we worked with a lot of a
lot of members. We've had a lot of,
you know, this growth financing
acquisitions, working capital, succession plans.
We've we've probably worked with 1 of your,
1 of your colleagues or for this that's
(30:09):
affiliated with Bd. So have a lot of
a lot of good customer customer testimonies as
well.
For yeah. A lot of lot of great
crossover
between the Bd and the Live oak teams
and
you know, what what we are committed to
and
this industry and the contractors we serve and
just really good alignment
(30:29):
between us and and between you guys and
it's been cool to see some of those
stories come out here over the last couple
of years about.
You know, we're we're we're going on. We're
we're 26 years now and now. And so
we've seen a couple of cycles of generations
coming into businesses,
selling businesses,
acquiring businesses,
(30:49):
and and to hear those those stories of
how how they were able to do it
right.
Was was a...
It's 1 of the, kind happiest moments for
us when we crucial and we hear that
that person got to take the next step
in their business.
And fulfilling. I... Yeah. It is fulfilling with
that is. Yeah.
So... Or well, Jordan, this has been an
(31:11):
incredibly insightful conversation. And, I hope some of
our listeners out that have have
the wheels started to turn in their minds
as they start to think about their future,
potential succession planning, But also even just in
the acquisition side, look like you talked about
or early on in the episode, you guys
do a lot in the market if if
(31:31):
people are looking to grow their business if
they wanna,
acquire, you know, another person in their market.
You guys work in that space as well.
We do. Yeah. Anything
any any ways that we can help a
home service service company grow. Working capital, grow
through acquisition, buying a piece of property,
that's what we. Specialize, and that's what we've
(31:53):
gotten really good at. So we're we're here
to help. We wanna... We've seen we've worked
with Bd members who we've seen at 3000000
bucks go to 10000000 bucks.
We've seen folks that are running its 10000000
dollar company that wanna sell to their internal
employees. So this is... These are real time
things that are happening. This that we we
get so excited to help with.
Yes. Absolutely. So I what I would I
(32:14):
would say in in closing out our our
time together here. I've got 1 final question
for You.
And you, you know, just like you said,
you... This is what you deal with all
day,
everyday,
serve contractors,
and and businesses,
what would be that first step for a
business owner that wants to be proactive,
(32:37):
with their succession planning when it comes to
to to utilizing business loan options.
Net.
It's never it's never too early to loop
me in on something.
If you've gone... Even if your plan is
you're thinking 5 years out, and you wanna
understand,
how you should prepare your business to be
in the best position
(32:58):
to get approved for a bank loan.
Is now too early to loop myself in.
I'm able to paint the picture for you
on what your business should look like what
you should be targeting.
B probably coaches on this a lot too
when she should meet targeting from a gross
profit standpoint, a profit margin standpoint,
how we how we would analyze your business
(33:19):
and how we would get you approved. I'll
be able to walk you through that situation,
but also as well, I'm able to paint
the picture for you on what the the
person buying your business to look like.
Because really, if you've identified that person that
she wants to sell your company, to, you're
able to understand what that person... What that
personal profile move like from that person
(33:40):
far as say, what should their credit score
look like?
Hey, how much money should they have to
put down. And when you think about that
years in advance, you're able to prepare for
that? As that person's able to start
saving up that money. Start working on their
credit score. You as your business, You're able
to clean up your financials. You're able to
show a bank and true picture. Of what
your business is actually doing from a profitability
(34:00):
standpoint.
So we always encourage encourage folks. We completely
free for people to reach out. We don't
charge a fee or review, to review your
business or or talk with you over the
phone.
We encourage people to reach out as early
as they want, and we can help paint
the picture form what they should be looking
for as they do approach, or as they
do think about, taking that next step in
(34:21):
their career?
Awesome. Yep. Never too early to to start
thinking about
any step in this process, whether you're looking
too
start planning your succession,
your exit strategy,
or even even acquisition, Maybe you've got dreams
of of how you want to grow your
(34:42):
business.
Never too early to reach out and start
having that conversation with a a team at
Live oak bank. Self
Jordan, I wanna thank you so much for
taking some time to to talk with us
and give us some some insights on on
L oak Bank and end this topic.
What are some good ways people could could
get into contact with you or or reach
(35:04):
out and get connected with live oak bank?
Yeah. So anybody can give me a call
on my cell phone number. My number is
9 01:03
584588.
My direct line, text. Call, whatever's is easiest
is. Also, my email is my first and
last name, jordan dot cord at live oak
dot bank.
So anybody, give me give me a shout.
(35:24):
I'm always happy chat.
Awesome, and
we will
continue the amazing partnership that we've had and
and being able to... Foster those relationships with
contractors both on the coaching and training side
as we do and on the
acquisition growth and and develop side as Live
oak bank does. So...
(35:45):
We appreciate appreciate you guys Bd so much.
You guys have a a great group of
people over there. Genuine, and you guys genuinely
wanna help contractors grow as well. And we
we appreciate the partnership with you.
Very cool. Well, Jordan, thank you again for
joining us on the to the podcast.
And to those of you listening out there,
thank you as well for joining us for
(36:05):
another episode of the prime partners podcast, if
you're listening over on Apple or Spotify, make
sure to subscribe so that you get those
new episodes hanging straight to your phone. That
was fun. I I forgot that we had
1 coming out an when we did yesterday,
and I got a little notification on my
phone. And so it was a fun little
surprise. So make sure you turn on those
fun little surprises well. If you are listening
(36:28):
on... Or if you're watching on Youtube, make
sure to subscribe here as well.
As always, thank you so much for listening,
we'll catch you again next time.
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