Dental Unscripted | Getting into Ownership and Practice Management Insights

Welcome to Dental Unscripted.

Where Mike Dinsio and Paula Quinn break

down the practice ownership journey,

one episode at a time.

Starting up, buying,

and running a successful dental practice.

Hello, hello.

Welcome back to another episode of Dental

Unscripted.

My name is Michael Dinsio.

My co-host Paula Quinn are here today

dropping another pod on you guys.

And today we're going to discuss all

things SBA lending.

I think it's a good topic because SBA

is kind of pretty important to this

environment,

dental lending and dental acquisitions and

real estate and all the things.

I was just saying to Bert,

it's been five, seven years.

I had never had this conversation before.

So I'm excited to get this thing going.

But before we do that little housekeeping,

like subscribe, all the things we,

we do this for fun.

We love to give back to the community

and we would just love for you guys

to give us some,

some love on the socials and uh uh

follow us so that you guys can keep

getting this great information so um yeah

without further ado let's um let's get

cracking here um our guest today is bert

smith with live oak bank he's svp of

healthcare lending i've been doing

business with these guys for i was just

saying almost a decade and uh they always

come through and they always have a great

customer like excellent

customer service,

I think that's their thing.

And that's weird to say for SBA because

SBA is a painful process.

And these guys have figured out how to

make people smile through the process,

which is unique.

So Bert, welcome to the show, man.

Thanks for having me, Mike.

It is long overdue.

I can't believe I haven't done this yet.

So good to be here.

We're waiting on your beautiful studio to

be finished.

You look very professional back there.

Yeah,

I can guarantee you it was not me

that set this up.

You know, my home office is a nightmare,

but this is good.

I've got my back.

It's just blurred.

I just blurred.

Yeah, everybody just blurs it out.

Your sound sounds impeccable, Bert.

I was going to say that when Paula

got into business, she used an SBA loan,

and I don't think it was a white

glove service.

It was very painful, very painful.

A lot of people have that comment.

So I think today is a good thing

because we get to debunk what SBA lending

is and should be.

And so without further ado,

I'm just going to get right into it.

And by the way,

for anybody that's watching live.

ask your questions guys like we've got

burt you got me and paula here um

we're really here for you and for those

of you watching on instagram or youtube uh

send a comment and we'll we'll answer it

but okay first question um right right

into it on the hot seat this is

going to be hopefully not a complicated

conversation burt but my first question is

what what is the sba because it's like

it's just kind of like this thing and

you go on to chat gpt and it's

like like people are trying to figure out

what when people say sba what's it mean

what what is this

Yeah.

Well, let's start with the acronym.

Right.

It's the Small Business Administration.

And I think a lot of people don't

realize that it's actually a department of

government.

Right.

The head of the Small Business

Administration sits in the cabinet of the

president.

So this is a small cabinet or sorry,

a small department.

But people.

spend a lot of time, energy,

resources putting together a team on the

SBA, every administration.

The SBA was created to help small business

owners get access to capital and run their

business, right?

That's the mission of the Small Business

Administration.

The SBA has rolled out a couple of

different lending programs that are

available based on what you're trying to

do as a business owner.

But the goal is to help small business

owners get access to capital when it's not

available through conventional or normal

methods.

So that's really what it's there to do.

And then banks utilize those SBA lending

programs to make the loans to the small

business owners.

Perfect.

I love that.

And I know what you're thinking, folks,

driving into work, you're like, well,

anything connected to the government is

going to be a hot mess.

And that's probably true at your better

your your your motor bureau,

local getting your license in the counter.

And it's just a hot mess.

But and so to that point,

kind of my question then is, is like,

you know.

we've all heard of folks that that uh

that went through this process and and it

was a painful process i think paula could

probably share her story there but

anything government related has their

hands in on it it can be it

can be complicated uh is that true and

go ahead paula yeah besides signing your

firstborn and life away i mean it really

wasn't that bad oh

well said it was every time i turned

around there was a piece of paper to

sign i'm like how many documents do i

have so what you're saying is this hannah

is as act belongs to the sba government

no i actually paid it off she did

for a while belong to them but

It's paid off.

She's yours again.

That's great.

Well, it's so funny, too,

because dental is such a unique industry

and everyone is like, well, of course,

a bank will make me a loan.

I'm a dentist.

And that is true to an extent.

People don't understand.

I mean,

Live Oak Bank is the largest small

business lender in the country by volume.

We lend in like thirty plus different

industries where we have built a team in

a niche around an industry where we've

seen a need and, you know,

tried to fulfill that opportunity.

But in a lot of industries,

banks aren't just like ready to lend money

to a small business owner.

Right.

And Paula,

may have experienced that being a

non-dentist buying a business.

Most industries, you know,

banks do need a little help.

And I can kind of get into how

the SBA does this need a little help

getting the loan out to a small business

owner in a way that feels safe for

the lender.

Dental is not like that, right?

You know,

dental clients are very sought after.

High income earners need a lot of help.

And a lot of times you have to

borrow a significant amount of money to

start up, acquire or expand your practice.

And so banks love that.

But there are opportunities or situations

where, as you know, Mike,

it makes a lot of sense for the

practice owner to do whatever they're

trying to get done.

But a bank is just coming up short

or not willing to approve financing

because the project's too big or the

timing's not right.

And that's where

Banks like Live Oak utilize SBA financing

to help get those doctors into those

opportunities.

No, I love that you said that.

I think people do need to understand that

when you walk into a Bank of America,

let's just say Chase Bank, Wells Fargo,

whatever.

Big banks.

Big banks.

You walk into big banks and you want

a loan.

And if for whatever reason that particular

bank feels that you don't qualify for

their rules,

their underwriting requirements,

then those banks can go to you or

the SBA and say, hey,

we would like for you to participate in

the risk of this loan, Mr.

Government or Ms.

Government.

And the government's like, sure,

we'll share some of this risk.

And now all of a sudden,

those borrowers have have access to cash.

Would you like to break that down maybe

even better than I just did?

don't know if i can that's exactly what

happens right when you get an sba loan

the bank is getting some sort of

assistance or guarantee from the federal

government or some sort of enhancement to

the credit that we're offering that makes

it a safer loan for the bank in

the unlikely event that something goes

wrong in the loan defaults and that's how

we're able to get the the loan out

to the customer when conventional

financing is is not available

Is it too weird or too like maybe

out of your element to ask like,

why is the government willing to do that?

Just it's just.

It's a great question.

Small businesses and they're like willing

to just just so that there's more small

businesses out there.

small business is a bipartisan political

issue, right?

You're never going to hear anybody running

for federal office or state office say,

we really want more business to be done

at big corporations unless we've done it.

Right.

Exactly.

Nobody is coming out and saying that.

So it is it is a politically motivated

thing.

But I do think it's a benefit to

society.

Right.

The ability for you to have access to

capital as a citizen of this country,

formerly a lawful permanent resident.

But currently you have to be a U.S.

citizen to get SBA financing.

Oh, we're going this way.

Yeah, we don't have to.

But just calling that out,

that's a recent rule change.

That is, you know, a good thing, right?

Small business is the bedrock of American

society.

I was happy I got, you know,

to partake in that for sure.

Yeah.

You bought a business.

You employed people.

You paid your taxes.

You gave your employees benefits.

I mean, all the things.

And without that maybe support,

there wouldn't be as many small

businesses.

That's a fact.

I do want to mention, though, like,

you know,

when you walk into those businesses,

And it doesn't have to be the big

box banks.

It could be any bank.

There are three participants in these

loans, right?

Can you kind of explain that?

What I mean by that is you got

the borrower.

putting something in,

you've got the actual bank,

and then they got the SBA.

Can you explain that participation kind of

agreement or structure?

Because it's pretty much the way SBA loans

work, right?

Yeah, that is absolutely correct.

And the two flagship programs in the SBA

world are the seven a loan product and

the five oh four loan product five zero

four five oh four is what we call

it.

The seven a product is what we specialize

in the most at Live Oak.

It is a very flexible loan product.

You can use it to acquire a business,

start a business, buy real estate.

And the way it works is the bank

is going to make you the small business

owner, the dentist, a loan.

And we will obtain a seventy five percent

guarantee from the federal government.

saying that you know if something goes

wrong and there's a default if we

liquidate all of our collateral and you

know try to recoup as much of the

money as we can whatever we're still left

out of at the end of that seventy

five percent will get repaid by the

federal government if we made a valid

qualifying loan and did all of our

paperwork right and you know use the

program in the way that the federal

government wanted us to use it

um that seventy five percent guarantee

allows us to do things and get comfortable

with opportunities that other banks bigger

banks just might not want to do and

michael knows every project we've worked

on it's usually a bigger real estate

project ground up construction somebody

that's growing faster than a big bank

likes and they need funding with less

money down or

you know,

a longer term and we can help the

client get that done with terms that are

reasonable.

Yeah, it's perfect.

I love that.

So I think we kind of covered like

why you might use an SBA loan.

It just gets you over the hump when

it's, when it's borderline.

Um,

but I will say that when you go

on chat GPT or Google or whatever,

and you search,

is it a good idea or Reddit?

Reddit's a good one, right?

It's like, Oh my God, like SBA nightmares.

Right.

And, um,

I think we should probably discuss the

difference between a preferred lender

versus kind of like...

Joe Schmoe's bank down the street who does

some SBA lending.

I mean, you just mentioned Live Oak.

And I knew that.

Not too many people know that Live Oak

is the number one SBA lender in the

country.

It's a big, big number.

And you guys are obviously preferred.

But what's it mean to be preferred?

Because not all SBA lenders are preferred.

And what that what what

What does that get you?

Because I can convalesce,

which is why you're on your program.

You guys offer impeccable white glove

service.

And that's not the case sometimes when you

go to Joe Schmo Bank that participates in

the SBA.

So break that down.

Like,

why do you guys why are you easier

to work with?

Yeah, I mean,

I think historically the SBA department at

a local bank or a regional bank is

like a couple of people in an office

somewhere and they take all the stuff that

their other lenders at the bank are

turning down.

And so this concept that SBA is a

backup option creates a situation where

the bank maybe doesn't invest in the SBA

program as much as other banks would.

or just doesn't have the knowledge or

expertise.

And SBA lending is very different

depending on the bank you work with and

their knowledge of the product.

At Live Oak,

we have literally looked at industries

that we lend to,

and mine is the dental space, and said,

where would an SBA loan and the terms

that we can offer fit in this very

competitive,

very sought after part of the financing

landscape?

And so just by saying that we're a

specialist and not a generalist,

we're not all things to all people,

but here's where we fit really well and

where an SBA product can help.

A lot of times, Mike, you know,

a lot of doctors don't think that they

can buy real estate when they're starting

up a practice or don't think they can

afford a big relocation project because

they don't have the money to put down.

And that's not simply true with SBA

financing.

You can do a hundred percent financing

under the current rules as an existing

practice owner and obtain real estate

financing with a really reasonable down

payment if you're doing a startup.

So we have figured out instances or

situations where we can educate the

industry about opportunities that practice

owners can get into that they didn't think

they could get into.

And that inherently

is different than being a backup option at

a big bank to a conventional loan.

Love that.

Yeah, that's great.

That's great.

Okay.

Well,

before we get to like the newest thing,

that's the exciting news.

Is there anything else you want to add

or Paula ask on this whole SBA kind

of idea concept?

I think we did a pretty good job

of explaining what it is and why you

might want to use it.

You've got a new thing that you want

to talk about.

I think it's really relevant in the dental

space.

Anything else to add, guys,

before we jump over to the express loan?

Would this be also,

I know you're going to explain your

products and kind of your new one,

and you explained that, you know,

rather than be a backup plan, this is,

you know,

if someone's buying real estate or moving,

you know, there are different projects,

this would help with affordability,

but it can doctors who maybe have been

turned down.

for traditional loans due to credit or a

history of some unfortunate events,

is this also an option through Live Oak

for an SBA loan?

It's definitely an option and we should

have the conversation about it.

SBA lending is a great conversation to

have whenever you get turned down

conventionally with a big bank.

So the question then becomes which bank is

going to take on the risk of approving

your request.

so you know more marginal credit you know

issues in the past a lot of times

sba lenders can document what happened and

get comfortable with the narrative instead

of just looking at your credit score and

saying no um you know for example

Bankruptcies are something that do not

disqualify you from an SBA loan,

but you have to find a bank that's

going to be willing to look at your

past history, look at the story and say,

yes, we still want to do this.

But it does give you the opportunity to

think about every situation critically

instead of having a scorecard from a

credit criteria standpoint.

And I do want to I do want

to piggyback off that because I don't

think the narrative should be

i know that's not what you're intending

but what i i just want to add

to that that that maybe sba shouldn't be

the backup um sure bankruptcies or major

major risk big big risk deals kind of

need the sba and so buyers oftentimes

startups oftentimes think well gosh if all

the conventionals aren't going to do it i

shouldn't do this deal right

I'll be the first one to tell you

that there have been at least five,

maybe ten two-hand type deals that I

believed in, I liked, conventional didn't.

It could be simple things like maybe

you're a dentist that practices in a

Medicaid office currently and your

production report doesn't show that you

can handle

This practice that you're looking to buy

and the lenders are asking for production

reports to support this new venture and

you can't provide them a production

report.

Well,

your hand speeds actually faster than the

sellers because you worked Medicaid.

But the conventional lenders don't

understand that.

I dealt with that literally last night.

Um,

maybe the cash flow of the practice is,

is bad because the seller is,

is a horrible, uh,

manager and we can clearly see all the

things that we can tweak to make this

business more profitable.

And so we need to stretch the loan

out to twenty five years with Bert to

make it cash flow.

And then there's like a lot of scenarios

where it's not a questionable or a bad

deal,

or it's not a huge character flaw in

the buyer, but it's just an SBA deal.

And that's okay.

I think,

I think this idea of SBA being the

backup is not sure if it's a fairway

right down the middle, par three,

easy layup, whatever you want to call it.

Yeah.

That's probably going to be conventional

SBA.

But there's a lot of deals that are

not fairway.

Let's just put it that way.

Yeah,

I one hundred percent agree with that.

And we love putting strong buyers,

good producers, the people that, you know,

you and I have worked with over the

years, Mike, into opportunistic scenarios.

And sometimes that opportunistic scenario

is like a practice that has.

decreased in collections for a couple

years because the seller is taking some

time off but the real estate is available

but it doesn't cash flow but you can

see with projections that are very

reasonable reasonable of what our buyer

could do in that office based on

their ability to produce at their current

jobs and their demonstrated history that

this makes sense all day long.

And so I think that's a perfect use

case.

Another one,

doctor that was doing a ground up startup

in another state from where they lived.

Conventional owners dismiss that all day

long.

They say you need to have history of

income in your current market.

we looked at and said, okay,

wait a minute, like,

why are you moving to this other state?

Well,

it turns out both their families are from

there, you know,

like they have siblings that are

practicing dentists nearby.

And so it's like, okay,

is there really that much risk that these

two are not gonna be able to obtain

employment when they move from one state

to another?

And so,

I love digging into the narrative and

having the debate about what makes sense

for the customer and the SBA product and

that guarantee you get from the from the

government allows you to do that.

Yeah.

Great, great idea.

Great, great examples.

You know,

I'll even say Paula's practice that she

bought was not the prettiest practice on

paper.

And, you know,

even if Paula was a dentist now thinking

about it,

Maybe the conventional lenders may not

have still even given you a loan for

that practice.

Turned out to be one of the best

things that you ever did.

Right, Paula?

I mean, financially.

So you probably would have been SBA

anyways.

And that's a perfect example of that.

So.

um yeah so okay let's uh let's get

to the to the real reason uh that

this podcast has existed and you've got

some exciting news about a product that i

haven't uh taken advantage of but i will

in the future i know it so walk

us through like this this thing this

express loan that you uh just released

it's kind of hot off the press

Yeah, it is.

So the SBA has always wanted banks to

focus on smaller dollar opportunities,

right?

You know,

the limits of the SBA seven a program

right now allow one business owner to

borrow up to five million dollars.

There's a way we can go beyond that

with non SBA money.

We can get into that on another podcast.

But, you know, the the government says,

hey,

we want

businesses that just need a couple hundred

thousand dollars to expand or consolidate

credit card debt or pursue a new

opportunity.

We want these programs to be used by

banks for those types of opportunities as

well.

The challenge was that it took the same

amount of paperwork,

time and energy on the bank's level to

underwrite a two hundred thousand dollar

SBA loan that it did a two million

dollar SBA loan.

So the federal government kind of took

that feedback and offered very streamlined

underwriting requirements for smaller

dollar requests.

And this has been kind of unfolding over

the last couple of years.

Live Oak Bank has responded to that

initiative and has built a team that we

call our Express Team.

The Express Team can get you an SBA,

seven A working capital loan of up to

three hundred fifty thousand dollars on a

ten year term with no prepayment penalty,

no requirement to refinance or pay off any

of your existing debt.

And no first born.

Hannah's safe.

No firstborn,

no real estate is collateral for this

smaller loan.

Charlotte and Hannah are safe.

And my house.

And your house is not on the hook.

And your house.

And so we can make that loan.

It's money in your bank account.

Cash.

It's cash.

That's what you mean.

It's cash in your bank account.

Yeah.

cash in your bank account and it's

available in all SBA eligible industries

for established businesses that have

positive cash flow.

In the healthcare and veterinary space,

live oak bank has also decided to make

these working capital loans on a pro forma

for new business owners so if you're a

doctor that recently acquired a practice

and you know you're doing well three to

six months in but because of insurance

timing reimbursement timing

you might need a little additional money.

Live Oak can underwrite and approve this

loan pretty quickly,

like a couple of business days from

application to approval, you know,

two to four weeks funding timeline,

you know, and again,

it's money in your bank account.

So start up.

I got a question.

So we get, Paul and I,

we've kind of earned a reputation in the

marketplace as the hell's kitchen of

dental consulting where, where,

doctors are struggling.

They might be in a SAG department.

I'm speaking banking terms now for folks

that don't know what that means.

People that are in some trouble with the

bank with their first loan and maybe not

as profitable as they could be.

And now we're getting referrals from SAG

departments.

Basically,

departments within Bank of America provide

some choice banks that are sending us

clients because their clients are in some

trouble.

And so I'll ask,

this is the perfect example of potentially

an SBA reach out help.

where they need to finance us,

they need to finance a better marketing

strategy,

and they might need something refinance,

an equipment loan refinance,

because some freaking Patterson rep sold

them on a three-year term of a freaking

whatever,

and now they can't manage their bills,

they need help, and they need marketing.

That's a perfect example of what maybe

this express loan could do.

Am I putting you too much on the

hot seat?

Is that something that we could discuss?

Yeah.

Absolutely, we can discuss it.

I mean,

I'll be very clear that once you hit

the thirty six month mark of your business

operating history,

you're considered an established business

and we need to see the business have

an ability on a simple cash flow test

to cash flow our new loan payment as

well as any existing loan payments that

will still be there after we close.

So we're not going to do turnarounds for

existing businesses.

But a lot of times

I've done several consolidations with this

product where people have had

high business credit card debt,

non-bank lenders.

And once we take that high interest rate,

high payment debt out,

the practice cash flows beautifully.

So we can certainly do that.

But you said,

but you said thirty six months.

So think about all those startups that

just didn't do it right.

We do a lot of startup coaching.

Thirty six months.

That's three years.

Right.

So if you're a startup in that in

two years in and

your marketing money ran out and you made

some bad decisions with hiring, right,

Paula?

Like all of these startups,

what do they wanna do?

Tell me with the startups,

what do they do?

hire their village they hire a village

they they offer too many days five days

a week they just make some some some

key mistakes and their marketing didn't

didn't work and then they hired a like

like paula said a village and so there's

just small tweaks that get people right

back into the black uh so so it

sounds like this program could be great uh

for for expect go ahead yeah

Yeah,

it's a great fit for that opportunity.

I'll just say right now our FICO minimum

is six hundred eighty.

So any new practice owner,

as long as it hasn't bled into your

personal financial situation,

that's the minimum FICO we're looking for.

But yes,

for those new business owners where

it's starting to click but it just took

a little while or the ramp up took

longer than expected or you made bad

decisions with your initial working

capital and now you're trying to rectify

that with the help of incredible dental

consulting yeah that's a great fit for

this express program that's awesome well i

i look forward to um finding some of

those opportunities that make sense for

this program and and sending them over to

live oak bank um

Guys,

anything else that you could think of on

the SBA lending topic?

I think you guys do some really great

things for the industry.

I will also say the fact that your

dental specific SBA is really helpful.

Try having a conversation with an SBA

lender at credit union, whatever,

And I don't even think that's possible,

but whatever.

And discussing production gaps and dental

equipment that costs two hundred and fifty

thousand.

Like it's just these conversations go

right over their heads.

So you want to work with a dental

SBA lender.

Live hook, of course, is that.

And yeah.

Anything else, Bert,

that you'd like to add to the description

below when we post this up there?

And last comments.

I think we covered it.

If anybody wants to reach out to me

to discuss an express loan or look at

their next project, just reach out.

Get my contact info from Mike.

That's right.

That's right.

Well, thanks again, guys,

for enduring another bank conversation.

But it's so important that you guys can...

Get access to capital so that you can

continue to grow your business.

And the smart people use other people's

money.

And fantastic folks like Bert and banks

like Live Oak help you do that.

And we should all be grateful with

incredible terms and great customer

service.

So without further ado,

let's shut this bad boy down.

Reach out if you can think of any

opportunities for Bert.

And we'll catch you on the other side.

Bert, thanks so much for your time today.

Thanks Mike.

Thanks Paula.

Talk to you soon guys.

Bye.

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