Second Act Financial Services got off to a smooth start in 2019, only to take a hiatus soon after. But now the financial provider has officially launched its service to help the elderly finance their move to the elderly living communities.
According to President and CEO Elias Papasavvas, Second Act, now a division of Liberty Savings Bank, offers bridging loans to seniors in an effort to give them more time and options when they move into a retirement home. the elderly. Through Liberty, Second Act has approximately $ 500 million to make available in bridge loan financing.
“For seniors who have a home to sell, they can leverage the equity in their existing home, get an easy bridging loan to fund their retirement costs, and take their time selling the homes,” Papasavvas said. at Senior Housing News.
The company’s initial loan product is a Home Equity Line of Credit, and prospective residents can use the financing to fund either their monthly rent or their entry fees into a Continuing Care Retirement Community (CPAB). The loans will carry a prime interest rate of +1.99% or + 2.99%, with one-time origination fees of 1.99% for CCRCs and 2.99% for loans to individuals. seniors with the best credit profiles.
These terms are more favorable than what other specialist finance companies tend to offer seniors, added Papasavvas. The company is also federally licensed, with nationally consistent rates and terms – another step ahead of specialist finance companies, which “must obtain state-to-state licenses and deal with it. sometimes very different regulatory requirements between states, ”he said.
And unlike many other traditional finance providers, Papasavvas has extensive knowledge of the senior housing industry thanks to his long involvement in the industry, most notably as a former Vice President of Finance for Artis Senior Living.
“What we offer operators is a comprehensive financing partner who can immediately support your client, finance their move and give them space and time to sell their home,” said Papasavvas.
Second act of the second act
Second Act was originally scheduled to open as a division of a Texas-based bank. But as thunderstorm clouds accumulated and the prospect of a global pandemic loomed in late 2019, this bank decided to take a wait-and-see approach, and the two partners stepped up to the plate. concept pending.
“There was no hard feelings and we both decided to take a step back,” Papasavvas said.
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Shortly after, Papasavvas was introduced to Liberty Savings Bank, based in Dayton. The bank was a good choice for a variety of reasons, including the fact that it has branches in Florida with many elderly customers.
“They had listened to their older clientele on the kinds of things they needed,” Papasavvas said. “When they saw that we wanted to create the first retail bank – and the first online FinTech, basically – for people 50 and over, it was really a game. “
The two companies therefore teamed up and entered into a five-year deal to offer loans through Liberty, with the intention of turning Second Act into its own online retail bank focused on 50+ years after the end of this. period.
Second Act is not just about helping the elderly. According to John Schwaner, Director of Growth for Second Act, the service can also work directly with senior service providers to lend money to potential residents when needed, and thus speed up new moves.
“There is a lot of turnover in the industry for executive director and sales positions,” Schwaner told SHN. “This is one of the points that will differentiate us: it’s not just a transaction, it’s a partnership to help you optimize your census and your income.
Papasavvas, a football enthusiast, thinks that the life of the elderly is also a ‘thumbs up’. He stressed that it’s one thing to go from 80% occupancy to 92% or 93% – but going from there to 100% is a process of incremental gains.
“By presenting to [prospects] all the options and making it easier for them to transition it becomes an easier sale, ”Papasavvas said.
For an average assisted living provider with 50 buildings, just four new moves per year in each community could yield millions of dollars in additional net operating income (NOI) – money that providers could use for capital expenditures for keep up with competitors or to hire staff during a tough job market.
In early July, the Second Act had already granted two loans and signed with dozens of retirement homes. The company was also in talks with around 1,000 different elderly communities.
Within a year, the Second Act plans to begin providing bridge funding to active adult communities, and the company is launching a CD money market savings account service for seniors at “higher rates of return and to your traditional bank branches, ”Papasavvas said.