The bank, which uses high-leverage, government-guaranteed loan programs facilitated by the U.S. Small Business Administration, initially lent only to veterinary practices but expanded to around 35 industries, including dealerships, about four years ago, Duncan said
The pandemic coincided with an uptick in Live Oak’s loans to dealership buyers.
“2020 was probably one of the first years that we made a splash in terms of lending money” to dealers, Duncan said. “That was to the tune of $25 million or $30 million.”
The outlay rose to $70 million in 2021 and then $90 million in 2022, he said.
Duncan estimates Live Oak has helped about 19 people — including Boyd — make their initial dealership purchase, including eight in 2021 and seven in 2022. He expects the bank will help more do so in 2023.
Other consulting and lending programs aimed at assisting aspiring first-time dealers have popped up in recent years. Dave Cantin Group’s DCG Capital Ownership Accelerator Program, launched in 2021, is one example.
“DCG Capital strictly works with the general managers or operators of a car dealership that don’t have ownership … on how to properly prepare them to buy their first store in all aspects — from the financing aspect to the credibility aspect to the pro forma aspect of what manufacturers are looking for,” CEO Dave Cantin said. “Basically, it is providing them with all the tools, resources, knowledges and wherewithal to properly prepare them to be approved by the manufacturers and to be approved by the lending institutions.”
The program also works with financial institutions, private equity groups and even family offices to assist prospective store buyers in securing funding, whether it be for mortgages, floorplan financing or working capital loans, Cantin said.
There is an initial retainer fee for the program, Cantin said. Participants do not have to use DCG Acquisitions, another Dave Cantin Group company, when buying a store, he added.
Cantin said his program has worked with dozens of people to buy a dealership, many of whom were buying their first or second stores.
“The program really was built upon general managers that work for a dealer that … is about to retire; there’s no one else to take over that platform, and they just want help on how does their GM get the financial wherewithal and the guidance to buy their store,” he said.
“And then we come right there and help them.”