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Newly Launched Second Act Financial Looks to Help Senior Living Win Back Occupancy

Second Act Financial Services soft launched in 2019, to pause a short time later. But now the financial services company has officially launched its service to help older adults fund their move to senior communities.

According to president and CEO Elias Papasavvas, Second Act, now a division of Liberty Savings Bank, offers bridging loans to older adults with the intent of giving them more time and options if they move into a senior citizen community. Through Liberty, Second Act has approximately $500 million available for bridge financing.

“For seniors who have a home for sale, they can use their existing equity, get an easy bridging loan to fund their retiree community costs, and take the time to sell the homes,” Papasavvas told Senior Housing News.

The company’s initial loan product is an equity line of credit, and potential residents can use the financing to fund either their monthly rent or their entrance fee to a Permanent Care Retirement Community (CCRC). The loans bear an interest rate of either prime +1.99% or +2.99%, with a one-time origination fee of 1.99% for CCRCs and 2.99% for senior loans with the best credit profiles.

Those terms are more favorable than what other specialty finance companies offer older adults, Papasavvas added. The company is also federally licensed, with consistent rates and terms across the country — another edge over specialty finance firms, which “must be granted from state to state and deal with sometimes vastly different legal requirements between states,” he said.

And unlike many other traditional finance providers, Papasavvas has an in-depth knowledge of the senior living industry thanks to his long involvement in the industry, including as a former vice president of finance for Artis Senior Living.

“What we bring to the table for operators is an understanding financing partner who can immediately move in with your client, finance their move and give them breathing space and time to sell their home,” Papasavvas said.

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Second Act originally planned to open as a division of a Texas-based bank. But as storm clouds gathered and the prospect of a global pandemic loomed in late 2019, that bank decided to take a wait-and-see approach, and the two partners put the concept on hold.

“There were no hard feelings and we both decided to take a step back,” Papasavvas said.

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Not long after, Papasavvas became acquainted with the Dayton-based Liberty Savings Bank. The bank was a good fit for several reasons, including the fact that it has branches in Florida with many older adults as customers.

“They had listened to their older customers about the kinds of things they needed,” Papasavvas said. “When they saw that we wanted to build the first retail bank – and essentially the first online FinTech – for the over-50s, it was a real match.”

So the two companies teamed up and entered into a five-year loan offering through Liberty, with plans to turn Second Act into its own online retail bank targeting the 50+ demographic after that time period ends.

Second Act isn’t just about helping older adults. According to John Schwaner, Second Act’s chief growth officer, the service may also work directly with senior housing providers to lend money to prospective residents.

“There is a lot of turnover in the industry for executive director and sales positions,” Schwaner told SHN. “That’s one of the things that will make us different: it’s not just a transaction, this is a partnership to optimize your count and revenue.”

Papasavvas, an avid football fan, believes that senior life is also a “game of centimeters”. He pointed out 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 easy for them to switch makes it an easier sale,” said Papasavvas.

For an average assisted living provider with 50 buildings, just four new moves per year in any community could generate millions of dollars in additional net business income (NOI) — money that providers could use for capital expenditures to keep up with competitors or to hiring in a challenging job market.

By early July, Second Act had already provided two loans and applied to dozens of senior residential communities. The company was also in talks with about 1,000 different senior living communities.

Within a year, Second Act plans to offer bridge financing to active adult communities, and the company is launching a money market CD savings account service for older adults at “higher interest rates and your traditional bank branches,” Papasavvas said.

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