Dr. Kenton Allen, an anesthesiologist and the Co-Founder of Doc2Doc Lending, is on a mission to financially empower physicians. Frustrated with his own roadblocks at acquiring loans, his entrepreneurial passion led him to help create Doc2Doc Lending, which offers a variety of financial solutions tailored to the unique needs of doctors, both in training and in practice. Their programs include personal loans for medical practitioners and trainees, as well as a special “Bridge Loan” for those transitioning from training to practice. By understanding the unique financial pressures of doctors, Doc2Doc provides a service not typically considered by traditional financial institutions.
Doc 2 Doc Lending
Dr. Mike Woo-Ming: Today we’re gonna be talking about loans. Now, I know as physicians, loans tend to follow us wherever we want, but if you’re looking to start a new venture, maybe you’re looking for. Consolidating some credit cards or maybe you’re just needing a personal loan, maybe getting through some tough times.
You’re starting off as a new doctor and maybe just need some help. Well, there are some options and here to let us know more about loans and actually why he as an entrepreneur started his own company. We’ve got an anesthesiologist. He is the director of Anesthesia and Wentworth Surgery Center.
Also the vp. Vice President of the New Hampshire Medical Society after completing some medical expense school at Dartmouth, you finished his residency at Harvard. Began his career in New Hampshire, stirring a family. But when he found out was that when he was looking for sources of capital to help him out, that a lot of times these institutions were not too.
Excited about working with doctors, especially when they’re looking at the loans that we are already coming in increasing debt to income ratio. And he felt that they were ignoring the unique situation that many of us doctors starting out have. So he went out and he created a co-founded his own lending company called DOC to Doc Lending.
He’s gonna tell us all about it today. Please welcome to this show, Dr. Kenton Allen Kenton, how are you doing?
Dr. Kenton Allen: I’m well, Mike, thanks so much for the warm welcome and for for hosting me here today. I’m excited to be here and joining you and your community.
Dr. Mike Woo-Ming: Well, awesome. So anytime you know, doctors talk about loans, we kind of feel uneasy about the talk, but you know, we can turn, certainly take you where you need to be.
Especially in my audience, we’ve got entrepreneurs, they’re looking to start a business. We do talk about bootstrapping quite a bit, but there are times that bootstrapping isn’t enough and maybe we won’t need some help. To get this started. So let’s just talk about your beginning and maybe at the beginning in terms of like medicine.
What actually, got you into to medicine and why did you decide to go that route? I.
Dr. Kenton Allen: Yeah. So my, my, my kind of journey to that point of deciding to go into medicine was was started based on what I liked in, in, in college, I guess, I liked mathematics and biology and I wasn’t sure if that was gonna bring me to benchtop research or to clinical medicine.
And so my first year graduating undergraduate college I. Institute of Health and had a position that allowed me to have a foot in, in, in both worlds essentially. So I worked at the experimental transplantation and immunology branch of the n i H for a year. And in that role we had active clinical trials for patients who had failed all the FDA approved treatment for.
Uncommon cancers and those patients would physically be in Bethesda and we would round on them every day and take blood samples and bone marrow samples. And then we would take those samples and work on ’em in the lab. And and for me, of those two realms, it was the direct patient interaction that that really.
And so, so from there I went on to medical school.
Dr. Mike Woo-Ming: So you ended up going into anesthesia and you talk about, and in your bio I mentioned that, you’re starting your own practice. Tell us about that and what led you to actually looking to get loans to help you further
Dr. Kenton Allen: your career. Sure, yeah.
So, the, my experience that led to the founding of Doc 2 Doc Lending was in my residency. And I. In residency in Boston, I came out of medical school with $225,000 worth of student loan debt. And we lived in Jamaica Plain in Boston, which if anyone was familiar with Boston at least 10 years ago, Jamaica Plain wasn’t the nicest part of Boston.
And still, my, my, my rent was north of $2,000 a month on a $54,000 a year salary. I. A family with two young daughters, under the age of four at that time. And my wife had some ambitions of her own. She supported me as a nurse through medical school and wanted to advance her career and go back and get an additional degree.
And when we did the math together, my salary wasn’t gonna, wasn’t gonna support all of those objectives. And when we looked to supplement my salary, It was really disheartening to see that I was viewed. As a high risk borrower, primarily because of my debt to income ratio. And it seemed really shortsighted because, from the first year of residency we had job opportunities and in some instances, job offers on the table that were lucrative.
And and and again, it seemed as though I was being mis. In the market with respect to what my true risk was. And yeah, I ended up supplementing a lot with with credit cards and, in, in my early thirties asking family members for for support, which was humbling, especially at that kind of stage in my life.
And and so we founded Doc 2 Doc on the business premise that doctors. Uniquely credit worthy and that this niche population should be treated differently. And and that’s what we offer. We offer our flagship product is a personal loan from five to a hundred thousand dollars.
We look at that risk differently. And it allows us to offer most competitive rates and have doctors qualify for our program that in many instances aren’t eligible for programs with with the other options that are out there. So
Dr. Mike Woo-Ming: why do you think and I had similar situations when, looking for loans to start my business at the time and I was already an established doctor.
I was already making a good salary. But then when we looked at the time to actually give me the loan it was very small in terms of what I actually could do. What do you think the financial institutions don’t? Don’t see that. Is it just because our debt to income ratio is so high or are there other factors?
Dr. Kenton Allen: That’s one of the factor, but it’s one of the major factors cuz that’s a, that’s so central to the underwriting of of loans in general. And when and there’s really strong data to, to support the reasons why banks underwrite things the way they do the. The piece of this that’s unique is that you need physicians have a very unique career arc.
It doesn’t follow, it doesn’t follow the arc of other professions. And in addition to debt to income ratio, for example we tend to have more immature FICO scores later in life. Look you look at my example, I was in my. My early to mid thirties I was still in training and again, having a relatively depressed salary and carrying a lot of debt.
When you compared that to my peers who I was in college with, who went into finance or management or marketing or consulting, they were about a decade ahead of me. In terms of maturing their credit profile. And so even though there were no black marks against me there were no, or even late payments.
It was just immature. And so when you take that kind of conglomeration of what the typical path is for a doctor it’s it. Impairs us when we apply for these products. And so, and so again we have a company that loans exclusively to doctors. We carve out this niche population, like we understand it better than any other bank, certainly and underwrite the risk appropriately.
Dr. Mike Woo-Ming: Now one of the things that I ki I kind of harp on and it’s still, I still see it today, is that, as physicians we get hardly any financial education whatsoever. I mean, even in my own experience when I was graduating residency, I had a quote, financial planner who happened to be associated with one of the faculty, and it seemed he was more interested in.
His objective rather than my personal financial objective. For someone who started a lending company, what type of financial education did you have?
Dr. Kenton Allen: Yeah, that’s that’s a great question, Mike. The, my my background when I was in medical school, I was kind of fortunate enough to be.
Entering medical school right at the time that Dartmouth was trying to promote their dual degree MD m MBA program. And at the time it was a difficult sell to the medical students and it was difficult because there was a split in the faculty, not just at our medical school, but a, across the country that anyone who was going into or had an interest in business Sure about whether they were serious about a career in medicine and and so a lot of the medical students were weary about about applying and kinda matriculating into that program.
And because the school really wanted to promote it as a way to create leadership physician leadership in medical industry they established a scholarship program. And and it was through that, that I completed that m MBA degree and it opened my eyes a lot to how the world works and how money flows and how.
Businesses, not just within medicine, but in general. Businesses are incentivized by money and and it gave me that background to understand the industry. But more than anything, Mike, it gave me the confidence to To to start something when the opportunity arose. And I certainly didn’t have a background in, in banking.
I co-founded the company with a co-resident of mine, also an anesthesiologist who practices interventional pain medi medicine in between the two of us. We both had that experience of having an MD m MBA background. But again, we didn’t have, we didn’t have a banking background. But what we did have was the.
It’s that that we could start a company and that we could supplement the gaps in our knowledge with really smart people who shared our vision or excited about what we were building. And that’s been the case for the last six years now. So, at
Dr. Mike Woo-Ming: the time of this recording, obviously there’s a lot been of financial upheaval, of late, we know about banks.
Are going, some banks are, and getting out in trouble like the Silicon Valley Bank. Can we talk about your loan? So who funds your loans? Is that something we can we can discuss?
Dr. Kenton Allen: Absolutely. Yeah. When I’ll give you, I’ll expand on the answer a little bit cuz it’s changed over time.
When we started and founded this company we made our loans through a pilot program. Purely through fundraising. 2 million only started the company and we used that 2 million to make loans to doctors. And the purpose of that was to prove that our business supposition that.
That doctors are uniquely credit worthy that could be proven out over time. And it was accelerated through the covid pandemic Mike. So at the peak of the pandemic, there’s about a 14% impairment rate in the personal loan industry being that defaults, delinquencies payments. Which is very high.
That’s a high number of impairments and it’s kinda under understandably now compared to our portfolio which at that time had grown well beyond 2 million. Across the entire portfolio we had zero defaults zero delinquencies, and we had zero 30 day late payments.
Wow. Which is because a lot of the medical practices the business owners that we lent to were impacted by the pandemic. And yet and yet everybody was maintaining their. Maintaining their their loan with us and making those payments despite that. And so it really kind of gained the attention of the industry.
And since then, since about the beginning of 2019, we’ve had what’s called a debt facility whereby we pull money from a fund supplement cents on the dollar. With our own fundraising to fund those loans. So we have a few partners that that supply that, that funding and believe in our mission and allow us to, to keep our product as, as competitive as it is so,
Dr. Mike Woo-Ming: Great.
So let’s talk about, we mentioned, the different types of loan you offer. You mentioned your most popular one is the personal loan. Can we talk more about that?
Dr. Kenton Allen: Yeah, so, the personal loan was where we felt the the industry was the mismatch between the true risk and the.
Kinda calculated risk had the biggest discrepancy. And so that was our, that was the product that, that we really founded the company with. And the benefit of the personal loan is it can be used for any reason. We’re underwriting an individual and not a business entity. And so it’s right in line with our supposition that doctors are uniquely credit worthy.
That product, as I mentioned earlier, is between five and a hundred thousand dollars. We have fixed terms. We have no prepayment penalties, and the process is extremely easy to go through. It’s about three computer screens can be done in about five minutes. Funds arrive in in the applicant’s bank account in between five and 10 business days.
You mentioned earlier that there’s a, there’s a cringe when we speak about loans in the, in, in the doctor world because we’re because we tend to use them and have to use them to go on this career arc and. We share that, that sentiment, we we want everybody to get to get the right product to fit the need.
And at times a personal loan isn’t the right product for what someone’s trying to achieve. And to try to act against using the wrong product for a certain cause. We, our team of doctors speaks with every applicant, or at least makes ourself available to every applicant.
Not everybody wants to speak with us and certainly doesn’t have to, but but there’s a team of six doctors on our team and we reach out to every applicant who applies and offer offers to speak with them and just offer our kind of thoughts and advice. What the terms, the loan mean, what they’re trying to use it for, and again make sure that it’s the best option available
Dr. Mike Woo-Ming:And what did you generally the terms of the loan? Of a personal loan?
Dr. Kenton Allen: Yeah. So, they’re all fixed products between fixed terms of five years. The interest rates range between eight percentiles up to 16 percentiles. That’s risen over time. You’ve mentioned the kind of current industry we’re in now.
Over the course of the last two years, we’ve had to raise our interest rates twice. And for those who think, eight, eight to 60% certainly sounds high. It is. And it’s particularly when you compare to products like student loans or mortgages, which is, which are what people are most used to.
Borrowing for. The reason why personal loan interest rates in general are higher is because there’s no asset to back those. So, so we don’t use at home as a collateral. In the case of student loans, those are backed by the federal government. These are really loans for any purposes purpose.
And they’re and they’re there’s no collateral associated with them. And so as a product in general, Those rates tend to be a little higher. And, I’d encourage people who think it might be a appropriate product for what they’re to do to see what’s out there and compare rates and and confident that you find ours are are as competitive as they come.
Dr. Mike Woo-Ming: And you said you could get it done within in five minutes. There’s some confusion that we hear between soft pulls and hard pulls. What do you usually assess when you’re looking at someone for a personal loan?
Dr. Kenton Allen: Yeah. So, so amount, A lot of those factors that I mentioned earlier for example, we do not use.
FICO score in the underwriting of our loan, what we do is we pull out the threats of the FICO score that we feel are relevant and we weave out those that we feel don’t apply or or negatively impact doctors disproportionately. Now in addition out some of those factors that the traditional banks look at, We include some doctor specific factors in the underwriting and we have we very generally we have some experience through student loan performance data sets to suggest that the very few number of doctors that do default on, on on loans, Are those that, that tend to drop out for one reason or another.
So, so based upon that, we have some predictors of success in careers, in medicine, for example. And we include those in our underwriting to help benefit the ultimate rate that’s offered to each individual. And so, as a, as kind a 10,000 foot view, Mike we kind of, we tailor this to the niche community by including factors that typically aren’t included.
Moving factors that traditional underwriting that we feel aren’t relevant.
Dr. Mike Woo-Ming: You mentioned you offer some other loans. Can we talk, discuss those?
Dr. Kenton Allen: Yeah. So, so in addition to the personal loan, we’ve also within the last couple years rolled out new products. And these are products that that we know are, there’s a demand for within our community.
And the most those are practice, medical, dental practice, or a s c buy-in loans. So these are loans that. For someone who is joining a practice from an employee to a private practice position, or someone whose practice is building out or has the opportunity to buy into an associated ambulatory surgery center or procedural center.
It allows them to do that at day one. And for a lot of folks, the alternative to that, Is to have kind of a deferred compensation model for a series of couple years generally until they obtain that full equity partnership. And by, by being able to fund the purchase of that equity at day zero, it allows them to, to recognize the growth and value that they bring to the practice.
And so that equity two years from now the price that, that, that’s worth. They’re able to, they’re able to realize that value as opposed to as opposed to buying in two years from now when when you’ve, they’ve already recognized what they’ve brought to the practice. And so, that’s a very popular product of ours.
We also have a business line of credit particularly for not just medical and dental practices, but entrepreneurial businesses that are, that have since for for two years. And this allows a lot of pressure to be taken off of businesses, particularly with practices that have longer accounts receivable or or certain.
Calendar year variation with how those receivables are paid. And it allows the cost of the practice. Some of that can be pulled from the business line of credit when there’s a, when there’s a capital crunch. And again, these are products that. That our community members were coming to us asking for and initially we didn’t have a way to, to serve that need.
But but again, through the partnerships we’ve built we do now. And so, so again the personal loan continues to be kind of our primary primary product. But as, and as we learn more about what the needs are, we’ve rolled out new products, and those are, two of them we’re popular.
Dr. Mike Woo-Ming: Now as a doctor, and I know it’s just not me, but we’re always getting, I always seem getting more, loan offers in the mail and email, and I’m sure you do too, even though you have a lending company. Putting yourself back to when you were starting out and looking for different loans.
What should doctors be looking at when they’re assessing a loan company?
Dr. Kenton Allen: Yeah, good question. And it’s true, we kind of go from being the ugly duckling to being the swan that, that that every, that everybody wants. The, there’s a couple, there’s a couple of key pieces to look at. When you look at comparing alone to make it apples to apples comparison, the first is understanding the difference between an APR and an interest rate APR being annual per.
Rate and the difference between the a p R and the interest rate is that the APR is inclusive of all the fees associated with that loan. And companies that make loans are allowed to market what their interest rate is, which is not inclusive of all the fees. And some common fees are.
Origination processing fees prepayment fees and so you’ll see some advertisements of very low interest rates apply and then when you get the final terms after your application, they’ll report the a p r first percentage rate inclusive of all the fees. And that’ll be higher than than the interest rate.
And so as you’re looking through your options what you wanna see is really the a p r and that allows you to make it apples to apples comparison. The second is the the loan term. So in general the longer the term of the loan, the higher the interest rate will be. The fit of a longer term is that from a cash flow pers perspective, the monthly payment will be lower.
And the benefit of a lower monthly payment is obviously that it’s less strain on a month-to-month basis. But again, the longer that term, the downside is the more interest you pay over the full life of that of that loan. And so, again, as you’re making decisions about what’s the best product for you, You wanna look at the length of the term, look at it from two perspectives.
One, what the monthly payment is to ensure that’s a monthly payment that’s feasible. And then secondly, what’s the total interest you’ll pay over the loan. And again in conjunction with. What’s affordable on a monthly basis, choose the term that allows you to pay the least amount of interest over the entire term.
And lastly, Mike a really important point is the prepayment penalties. Particularly in the, in, in our career, our income levels can have very significant jumps and can have and can have periods when we transition from one practice to another. Of depressions and and being able to plan for the potential that you can pay off those loans earlier is really important.
And so asking about free payment penalties is paramount. The the prepayment penalties are oftentimes kind of buried in the language of these products. And people don’t realize that that if they wanna get outta debt early, which is a really good thing they may only be able to by, by paying extra.
And it’s something that, we proudly don’t have any prepayment penalty. And and again, unless you ask the question or look are looking for it specifically, you may be surprised.
Dr. Mike Woo-Ming: Yeah, I mean, on, on a personal note, I had a business loan and was able to pay it early.
I didn’t wanted to pay it early, and it almost seemed like a, I was getting the runaround now that you weren’t as interested in talking with me as much and it. And finally did, it took about a week before I finally got an answer and I was surprised that what the amount was cuz it certainly was, hidden, I think when I initially signed up for the loan.
But yeah. Great. Three things to to think about Kenton. This has been great. I do want to let you know as a disclosure that Doc 2 Doc Loans is an affiliate partner sponsor for us at Bootstrap md. I. Got into to meet your staff. And I like what we’ve seen and I’m always supporting other physician owned entities that can help other physicians.
So, we’ll have a link if you are someone who’s in a situation where you’re looking to help alone to keep. To kind of make things a little bit easier for you we’ve got a link here. It’s called BootstrapMD.com/doc2doc And Kenton and his team will take care of you.
Again, I want to thank you for your time and joining with us today. Any last minute thoughts before we end the call today?
Dr. Kenton Allen: Well, Mike thank you for having me. I I kind of echo your sentiment that what has made this really rewarding on multiple levels is working with what really is our shared community here and and being able to feel.
We have smoothed the path in some ways for the folks walking behind us. I can tell you in my career thus far as a physician, some of the most stressful times have been financial stress, not so much clinical stress. And and and to the extent that we can relieve some of that burden for folks who are in position similar to ours.
It really it really makes makes it worthwhile, is my favorite part of what we do here. So I appreciate you you, you speaking to me and letting us share that story and we look forward to the chance to speak with anybody who who may be interested.
Dr. Mike Woo-Ming: All right. Again, that’s Dr.
Ken Allen, co-founder of Doc to Doc Lending. Guys, thanks again for listening. If you are in a situation, maybe you need a loan to keep you going, maybe help you out and starting a new venture, maybe some personal issues that, that you need to take care of, reach out to them. Again no cost or no obligation correct Ken, if just looking in terms of a loan, correct?
Dr. Kenton Allen: Yeah absolutely.
Dr. Mike Woo-Ming: Go out and contact them, check out the link that we have for you, and as always, guys, keep moving forward.