John-Paul Smolenski is President and CEO of MMP Capital.
In an exclusive Q&A with Monitor, John-Paul Smolenski of MMP Capital discusses how the company takes a hybrid-style approach to provide quick and efficient equipment leasing solutions for the medical device and aesthetic market and how it has maintained success in the current environment.
For those unfamiliar with MMP Capital, what does the company do and what is its go-to-market strategy?
MMP Capital has been in business for eight years now, and is led by three partners: James Siederman, Michael McCaffrey, and myself. Most prominently, MMP Capital handles financing for medical equipment, with a special emphasis on aesthetic medical equipment. We also finance dental equipment, graphic arts equipment, and offer unsecured financing.
In the past, we’ve been primarily tied to vendor finance, but over the last three years MMP has developed a retention team run by James Siederman. We have developed strong customer loyalty to MMP Capital due to the relationships our retention sales team has with our customers, along with our competitive terms, and our quick approach to financing. The customer centric model has helped us organically grow into new verticals and grow our revenue. The new vendors we have recently worked with, along with a loss in competition, has helped us gain market share. This strategy has helped diversify our growth and origination base while building the brand of who we are as a company.
Over the last couple of years, MMP Capital has become the largest financing company in the aesthetic medical industry. We book and originate more business right now within that space than anyone else and that is continuing to grow. When COVID-19 entered into our lives, probably like most people, we weren’t quite sure what would happen. The silver lining was that we came out three steps ahead, since we saw some competitors close their doors giving us less competition.
You mentioned the various channels that you work in. Why is taking that hybrid approach important to you?
We offer captive financing programs for key vendor partners, and when you’re handling that program, a hybrid approach is a much more efficient way to do business. Unless the customer is grossly underqualified, the answer is always yes. The question is which solution can we provide. This platform is extremely valuable to our key vendor partners since it streamlines their sales approach and helps them maximize production. You’re not buying leads, you’re not buying data, you don’t have to do online ads, and you know exactly who you’re working with. Being able to work with licensed professionals, you can validate everything you want to know about their practice. This is a much safer investment That part of the business is straightforward.
The other part is that we also finance people who don’t have time to go to their local bank. We believe in the fundamental principal that “Time is Money.” Most successful business owners don’t have 2-4 hours to go to their local bank, shake hands, and chit chat. We offer decisions in real time so business owners can make quick decisions, and execute in a matter of 30 minutes, instead of 30 days. It is our responsibility to build relationships with different lending partners that have appetite for certain levels of risk. The hybrid model that we have as both a direct lender and as a broker makes us much more competitive in the space, and makes it very easy for key vendors and customers to work with us.
It is also gratifying to be able to help a customer when they’re building their business or when they’re in a down point. Last year, for example, when COVID-19 first hit, a lot of local banks weren’t open and people were calling looking for Paycheck Protection Program loans and SBA loans. No one returned those phone calls. MMP Capital is very tech savvy and we were able to go remote and get it done to help people out. We originated about $8 million from PPP loans last year, which is a lot because most of our medical practices are smaller offices, not a staff of 50 to 100. That’s a lot of small PPP loans that really helped people when they needed it most. Now those same customers are in a much better place and building their business and buying and financing more equipment. The growth is organic and as long as our customers keep doing well and they keep growing, we’re growing along with them.
What is the market for medical devices and medical aesthetics like and why is it suited for equipment finance?
Medical device equipment is one of the few industries where the technology is growing. Licensed professionals need capital equipment. It’s not software, it’s not a consignment model. Traditionally, medical doctors do very well, but as more and more hospitals buy up individual practices, most of the best medical doctors do not want to work for somebody else.
Most medical doctors who are running private practices have to offer a comprehensive platform – meaning both clinical and aesthetic. With the healthcare market right now, insurance premiums are going up, so the cost to consumers and the cost to small businesses that pay for health insurance is going up. The income, the cost, and the profits of the doctors are down. Doctors are offsetting the losses on their clinical practice by incorporating aesthetics, which requires no collaboration with health insurance companies.
With aesthetics, it’s 100% cash-based receivables, there is no middleman inflating the cost. They get paid upfront that day. They’re not arguing with insurance companies to pay them in 90 days… maybe. Aesthetics allow doctors to have a higher quality of life without working nights or weekends. You can work nine to five, you can go to your kid’s soccer games on the weekends, you could have a good night of sleep. It’s a very good way to have a good living, but also enjoy your livelihood as a doctor.
MMP Capital was built to basically accommodate this process. We have a superior understanding of the industry, and we’ve accommodated our process to the way the medical industry works. We know doctors will see patients from nine to six, from nine to seven, and then they’ll do the business between seven and eight o’clock at night. Our staff understands they’re going to get calls at all hours of the day and are ready to help whenever and however it is needed.
Are you planning to expand into any other markets beyond what you’ve already mentioned?
We are. We’ve been doing it already. We are growing into the veterinarian space, not only on our own merits, but through referrals from our portfolio of clients. They’ve been approaching us because they really enjoy the experience with us. They appreciate the service. They enjoy the competitive programs that don’t require them to go to the local bank and wait three months for an approval. They’re getting very competitive financing through us in a matter of 30 minutes.
Other providers are even asking us to help finance their other equipment from the other verticals. The aesthetic medical equipment is a little bit different than their clinical medical equipment, but financing is financing, and the customer is the customer. We’re leveraging our relationships with customers to help us grow into new verticals, and were happy with the growth and new relationships.
What’s the average turnaround time like for your customers, from application to approval and then from application to funding?
From an application to approval, it takes as little as five minutes. If it’s someone who’s a little bit more challenging, it can take a bit longer. The process could take up to four to six hours depending on how much time is needed to get a sense of what that customer needs. But if it’s your standard customer who is established, they’ve been busy for a couple of years, they’ve got great credit, there’s no need to make it complex.
The quick manner in which we can get customers approved offers a lot of value to the doctor or the customer because they don’t have to waste three months of time shopping their financing. It’s done and it’s very convenient for them.
What role does technology play in your approach to equipment finance?
MMP Capital has looked to automate and streamline the process as much as possible to reduce inefficiencies and human error. We do a lot of traveling for trade shows and workshops for our key vendor partners, and we’re used to working on the road. Having that process in place certainly helped last year, when COVID-19 happened. We leverage our Salesforce CRM and we’ve invested resources to make it as efficient as possible to support the process. Because of that, a lot of the data that we have in our CRM allows us to underwrite deals very quickly.
Since processing applications is all done through the system, not manually, instead of taking 30 minutes, the deal can be approved in as little as five minutes. We email the customer contracts within two clicks, which is about 15 seconds. It can be hard for a lot of companies to compete with that because they just can’t come close to the speed. And then again, for our industry, we have good terms and very safe investments. We’re branching out because it’s so appealing for most of the vendors and most of the clients.
You mentioned earlier that MMP helped out a lot of small business customers with PPP loans. Can you tell me about that experience?
The first month of the COVID-19 pandemic was a very dire time for everybody. Most people didn’t know what was going to happen. MMP is located on Long Island, about 35 miles from midtown Manhattan, and other than three people, everyone is here in our Long Island office. We are fortunate to have the large majority of our company working everyday together in the same office, and this has led to a true sense of camaraderie. So, when the NY State government shut down, it was the toughest challenge of my professional career. We adapted by doing morning calls every day to go over what we’re seeing in the market and how to best communicate and service customers remotely. We shared some of our best practices with our customers and vendor partners.
As a small business, our PPP loan really helped us, like many others out there. People leveraged those PPP loans to salvage their business or retain their employees. Medical doctors were never shut down because they’re essential businesses, so they had a dip in income, but not as significant as other industries. So medical doctors got an injection of capital from the government on top of a normal profitable business because they were just less profitable.
For many licensed professionals, receiving the PPP loan allowed them to invest in equipment. Many financed and it kept us afloat during the second quarter.
One of my favorite customer stories is a local party rental company, whose business obviously suffered tremendously during COVID. We financed some graphic art equipment for him to redirect his business during this time to make graphic art cutouts and signs. They print cutouts of fans to put in the stadium chairs so it looked like there were fans in the stands. This client was making all the cutouts for the New York Mets and some other teams. For him, it was a financial windfall, but it was also a classic case of American ingenuity where if one vertical shut down, well what’s there a market for? And let’s write a solution for that market.
MMP has experienced some unprecedented and record-breaking growth recently. How did you manage to accomplish that after the year we had in 2020?
Last year, Q2 was rough for everybody, but Q3 came back pretty strong in the medical field. As I mentioned, a lot of our clients and our vendor partners had their best years because people had extra money to spend once they received their PPP loans. That being said, once that money dried up, financing became more prevalent.
When times got tough last year, we had more customers coming to us because their local bank was closed. In New York, you still can’t go to a lot of local banks. It’s based on the bank’s policy, but the government really shut people down. For the first three months, you couldn’t even walk in.
MMP almost became the only option for those companies to finance their equipment. And when they worked with us once, they enjoyed the experience and have remained customers for the long-term. We’ve parlayed that success into maintaining those relationships. We also brought on a lot of new vendors as some of our competitors didn’t survive last year, which helped us gain more market share.
One thing that is also very important is our culture. A lot of companies have a corporate office with a lot of the people working remote. Remote working and remote employment are not for everybody. Some people can thrive on it, but others are not able to. We’re very blessed, very fortunate. MMP Capital’s office is a very warm, fun environment. Part of our culture is what we call the work-family. Our leadership team tries to embrace the mentality that people look forward to Monday mornings. We foster an environment where people enjoy being with their peers in the office. We do a lot of fun team events like bowling, we did a booze cruise, we have season tickets to the New York Islanders. We have arcade games in the office, as well as golf. We even caught the Olympic spirit and put a badminton court in the office for some friendly competition.
People work to make money, make a living, but you want to have a balance. You want to enjoy what you’re doing. At that point, it’s not really a job; it’s a career. And it becomes a passion. That’s what MMP strives for and we’re succeeding. We embolden and empower our employees to be their best and live life to the fullest.
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