Loans for Veterinarians: How to Find the Best Funding Option for Your Practice

2015-02-18

Jeffrey Bumbales

Veterinarians have special needs when it comes to cash-flow, improvements to their practice and planning for future growth. Simply being “in the black” is not enough for a veterinarian’s long-term financial success or expansion.

Loans for Veterinarians: Why You Need Them

Whether you’re just starting out, making improvements to the practice or expanding services, there are several reasons that may prompt you to consider loans for veterinarians:

  • Acquiring a practice, whether buying an established one or opening a new start-up business
  • Renovations and construction within an existing practice
  • New equipment for diagnostic and treatment
  • Working capital to help you get started and keep daily operations going
  • More staff to increase productivity and growth

According to entrepreneur.com, you must adapt your practice to stay on top of the latest in treatment options, offer the most comfort, and keep up with the volume of demand for service. Your customers come first.

Once you decide you need a loan, the bank may seem like the most obvious place to shop for a solution. While it is true that they will probably want to do business with you, what you really need to consider is how customized their loan product be and how much risk will you be taking on.

There are certain restrictions hidden within the terms of a bank loan, so shop for the best terms and service and understand the fine print. Know your risks if the loan goes into default and if the terms actually put your personal property in jeopardy as well. Understand the repayment schedule and analyze if it is realistic, based upon your practice and income.

A veterinarian practice requires expensive equipment, specialized insurance, and adequate cash flow for daily operation costs. This all adds up quickly and nothing can cripple a thriving veterinarian practice more than a lack of capital or cash flow.

There is a different borrowing product to fit just about every situation, and several types of lenders to choose from.

Banks

Banks may be willing to consider your loan if you have good credit combined with the collateral your practice can offer up, but you could be put through an extensive application process and still be denied. According to Forbes.com, most business owners don’t meet the tough lending criteria and less than stellar credit scores can trigger a red flag on your application.

If you qualify, you still have things to consider:

  • Does the loan offer the most safety? Is it flexible and fit your needs?
  • Does the loan maximize your ability to grow your business, but also allow you to create wealth (savings)?
  • Banks take their time in providing answers. Plan on at least 30 days to process your loan.
  • Underwriters will scrutinize everything about your finances from your credit score, to business and personal tax documents.
  • Bank loans for veterinarians may demand a personal guarantee for your practice. If you default on the loan you risk your personal credit, finances and property.
  • Your business plan must include fine details about your practice including a list of your competitors and your strategic marketing plans, tax returns and bank records, and usually a substantial amount of collateral in case you cannot repay the loan.
  • Bank loans can be difficult for start-up practices to obtain because they lack the three-year required credit history.

Which funding is right for your business?

Small Business Administration (SBA)

The SBA offers lending solutions to small businesses like veterinarian practices. When seeking loans for veterinarians, borrowers need to be prepared for an application process that is very detailed, lengthy and requires lots of financial and business management documentation. The reason behind the lengthy application is the SBA, a government agency, guarantees your loan and then connects you to one of their partner lenders. You are basically trying to win the approval of the SBA and a bank.

Things to consider:

  • Your personal credit score, your credentials, and managerial experience within a practice may be scrutinized as part of the approval criteria.
  • The SBA guarantees these loans provided by its partner lenders, usually banks. The application and credit scrutiny is more rigorous.
  • You are dealing with a government agency. It can take 90 days or longer to process your loan application.
  • There is a required amount of collateral. Your liability will vary depending on which loan product you choose, but you will need to understand all the fine print.

Alternative lenders

Alternative lending is where many small businesses are turning today for simple, easy and flexible terms in financing. These lenders typically offer several small business loan options and may include ways to limit your risks, such as through a repayment schedule that changes to match your sales volume.

Things to consider:

  • Alternative lenders may focus more on what you have built for your business and its overall potential, rather than your past credit history. If your credit score is less than perfect you still have funding options.
  • The application process is simple, light on documentation and not time consuming.
  • The approval process is quick, so if you are looking to seize a new opportunity for your practice you can do so with confidence.
  • The repayment schedule can be customized to ease your risk and assure greater success.

Lines of credit

A line of credit is only for short-term needs like for buying new technology or equipment. Similar to a credit card, but with better rates, you will only be charged interest on the amount of funding you utilize.

Things to consider:

  • Lines of credit usually offer good interest rates, but are not for your larger, long-term needs like purchasing a new practice.
  • Lines of credit have repayment terms of about 12 months.
  • Your credit score may still be a factor in approval depending on the lender.

Conclusion

When it comes to meeting your working capital needs, there are several options available. Be sure to learn about the different types of loans for veterinarians. Contact Credibly today to get more information about workable business funding solutions.

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