Financing your Practice

Whether you are buying a practice or need help with expansion we can help you navigate the sea of confusion when it comes to practice financing options. We've worked directly with lenders for over 18 years and understand what the banks require. We'll help you present your plan in a professional and readable manner to insure a credit approval. Plus we'll review your various loan options and help structure the best loan to meet your cash flow requirements.

Financing services are free to Buyers for all our current listings

Practice Acquisition loans
We understand that most buyers have large student loans and often need to obtain 100% financing. All the lenders we work with are proven and reputable companies. We've help educate them on the nuances of the profession. This insures a better opportunity for a loan approval and a structure that meets your cash flow needs.

Partnership Buy-in loans
Buying into a practice can be complicated. We can help in structuring a fair agreement for all partners. Several of our key referral lenders have special programs designed for junior doctors to buy-into existing practices. This provides upfront cash for the senior doctor eliminating the need for a seller note.

Real Estate Loans
Purchasing real estate is an excellent method of building equity in your practice. We can help obtain practice loans with terms up to 25 years.All about Practice Loans.

All About Loans
There are essential two types of loans available for businesses. Those based on cashflow and those based on assets.

Cashflow lenders approve loans based on the profit or cashflow of the business or practice. They are not interested in the value of the equipment. Generally in these circumstances the assets would be of little or no value if a lender re-possessed them. Any service businesses and most medical practices fall into this category. Attorneys, accountants, doctors and advertising agencies are all examples service related businesses. The "value" of these businesses - the owner or staff - goes home at night.

Asset Based Lenders approve loans based on the collateral or asset pledged. This collateral insures that if re-possessed the lender will be able to sell the collateral and recover the entire loan balance. The main focus is the value of the asset. The best example of this is residential real estate loans. Most lenders will loan up to 80% of the appraised value of the home often times with little or no verification of income. Asset lenders usually work with such industries and manufacturers, heavy construction companies, material handlers or transportation outfits.

SBA Loans
The Small Business Administration loans provided by the government, or SBA loans, are the most common for small businesses and medical practices. Loans are typically up to $1 million dollars. Interest rates for these loans are variable . Loans are usually 2.5% to 2.75% over the prime rate. Typically down payments of 5% - 10% are required. Some lenders have special programs which provide for lower or no down payments (based on buyer's credit profile). The SBA will go as high as $1.5 million if the buyer puts down approximately $500,000. SBA loans require a guarantee fee. This guarantee fee is 3% of 75% of the loan amount. SBA loans are up to 10 years for business purchases, 25 years for real estate and 7 years for equipment. Often times the terms may be blended if there s a mixture of loan types (collateral)

You can apply for an SBA at most banks. Each bank (lender) will have their own criteria for lending because the bank is at risk for 25% of the loan. Every bank will first determine their criteria for size of loans, types of businesses and credit parameters. Some SBA lender will not do all loans. The best approach is to find cash flow SBA lenders who understand the medical profession. Preferred SBA lenders can approve loans faster and insure faster funding.

SBA Loans summary

• Variable interest rates 2.5% over prime
• May require up to 10% down payent
• Will finance working capital
• Lowest rates available. (Except for home equity lines)
• Terms up to 10 years for practice purchasing
• Terms up to 25 years for real estate
• No pre-payment penalties
• Requires life insurance
• Minimum 2 years license experience for buyers. (Exceptions may apply)

Conventional Practice Acquisition Loans
Most conventional loans offer fixed interest rates with a one time adjustment after five years. Typically they offer 100% financing, plus working capital with no down payment. Conventional loans are offered by various brokers, banks and financial institutions. Loan brokers often charge a packaging or receive a fee from their lender. Loan brokers are not direct lenders. Just like a mortgage broker they work with various wholesale lenders on a recourse or non-recourse basis. Only brokers with recourse share in the responsibility for defaulted loans, which often give them a more liberal credit criteria. Rates for loan brokers are usually slightly higher. Direct lenders include banks or other private financing companies. Both provide slightly lower rates than brokers based on credit criteria and loan size. Rates are still generally higher than SBA loans.

• Conventional Loans summary
• Fixed interest rates (higher than SBA loans)
• Usually have pre-payment penalties
• Terms up to 10 years for practice purchasing
• 100% financing (no down payment required
• Will finance working capital
• Requires life insurance and business overhead insurance
• Minimum 2 years license experience for buyers. (Exceptions may apply)