When it comes to financing your new veterinary practice, there are several different financing options available to you. The one you choose will largely depend on your actual needs and the type of practice you are purchasing. Here are the three main ways that new owners typically secure funding for their practices.
- Conventional Loan - If you've been thinking about buying a practice for a while, you've probably read a thing or two about how the conventional loan process works. You will need to put together a complete proposal that covers your earnings, assets and personal background in the industry, as well as information about what you intend to do with the practice in the future. This process can be somewhat labor intensive and requires great care. However, once your proposal is put together you can submit it to multiple banks.
- Private Lending - If you want to skip a lot of the red tape, private lending is usually a better option, although it comes with its own risks. Usually private money is given based on a promise of big returns rather than an extensive corporate underwriting process. This can make your loan move faster and can help you secure a loan when a bank might otherwise turn you down. The downside is that you have to know somebody with money to lend, and you have to be able to take the risk of higher interest rates or shorter repayment terms to make it work.
- Small Business Administration (SBA) Loans - The SBA created a loan program that is designed to help small businesses succeed in a challenging market. This can be particularly helpful if you intend to run your practice as a small business and you want a very specialized type of loan. On the other hand, applying for an SBA loan typically requires much of the same paperwork and proposal writing as a conventional loan. SBA loans tend to have lower interest rates and longer repayment terms which make them attractive to first time practice buyers.
These are just the three most common ways that veterinaries find financing for their new practices. Private lending is a great option if you have personal connections and are looking at a higher than typical risk profile for your practice loan. However, both SBA and conventional loans can provide adequate lending options with a little bit of ground work. The most important thing to remember is that lenders are there to make money too, so you need to present your purchase as a manageable risk that promises positive returns for them.
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