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Financing Options for Your Practice Purchase, Start-Up or Expansion Project Part 1

By: Jim Baum

Whether you're purchasing, building or expanding your practice, you may require financing that provides maximum flexibility for meeting immediate needs and supporting continued growth. Before approaching your lender, understand the financing options available so you can make an informed decision about the type of loan package that can meet your needs.

Loan options are based on the type of project you pursue. If you are purchasing or expanding a practice or starting a practice in a lease space, your loan is considered 'practice financing' and can be structured as either a conventional or specialized practice loan or Small Business Administration (SBA) loan. Practice financing does not include the building or structure, but the practice only. A building purchase requires a separate financing package that can be structured as either a conventional practice loan, a small business loan, or a loan with a specialty lender.

Conventional Practice Financing

A conventional practice loan is typically financed over five to ten years and consists of variable and fixed-rate loan packages with standard repayment terms and possible down payment requirements.

Conventional practice term loans may be used for practice acquisitions, start-ups and expansions, and can offer several advantages to practices, which vary by lender, including:

  • Competitive interest rates
  • Potentially lower fees
  • Both fixed and variable rate loans

But conventional practice loans may have their disadvantages as well, particularly if you're not working with a specialized lender.

  • You may not qualify for lower interest rate options.
  • Loans from a local or regional bank may require a larger down payment.
  • Loans can be based on existing assets rather than future performance (particularly with traditional lenders), which may make it difficult for young or start-up practices to obtain financing.

Small Business Administration (SBA) Loans

SBA practice loans are term loans obtained through a bank or commercial lending institution and guaranteed by the Small Business Administration. SBA practice loans may offer some key advantages over conventional practice loans:

  • SBA loans may require a down payment and offer a fully amortized term up to 25 years
  • May offer a lower variable rate option
  • May offer  more flexible credit underwriting guidelines

SBA practice loans may also have their limitations:

  • SBA loans may require more paperwork and/or take more time to process.
  • The loan program may require personal assets and property as collateral.

About the Author

Jim Baum is Vice President, Business Development Manager for Wells Fargo Practice Finance in the New York / New Jersey region. In addition to his experience in the dental, veterinary and medical fields, he can provide information about credit management, practice acquisitions, start-up projects, practice expansions, business refinance, and practice equity loans. Jim brings over 30 years of experience working with healthcare professionals and is a national speaker presenting at tradeshows, seminars and dental schools throughout the year. Contact: Jim.baum@wellsfargo.com or 1-800-897-2208

View all articles by Jim Baum


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All financing is subject to credit approval.

All financing is subject to credit approval.

All financing is subject to credit approval.

All financing is subject to credit approval.

All financing is subject to credit approval.

All financing is subject to credit approval.

All financing is subject to credit approval.

All financing is subject to credit approval.

All financing is subject to credit approval.

All financing is subject to credit approval.