goebel-richard.thumbnail Dick Goebel, DVM, Simmons Great Lakes

A decade ago, most owners selling their veterinary practices had no choice but to finance part, if not all, of the practice sale. Today, many commercial lenders are eager to be involved.

Small Business Administration (SBA) loan performance data indicates that veterinary practice loans are in the “lowest risk” category. Commercial lenders, who represent agencies or individuals with money to invest, see veterinary practice buyers as ideal candidates for their clients. Unencumbered by strict banking rules and policies, commercial lenders can tailor loan packages to meet the needs of buyers and sellers alike.

Buyers are well served by loan terms of variable length and rates of interest. Some loans are “blended” interest and “blended” term. (Often 17-20 years.) The traditional alternative is a combination of two separate loans. One is for the business (5-10 years) and the other for the real estate (10-25 years). The “blended” loan offers lower monthly payments, but total interest costs can be higher.

SBA loans can often be obtained with more lenient terms than conventional loans. Conventional Loans, however, cost less to originate and require less paperwork.

Loan approvals are based upon the credit-worthiness (not the net worth) of the buyer. They also consider the present and historic practice profitability (cash flow) and, if the real estate is included, a real estate appraisal. Buyer indebtedness, for example educational debt, does not detract from credit-worthiness unless payments are past due.

Financing the sale of a veterinary practice has rarely been easier than it is now. Great opportunities are available to veterinarians with clean credit histories, who are interested in purchasing financially rewarding practices.

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