There are a lot of submissions that WeCanFinancial.ca gets through the website and phone calls with questions about business loans for professionals. Lawyers, Doctors, Dentists all require substantial financial resources to be available to them daily to run their practices smoothly. Also many young professionals require funding for start-up, equipment and rapid expansion in many cases. In this article we will discuss several different models of funding young and established professionals with some examples added to the conversation. Our proprietary structure helps funding Doctors, Lawyers, Dentists, Psychiatrists, Accountants and Finance professionals with a specialised small business loans solution.
Most common requests that we get is a small business loans for doctors or dentists. Average cost of primary office setup or secondary office expansion in our experience is about $250k-$500k which is a significant amount which is quite often is not available to most our clients. The typical break down of such set up is about 40% equipment purchase and installation, 40% renovations, and 20% start up operating capital (numbers vary from client to client). IN our current market place most banks are not very happy financing operating cash needs, especially if practice is not established and there is no track record for the last 2-3 years from the given professional. Dentists for example require 2-3 years in order to establish their base clientele and quite often banks cannot expect good repayment history from the client unless he comes with already established clientele. Another significant hurdle that most clients face when they ask for such a financing is the fact that even though they are looking for money, bank would still expect them to invest up to 50% of the cash required up front, and the other 50% is financed assuming the deal is approved by the lending institution. Approval is extremely lengthy and difficult process, client needs to qualify through a multiple criteria and very little variation off the accepted framework may kill the deal.
Doctors on the other hand have a little bit easier times right at the moment. Because there is a shortage of family doctors and specialists in Ontario, banks are more acceptable when a Doctor establishing new practice or expanding existing one. Still a lot of financial criteria apply, together with personal credit criteria, and again up to 50% of cash needs has to be financed by the doctors themselves in many cases in order to be able to qualify for any sort of funding such as a small business loan.
Lawyers are also good candidates for a small business loan that our firm can structure. Typical lawyer start-up costs vary between 50k-100k and normally include equipment 50%, renovations 30% and operating cash flow short term needs – 20% of the budget. Funding lawyers nowadays is not an easy task, good credit plays crucial part in many of such small business loan transactions, and good net worth is always an asset. Our firm did countless transactions where, lawyers office was expanded, multiple offices were opened for the same practice, and start up small business loans were placed for young lawyers that just started their practices.
Accountants can also be funded in many occasions using small business loan program that our company developed over the years. Start-up costs for accountant office is very similar to the lawyer’s office and very rarely is larger than 100k. Again in order to qualify for professional loan, accountant needs to have very strong personal credit, and in many cases verifiable net worth as well. Our firm does 2-3 accountant professional loans per year and we have a very successful track record with this group of clients.
Small business loan programs do not need to be limited to 250k as many professionals know it. Our recent transaction could be a good example. Very well-known psychiatrists came to us with a small business loan request in order to acquire a building and convert it to a professional office. We structured the deal for our client where he needed to put only 15% down (out of $2.4 Million purchase price) and our proprietary program would finance the rest. Strong points of the deal were great personal credit and several million dollars of net worth, weak points were short period of verifiable financial performance and small down payment considering the size of the purchase. The deal was done and placed in less than 6 weeks.
Our firm is always happy to review a possibility of providing small business loans to professionals, and as usually we wish you all happy funding!