Show me da MONEY!
Dreams cost money. One of the most important steps in building your dream practice is getting the right funding for your project. I like to refer to our office as a project because it has defined benchmarks that we must complete in order to position ourselves to be successful. You will also learn very quickly that now you are a business owner and not solely concerned about just the dentistry. Being properly funded is more than just getting a bunch of money. The bank can lend you 1 million dollars, but if you need to pay it all back within the first two months then that won’t work for you. A few of the main things you want to consider when pursuing banks for funding are the type of lender, structure, terms/conditions, and rate.
Type of Lender
Having a lender that is familiar with your business typically yields the best results when it comes to financing. There are healthcare-specific lenders that understand what you are trying to accomplish. They may even be lenders that specific startup or acquisition products.
Structure
How you repay your loan is a very important consideration. Lenders that have start-up specific funding may be able to offer lower payments for the beginning months that you are open. They may also be able to offer interest-only payments for a certain amount of time. Having these smaller payments will allow you to maximize your cash flow in the early months of your practice.
Terms and Conditions
A good lender will have have a good rate AND good terms and conditions. Each lender will have their own terms but here are a few things to consider.
Pre-payment Penalty: Some lenders will penalize you for repaying your loan early. Others may only penalize you if you repay the loan within a certain amount of year.
Principle Reduction: Wil you be able to pay more on your loan every month to reduce the principle faster?
Collateral: These are basically what the bank can come after in case you default on your loan.
Insurances: Banks will require you to carry certain insurances throughout specific parts of your project and/or the life of your loan. These may include Hazard Insurance, Builders Risk Insurance, and/or a Business Owners Policy.
Rate
Another important factor to consider is the rate. This basically determines how much interest you will end up paying in addition to the principal amount bored. Although the rate is very important it is not THE MOST important factor. A good bank will understand your business and offer you good terms AND rate.
Our Lender Search
We pursuit a financial relationship with the following banks. It is important to know that everyone’s situation is different and one bank may be good for one person but bad for another. It really boils down to what YOU need and are looking for in a financial institution. This is our brief synopsis of the lenders we were courting:
Wells Fargo - Always asking for more stuff. Financials, documentation. It felt never-ending. Plus we were skeptical due to the trouble they got themselves wrapped up in the last few years.
Bank of America - Great communication the advisor was VERY knowledgeable. However, it wasn’t enough to overcome the numerous bad experiences we had heard about from others who have used them.
PNC - I don’t even remember really following through with them. They asked for stuff and then nothing happened. Because we had other options I didn’t press the issue.
Huntington Bank - This is who we ended up going with. The advisor was very knowledgeable, transparent, and persistent in a good way.