Making it Easier to Navigate the Process to Your Veterinary Loan

By Schwanda Flowers
Thinking about buying or building a veterinary practice? Managing Director of First Financial Bank’s Professional Services Division, Schwanda Flowers, PharmD, provides some insights to help you navigate the business loan process successfully.

We understand your concerns. Many of us at First Financial Bank have been business owners in the past and remember how stressful it was to apply for that first business loan. The process can feel overwhelming, but there are some specific things you can do to make it more manageable.

It’s all about the preparation. Here are some tips to help you prepare to be successful:

1. Build Your Financial Story

As you look to become a business owner (or grow a business), you should know your net worth. An up-to-date personal financial statement is a requirement to be submitted with your loan application. You can find the template here from the U.S. Small Business Administration (SBA). Your lender will expect that there may be student debt, but we need to know your net worth outside of those loans. Take your time to be sure the information is accurate – and don’t forget to sign it.

2. Check Out Your Credit Before the Lender Does

Your lender will check your credit as part of the process, but you want to do it first. Give yourself the chance to work with the reporting bureau to clear up any mistakes or be ready to provide context to anything that might appear less than stellar. The three major credit bureaus are Experian, Equifax and TransUnion and you are entitled to a free credit report from each agency every year.

3. Identify Your Advisory Team Early

When your furry patients have a complex issue to address, you may assemble a team of specialists to increase the likelihood for a positive outcome. Buying or building a business is no different. You need a team of professionals with a variety of skills that can round out your expertise. This will include a good accountant, attorney and insurance broker/agent. They will need time to assess, advise and provide you what you need in time to meet deadlines, so plan ahead.

4. Know the Value of Your Planned Acquisition

If you are buying a piece of property to start a practice or planning to acquire an existing practice, you’ll need an accurate assessment of what it is worth before you apply for a loan. Competition for existing veterinary practices from the corporate vet businesses can inflate prices. The bank can’t loan you more than the actual value and will conduct a business appraisal and valuation as part of the loan process. Be prepared and know before you apply.

5. Start at Least 90 Days in Advance to Assign Life Insurance to Bank

You’ll need a variety of insurances to protect your business. One insurance that may not be top of mind is life insurance. If you are applying for an SBA loan, you’ll need to assign your life insurance benefits to the bank (this is not the same as making them a beneficiary). This can take time to establish, so start at least 90 days in advance with your insurance agent. Having this settled well in advance will avoid it slowing down the processing of your loan.

6. 60 Days in Advance Have Your Cash Injection Ready

In most cases, you’ll need at least a 10% down payment for your business loan. This money can be funds you accumulated in your account at your bank, or it may even be a gift from someone close to you. It can’t be a loan. Your lender will need to verify the funds have been in your account for at least 60 days prior to the loan closing. Make sure that all funds are traceable (electronic funds transfer from their bank or a check). If you are liquidating an asset for the down payment, you will want the funds issued and deposited in a manner that can be identified. Not cash. Be sure to talk to your lender about your down payment, how much you will need and how to bring those funds to closing.

7. Put All Those Data Points in Context

Finances, real estate and licensing documents are only part of the story of your new business. Help your lender see your vision. Paint them a word picture to illustrate the passion and driving force behind the numbers – and where you are planning to go.

8. Wrapping it All Up in a Business Plan

If you haven’t created a business plan yet, it’s time to get started. This includes the financial and licensing documents information we’ve already mentioned, plus:

  • Business opportunity, including market potential for any identified location and your type of practice.
  • Leadership team you have assembled as partners and/or advisors. For partners, your lender will need their financial information and their planned contribution/participation in the business.
  • Staffing, equipment and other assets/costs … and more.

Get some additional help with our free, downloadable: “A Guide to Building Your Veterinary Business Plan”.

Preparing to Successfully Navigate the Process

With a plan, good preparation and insightful advice from your trusted advisors, you can optimize the path to processing the loan for your new veterinary practice.

Need some more help building your business plan? Check out this article with the downloadable guide. Want to chat about your plans with our lending team? Let’s talk!

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