Tips for Securing Your Loan

Whether you are starting a new medical practice or expanding an existing one, understanding the financial piece of the puzzle can be a challenge. It is one of the most important challenges you will face, but the good news is, you can make it easy. The need for start-up and ongoing capital is vital to the success of practice.

Step 1: Relationship Building Relationship building is the first step towards securing your capital. As with any relationship, you should not just jump at the first person who wants to be your friend. That means you should not limit yourself to just one bank when you’re looking for start-up capital. Instead, take the extra effort to build a rapport with several banks. There are two reasons you want to build relationships at several banks. 1. Flexibility The more banks you talk to, the more capital you may find. While one bank may only be willing to offer you a certain amount at a certain rate, another bank may be willing to offer you more at an even lower rate. 2. Competition You’ve probably heard the slogan, “When banks compete, you win.” There is truth to that saying. If you only go to one bank, you have no leverage to negotiate different terms. Getting information from several banks gives you the leverage to negotiate and pick the best terms for your business. Remember your relationship with your bank is important. You should meet both the loan officer and the president of the bank if possible and build a relationship with them. Part of that relationship building is making sure both people have a clear understanding of what your need is for your loan or line of credit.

Step 2: Your Bank’s Credit Policy Once you have selected a bank, your next step is to learn about its credit policy. Understanding this policy and how it’s regulated will help you avoid possible complications with your loan. The better relationship you have with the bank, the easier it will be for you to learn about this process. Your loan officer should keep you well informed and help you procure the most effective loan or line of credit you will need for your Medical Practice. As you examine the policy, you should ask yourself a few questions: 1. Does the bank’s policy fit with my business? 2. Are you going to get bigger than what your bank can support? 3. Do you know the bank’s regulators?

Step 3: Your Financial Packet If you want to save time on the loan process, you should have a financial packet ready and available to present to the bank. Your financial packet should contain the following: 1. Tax returns for the last three years on all business owners or partners. Additionally, if you are requesting an ongoing capital loan, you should bring in your business tax returns for the last three years. 2. Your year-to-date financial statements for the business, including your profit and loss statement and your balance sheet.

Step 4: Maintain Good Credit Establishing and maintaining good credit is important to continuing the relationship you build with your bank. You need to have available collateral accessible at all times. You also need to be able to liquidate your assets into cash and be able to show and produce a good profit.

Living Every Minute,

Dr. Tim