Veterinary Practice Loans and Financing: Small Business Options
- August 10, 2018
- Posted by: Ashley Sutphin Watkins
- Category: Small Business Loans
Many veterinarians will start their careers by working within a practice that’s already well-established. Another option, either when you finish school or after you’ve worked as an associate at an established practice, is to start your own clinic.
Building a new practice does require careful planning, as well as financing. Veterinary practice loans can help in this regard.
There were about 70,000 employed veterinarians in the U.S. in 2017, according to the U.S. Bureau of Labor Statistics. The states with the highest number of veterinarians were California, Florida, and Texas. The mean annual wage for veterinarians was more than $101,500 in 2017, and the median annual wage was more than $90,200.
Meanwhile, the pet healthcare business is booming. Spending on visits to animal clinics in America was nearly $16 billion in 2016.
However, one report put the cost to start a small animal clinic at $1 million. A mobile clinic may have startup costs that are significantly lower, closer to $250,000.
- Veterinary Practice Financing
- Veterinary Practice Loans for Small Businesses
- Common Veterinary Practice Costs
Veterinary Practice Financing
Veterinarians eager to either buy a practice or start their own from the ground up can face numerous challenges in getting funding.
First, many veterinarians may already have a significant amount of student loan debt, which can hinder their efforts to get new financing.
Veterinarians need a strong business plan that demonstrates excellent future earning capabilities. This can include consideration for regional factors and client base. If you’re not buying an existing practice or drawing clients from another practice, you’re starting fresh, and lenders may be wary of that.
In general, a startup veteran practice is considered high-risk in the eyes of lenders. Veterinary practice loans are fairly dependent on the overall economy. If the economy declines, funding may be tight because many lenders can see veterinary services as something the public is less likely to spend money on.
Veterinary Practice Loans for Small Businesses
Different small business loan lenders offer various options for veterinarians who want to start, expand, or acquire a practice.
Bank of America offers up to 100 percent financing, with options for interest-only payments. Bank of America connects borrowers with project managers, to perform a “Demographic Site Analysis” to assess the value of the business. Loans range from $100,000 to $2.5 million.
Bank of America
Bank of America loans for new practices can be used to finance construction, fund certain expenses of the project and provide working capital. Bank of America’s funds for expanding a practice can go toward office improvements and new equipment. For acquiring a practice, the bank’s loans provide up to 100 percent financing and working capital. Terms and approval requirements depend on the specific type of financing.
Wells Fargo offers loans to finance and support health-care practices, which includes veterinarians. To start a practice, Wells Fargo offers fixed-rate loans with terms up to 10 years. Terms are similar for starting a practice, and there is a choice of repayment options. Wells Fargo offers a Milestone Program for new owners that includes short-term coaching, with the key business practice statistics tracked for 12 months to help improve systems and growth.
United Community Bank
United Community Bank provides another financing option from a smaller bank. Its veterinary loans can be used for land or building, practice acquisition, startup funding and business refinancing. United Bank offers SBA 7(a) and 504 loans, as well as other non-SBA guaranteed loans.
Many of the loan terms, limits, and qualification standards for funding a veterinary practice are similar to other small business loans. They do vary between lenders, however, so if you’re interested in opening your own vet practice or buying an existing practice, contact the lenders you’re considering to determine what you’ll need to qualify and what you can expect from the process.
Common Costs for a Veterinary Practice
There are quite a few different factors that play a significant role in how much it will cost to open your own veterinary practice. Here are some of the biggest costs to plan for.
Location – You may buy or lease a space that’s already been set up as a veterinary clinic, which will lower your costs. Otherwise the location you choose can have a big bearing on your startup costs. You want an area that’s going to be accessible to clients, but not oversaturated with other practices. If you’re building a space from the ground up, you can count on higher costs. Generally, to set up a waiting room and examination room in an existing space, budget for around $10,000. If you’re opening a mobile vet practice, you might plan for around $250,000 for the total cost of the vehicle and the equipment.
Equipment – The equipment needed for a veterinary practice includes the medical and surgical equipment, lab equipment, and kennel equipment. These costs are estimated at around $75,000.
Clerical Setup – For the clerical setup, which will include costs for bookkeeping and practice management, you can estimate around $5,000.
Other costs to consider include the costs of hiring staff such as vet techs and administration. You may also need to hire at least one other veterinarian to work at your practice aside from yourself. Finally, you will have to pay for insurance and marketing/advertising, which can be thousands of dollars.