Veterinary Practice Loans: How to Finance

There are more than 118,000 veterinarians actively practicing in the United States today. Though this is a record-breaking number, it’s still not enough: More than 41,000 additional veterinarians are needed by 2030 to keep up with the growing demand for pet healthcare, demonstrating the need for existing practices to expand their care provider options and new doctors to not only enter the industry, but start or acquire their own practice.

Opening and successfully growing your own veterinary clinic requires a strong business plan and adequate funding. With business financing, you can not only get your clinic up and running but also market the practice, cover expenses until you begin generating revenue, buy the most cutting-edge technology, and even expand your business as you grow.

Here’s a look at the veterinary practice loans available to new and existing vets, how important small business loan financing is to the growth of a clinic, and which types of veterinary practice funding are right for you.

Types of Veterinary Practice Loans

There are many different veterinary loan options to choose from, depending on your market, which veterinary services you plan to offer, and even the type of clinic you want to run. No matter which loan programs you choose, these funds can help you start your clinic, hire employees, and begin providing care to pet owners in your community.

SBA loans

One funding option for business owners is a loan backed by the Small Business Administration (SBA). SBA loans offer funds to a wide range of small businesses, often with lower interest rates and higher borrowing limits than other types of veterinary business loans.

Depending on the type of SBA loan you choose, you may be able to borrow up to $5 million toward your business financing needs, with repayment terms as long as 25 years in some instances. The eligibility and underwriting processes can be a bit arduous compared to other small business loans, so don’t look into an SBA 7(a), 504, or microloan if you need cash fast. These loans usually require a down payment, as well, so it’s probably not the best financing solution if you don’t have any cash on hand.

Traditional bank loans

Available through banks, credit unions, online lenders, and other small business financial institutions, traditional bank loans are what most people think of when they say, “small business loan.” Traditional bank loans offer the funds you need for practice acquisition or to build your own space. They can also give practice owners the long- or short-term funding necessary to manage cash flow, provide working capital, purchase new equipment, or even consolidate existing business debt.

Traditional bank funding might include a business term loan or even a business line of credit, depending on your personal and business creditworthiness. While rates may be higher than with SBA loans, you can usually get funds approved and disbursed faster, so this might be the best option for veterinary practices that need funding quickly.

Real estate loans

Want to purchase land and build your practice, or buy and remodel an existing building? Secured loans can offer veterinary practice funding for commercial real estate purchases and projects, just like a home mortgage loan would.

With a business real estate loan, you’ll get one lump sum that you can use to purchase the real property you want. You then repay that debt over monthly payments for a determined period of time. Since these loans are secured by the property in question, they often have lower interest rates and longer repayment terms than other forms of unsecured business loan debt.

Equipment financing

If you’re looking to purchase high-value equipment for your practice, equipment loans can often be your best bet. Other types of secured veterinary practice funding include equipment loans that offer the cash necessary for buying or leasing machinery and other costly equipment. Think everything from X-ray and CT machines to anesthesia machines and autoclaves. And since the valuable equipment in question secures the debt as collateral, you’re often able to lock in lower loan pricing.

Alternative funding

If you can’t qualify for veterinary practice funding or simply want another solution, there are a few other options to consider.

For example, business credit cards will give you access to on-demand funds that you can use to purchase supplies, repair equipment, cover marketing expenses, and more. Rates may be higher than with a business loan, though, so be sure to use this option wisely.

Key features of veterinary practice loans

When comparing different veterinary practice funding options, there are some important features to note.

Interest rates

The interest rate offered on your loan, line of credit, or even business credit card spells out how much you’ll pay for that debt. Put simply: You’ll want to lock in the lowest possible interest rate if you want to pay less to your lender.

Loan terms

Your veterinary practice funding term is how long you have to repay the debt. All other factors the same, a shorter loan term will equate to a larger monthly payment and vice versa. Be sure to choose a loan term that meets your budget while also getting you out of debt as soon as possible.

Eligibility requirements

Not all practices will qualify for all types of loans. For example, if you’re a brand new startup, you may not have the credit history and score required to qualify for a loan from a more traditional member FDIC bank. You may be forced to offer a personal guarantee, provide a down payment, or even opt for a different loan type and lender altogether.

Fees

Each veterinary practice funding option has its own fees and costs. Pay attention not only to the interest rate but also any origination fees, early prepayment penalties, and such.

How Veterinary Practice Loans Can Help Grow Your Clinic

There are so many different ways you can use veterinary practice funding options to establish and grow your practice.

Investing in equipment and technology

The right veterinary business loan can help you invest in the latest tech, equipment, and even highly-trained staff. This can make you stand out among other clinics in your area and also allows you to best serve your patients and their owners.

Enhancing care capabilities

With a vet practice loan, you can buy equipment, set up surgical suites, and even hire staff that make it possible to treat even complex cases. Want to offer in-office CT scans? Offer physical therapy or training services? The right veterinary practice funding can give you access to this cash when you need it most.

Expanding your space

Whether you’re looking into acquiring an existing practice, starting your own, or renovating existing facilities, you’ll need some capital to back up the project. Between unsecured loans, real estate loans, and even equipment loans, you can create the practice of your dreams.

Hiring and training staff

A vet practice is only as good as the people working there. With veterinary practice funding, you’ll have the cash available to attract top talent, offer specialized services, provide ongoing education for staff, and even cover salaries until your clinic is operational and profitable.

Choosing (and Securing) the Right Veterinary Practice Loan

The best veterinary practice funding for you depends on how you plan to use the money, when you need it, and what you can qualify for when it’s time to submit a loan application.

Your clinic’s financial health is an important first consideration. Your business credit score will play a big role in your eligibility; if you don’t have an adequate financial history or even a poor score, you’ll have trouble qualifying for veterinary practice financing through many business lenders. Some lenders — especially when it comes to SBA loans — will also want to look at your current cash flow and profitability. If you’re a new clinic, a smaller bank or loan amount may be the right solution.

The right loan also comes down to your clinic’s needs. You’ll need a different loan amount if you’re trying to just update your current clinic versus opening a new location. If you’re trying to buy new equipment, a secured loan might be the better answer.

Lastly, the varying application and approval processes can determine which loan is best for you. If you need funds fast, an SBA loan might take longer than you expect. On the flip side, the unsecured loan process for a small business lender may be simpler, but rates will usually be higher.

Final Thoughts

Veterinary practice loans can be a great way to start or grow your pet healthcare business. Whether you’re seeking financing options to purchase an existing practice, or you want to build your own company, vet loans give you the capital you need immediately, with the ability to repay the debt over the next few years. The application process and funding times can vary from one lender to the next, so be sure to shop around to find the right lender for you and your situation.

FAQs on Veterinary Practice Funding

How do I find small business loans near me?

You can find lenders in your area by searching online. However, consider that there are online lenders as well.

How much does it cost to buy a veterinary practice?

While the actual number depends on many factors, the typical vet practice is purchased anywhere from $200,000 to $1.5 million.

What percentage of veterinarians own their own practice?

According to the American Veterinary Medical Association (AVMA), about 42% of veterinarians own and run their own practice. In 2008, this percentage was 48%.

What is one of the largest expenses for veterinary practice?

Employee compensation is the biggest single expense for most veterinary clinics. The more talent you hire, the better you can serve the pets and pet owners in your community — but attracting and keeping that talent means ramping up your payroll expenses.

Can vets offer virtual care services?

Currently, six states allow for VCPR (veterinarian client-patient relationship) to be established remotely, such as through telehealth. Even in states where VCPR must be established in person, most veterinarians are allowed to offer select services virtually to established patients.

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