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Business Loan Question

1,229 Views | 8 Replies | Last: 5 yr ago by SLF11
Astros18
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Background: Opened a small medical practice with 1 partner. We opened 18 months ago. We leased a small space because it was what we could afford at the time. We have had great growth and paying all expenses, small staff salary and ourselves a healthy salary as of the last 3 months. We both exhausted our own cash reserves and took out a small $20k line of credit to start up. We have paid off about 1/2 of the line of credit but have not yet built up much of a cash reserve. We only signed a 3 year lease because we expected to grow. We are 18 months into the lease. There is a possibility that our neighbor tenant will be leaving and this would allow us to take over the space and double our sq footage and add another staff provider. Problem is we will likely need $75 to $100k for build out and new equipment. What type of loan/bank/investor do we need to be talking to for this situation? Small local bank was source of line of credit.

TLDR; 18 month medical practice with good growth, limited cash due to start up 18 months ago, opportunity to expand but need $100k loan with minimal collateral.
ChipFTAC01
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AG
Whereabouts?
Astros18
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San Antonio area
IslandAg76
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AG
I would think 2 physicians with a growing, positive cash flow practice wanting to expand could go to almost any bank and get money

Look in some of your journals, medical publications, there will probably be some ads in them looking for your business
The Wonderer
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AG
See if your LL will front the TI and roll it into the lease.

Also, you should be able to get a healthy six-figure loan/LOC so long as you both sign a personal guaranty.
752bro4
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AG
Not necessarily true without a personal guaranty. We found without 2 years in the black, many lenders cut it off there. Some of them even wanted 2 years in the black tax returns, which can often mean close to 3 years if you don't file until 10/15.

OP - check out BoA Practice Solutions Group. We didn't meet their specific criteria, but they had a lot of programs out there and seemed to be the best to work with.

Also, check with who your current business financial institution is. If you've got a relationship there (especially if it's a local/regional bank/CU), they'll be more likely to get this going.

As mentioned above, be prepared to fully guaranty it personally with your practice partner(s), and expect to put 10-20% down cash. Make sure you get a tenant broker involved and get fair market TI to help offset the cost of build out. A lot of medical equipment types will also finance in-house for 12-24 months at 0%.
Diggity
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AG
I have a friend in Houston whose group specializes in this sort of thing.

You should reach out to him and he'll put you in touch with his San Antonio colleagues.

Ryan Bates
Amegy Bank
Assistant Vice President | Private Banking
Ryan.Bates@amegybank.com
cohibasymas
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AG
OP - I'm a CPA and also have a brokerage relationship with a highly reputable debt advisory firm. I'd be glad to put you in touch with them; they help advise through the various options, their fees are extremely reasonable, and they don't get paid unless you decide to go through with one of the financing options they lay out for you.

Shoot me an email if you're interested with TexAgs in the title.

kristoferww at gmail dot com
Astros18
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Thanks for the replies. We use Broadway Bank and have plans to talk with them next week. I just didnt know if an alternative route was more advisable.
SLF11
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AG
Commercial real estate broker in SA here -

There is a situation where if you extend your lease, along with the expansion, the LL should have incentive to offer you a Tenant Improvement (TI) allowance - this is market standard. Otherwise, you live out the end of your lease at your current location then go shop for a more suitable space where, again, the LL should offer you an TI allowance.

Let me know if you'd like to discuss more offline.
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