🔒How to select the right financial partner for a medical practice

Whether you are acquiring a new medical, dental or specialty health care practice and are evaluating commercial financing options or are growing a practice by acquiring a new location or investing in new equipment, financing a general or specialty practice is a big step for any owner.

As you enter this stage of growth, there are several best practices to follow for medical offices undertaking the process of finding and working with a business banking partner to provide funding.

Establish a support team early

The financing process will inevitably go more smoothly if you’re well prepared. It’s good to have a solid advisory team to support you throughout the lending process. The team should include:

• An accountant to provide advice on tax implications of new legal structures, prepare corporate returns, provide thorough financial records, and ensure finances are in order.
• A financial advisor to provide strategies on benefits to personal finances, subsequent large purchases, and how best to optimize resulting income.
• A trusted real estate agent who understands the specific needs of your health care practice to potentially handle lease negotiations, provide listings options for your new space, and handle negotiations on purchase or sale of real estate.
• An insurance agent to ensure appropriate life, malpractice, liability, and property insurance to have the proper safeguards in place.

Select a qualified lender

When it’s time to consider options for expansion, it’s wise to start by reaching out to lenders with whom you have an existing depository account or business banking relationship. If you already have a strong relationship with your existing bank, you’ll be off to a good start working with a team that is familiar with your financial history. If you are looking for a financing partner, you might consider:

• What options are available with local lenders? A local provider understands the regional market and will be accessible in person to navigate any potential issues that may arise and can provide the high level of customer service needed to process and close a loan transaction smoothly and quickly.
• Does the lender have a demonstrated history of lending in this space? Choose a lender that understands how the medical industry operates compared to other industries and will be able to offer guidance based on this expertise.
• Does the lender offer additional services that can benefit your business? Some banks offer a full suite of business management tools including merchant services, payroll and cash management.

Prepare for the process

Depending on your circumstances, your lender will need numerous historical and current financial details throughout the lending process. You should be prepared to provide the following:

• Three years of historical financials and year-to-date financials.
• Specifics on your personal background including education history, personal financial strength, and three years of personal tax returns.
• Proof of life insurance and malpractice insurance policies.
• In the case of an acquisition, the practice’s primary employees and whether they will stay on.

In addition to financial information, a new healthcare practice might require a solid business plan, while construction of a new facility has its own needs including budgets, plans and specs to support your financing request.

The best way to be prepared for your individual situation is to build your support system early on so that any requisite documentation already exists and is easily accessible when it’s time to provide it. With a solid team in place, you will be well prepared to grow your practice.

Nick DiMatteo is a vice president and business relationship banker at Machias Savings Bank. He can be reached at NDiMatteo@machiassavings.com,