Australia’s ageing population and the increased coverage afforded by Medicare and private health insurance mean that demand for physiotherapy can only get bigger.
If you’re a qualified physiotherapist thinking of starting your own private practice, a physiotherapy practice loan may just be what you need to get it off the ground.
Physiotherapists are considered prime borrowers by a number of banks and lenders. As such, they are willing to lend you the complete costs of buying practice premises including fit-out and equipment.
How much can I borrow?
- Practice premises (freehold property): Borrow up to 100% of the property value.
- Physiotherapy practice business finance: Borrow up to 100% of the business value (leasehold) including fit-out and equipment costs.
- Maximum loan term for freehold: 25 years.
- Interest only: Up to 5 years.
- Overdraft facility: $100,000 or more depending on applicant strength.
- Low doc commercial loans are available.
- Significant interest rate discounts on offer based on your application strength.
- Buying a start-up: Business plan required showing cash flow projections.
- Buying an existing practice: Last 6-12 months vendor business financials.
- Member of the Australian Health Practitioner Regulation Agency (AHPRA).
We can negotiate a competitive interest rate on your behalf!
Call us on 1300 889 743 or fill in our free assessment form to find out if you qualify for physiotherapy practice loan.
Why wouldn’t I just ask my bank?
Many banks and lenders simply won’t allow you to borrow up to 100% of the commercial property value and 100% of the business value.
However, we know lenders that are willing to offer amazing deals just to get business from physiotherapists.
They know that physiotherapists and certain allied health professionals tend to earn above average incomes in a very stable industry.
Because of this, you not only won’t need a deposit but you may qualify for interest rates that are discounted considerably lower than those offered to general business owners.
Banks don’t generally reward loyalty so even if you have other facilities with your current bank including a home loan, credit card and personal loan, it doesn’t necessarily mean they will offer you a better deal.
In fact, they will likely only offer a marginal discount because they believe you’re unlikely to move on.
We know how to build a strong application so you can get approved the first time around with a lender that will actually fight for your business.
How do I get approved?
There a few things you can do to prepare for your application so you can speed up the process and get you approved for physiotherapy practice loan a lot faster.
These are just general guidelines only and will vary from lender to lender, not to mention the fact that commercial lending policies are highly negotiable and flexible.
It also depends on whether you’re planning to buy an existing practice or your own start-up.
Generally speaking, you’ll need to provide a residential or commercial property that you own as security for the loan.
In addition to that, you will generally need to provide a director’s guarantee and a registered fixed and floating charge over the business practice and associated assets.
Physiotherapy and management experience
You’ll need to be an AHPRA member as a minimum to qualify but you may also need a track record, particularly if you’re planning to start your own practice rather than buying an existing business.
It takes roughly 4-6 years to become a qualified physiotherapist, depending on whether you go through TAFE or university.
During this time, you’ll undertake hands-on work experience at either a hospital, rehabilitation centre, or community health centre. However, that bank may still want to see evidence and even referees for full-time work at a practice.
It’s very much the same thing as applying for a job except you’re applying with the bank and explaining that you have the skillset to run a successful practice.
As part of your business strategy (which you can explain in your business plan), you may want to hire a manager for the business who can handle the financials while you can just focus on treating patients.
This can work in your favour if you don’t have any previous business experience.
As mentioned previously, your business plan should be certified by your accountant and delve into a few areas such as:
- Cash flow forecasts for the next 12 months.
- Marketing strategy including local competition analysis.
- Your skills and experience as well as the experience of your management team (if any).
What if I’m buying an existing practice?
If you’re buying an existing physiotherapy business, the bank may ask for the current financials such as the profit and loss statement for the past 12 months.
If the financials are poor, the bank will want to know how you plan to turn things around through your business strategy.
What should I look for in a practice?
Although it’s not as popular an option as starting your own private practice from scratch but many physiotherapists choose to go down this path in order to avoid much of the upfront capital costs and the hassle of trying to build a client base.
There are few things to consider when checking out practices to purchases and this will help inform the offers you put on the table:
- Business financials: Having a good look at the past 2-3 years financials for the practice is one of the first things you should do. They tell a story of how the business has been tracking and it then forces to ask more questions such as why the practitioner is selling in the first place.
- Current debts: Debts and liabilities are often overlooked but a practice with a lot of debt is usually a sign that it isn’t financially stable and there’s something deeper going on in the business that you will be inheriting.
- Strong client base: Does the current owner or vendor have enough loyal and repeat customers so you can immediately start earning an income?
- Existing referral network: Does the practice already have long-term referral relationships with General Practitioners (GPs), hospital, community centre and sporting clubs?
- Good reputation: Goodwill can be difficult to calculate so you should hire a local commercial buyers agent who can compare similar-sized practices in the area and help you negotiate a fair price.
- Specialisation matches your skills: Are you buying a specialist practice or a one stop shop? Ensure that you’re buying a business that matches your skillset and experience. You will likely lose loyal customers if they can’t trust your expertise.
- Staff and management: Will key staff members and management stay on during a fair handover process? You may want to consider making this a prerequisite in the Heads of Agreement (Contract of Sale) with the vendor.
- Location: Consider practices that are located on busy thoroughfares with plenty of foot traffic. However, you also have to consider the demographics of the area, not least of which is the middle-aged to elderly.
- Practice premises: If you’re buying the freehold along with the business, ensure that the building is structurally sound and that all fixtures and fittings are in working order.
As you start evaluating physiotherapy practices, it’s important to have a strong team behind you including a qualified accountant, lawyer and a commercial buyers agent.
In this way, you can make an informed decision and avoid falling into common traps.
As you build a picture of the business, the next obvious question you should be asking is why the vendor is the selling in the first place.
Negotiating the Heads of Agreement
When you get to the negotiation stage, it’s important to draft up a Heads of Agreement with the involvement of lawyers and accountants from both parties.
In it, you should determine what is included in the sale and what isn’t:
- Equipment and assets: You should determine if the sale includes examination tables, exercise and rehabilitation equipment, electrotherapy machines, or any other physiotherapy tools.
- Key staff: You may want to negotiate with the current owner that key staff stay on for at least the next 6-12 months.
- Handover period: Will the current owner stay on to ensure a smooth transition. Many retiring practitioners opt to stay on as a consultant just to provide some relief to patients.
- Practice premises: You may also want to make it a requisite and that the practice premises be repaired or refurbished before the sale goes ahead. Often the cost is split between the two parties.
What if I’m just buying the business?
If you’re simply leasing a building, you should negotiate with the landlord for a renewed lease (anywhere up to 5 years) and even a rent-free period (anywhere up to 6 months) so you can get on your feet.
Tips for running the practice
As a general rule, you should play to your strengths and try not to overextend yourself in the world of private practice.
What will you specialise in?
Specialists are highly sought after in physiotherapy, whether your specialty is in:
- Sports injury
- Neurological treatment
- Paediatric services
- Cardiorespiratory treatment
Do you have business management skills?
If not, hire someone to manage the day-to-day operations while you focus on patient care.
You may also want to consider undertaking a training course.
Do you have customer service experience?
These skills come with time but continuous professional development is key when running a private practice so a training course can also help.
Consider your start-up costs
You should consider how much you want to invest in upfront capital costs such as fit-out and equipment.
You should balance this out with your cash flow needs, especially in the challenging first 6-12 months of operating. Your accountant can help you with this.
Luckily, with a physiotherapy practice loan, you can borrow up to 100% of the fit-out and equipment costs.
Do you need a physiotherapy practice loan?
Ready to buy your own private practice?
Call 1300 889 743 or complete our free assessment form to speak with one of our physiotherapy practice loan specialists today.