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Veterinary Practice Loan

Borrow 100% of the business costs!

If you’re looking to take your veterinarian profession to the next level, setting up your own practice could be the way to go.

Unfortunately, it’s not cheap to start your own business or buy your own practice.

Luckily, some lenders are willing to offer amazing deals on veterinary practice loans, including 100% lending and negotiated interest rates. What are the banks willing to do to get your business?

What are lenders offering?

Lenders see vets as strong borrowers and are willing to help them finance their:

  • Veterinary practice premises: Borrow up to 100% of the property value (freehold).
  • Veterinary practice business loan: Borrow up to 100% of the business value (leasehold) including fit-out and equipment costs.
  • Maximum loan term for (freehold): 25 years.
  • Maximum loan term for (leasehold): 15 years or as per the lease agreement.
  • 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: Need to provide a business plan with cash flow forecasting.
  • Buying an existing practice: Most recent business financials.
  • You need around 3 to 5 years experience as a qualified vet.
  • Significant interest rate discounts on offer based on your application strength.

Call us on 1300 889 743 or fill in our free assessment form to find out if you qualify for veterinary practice loan.

Lending criteria

Vets tend to earn higher than average incomes, which is the reason why banks are willing to offer deals that are not available to the general public.

To provide this, you can simply provide your most recent tax return or business activity statement (BAS) if you’re currently contracting.

Your ability to pay off the commercial loan, or your “serviceability” aside, you’ll generally need to show is that you’re a qualified veterinarian who is a registered member of the Australian Health Practitioner Regulation Agency (AHPRA).

Do I need experience?

Generally, the bank would like to see you have at least 2-3 years experience in an operation that matches the size and patient capacity of the commercial property you intend to buy.

If you’re simply buying an existing practice rather than starting a new practice, you won’t need as much business and management experience but, either way, you’ll need to provide the lender with a business plan that’s been approved by your accountant.

What should be in the business plan?

The business should basically be a summation of your cash flow forecast and what your strategy is for running the business going forward.

It will also include your own SWOT (strengths, weakness, opportunities and threats) analysis of the location including a competitor study and your unique selling point, such as specialising in a certain field of veterinary medicine such as canine, reptile and amphibian, bovine, equine etc.

Insurance may be required

If you’re quitting your job to run the practice full time, you may require income protection and life cover although this requirement will vary between lenders.

What can I use for security?

Firstly, you will need to provide a property as security for the purchase of the real estate as well as any business finance you need.

With a residential property, such as your home as security, you can borrow up to 80% of the property value.

The bank will also take a fixed and floating charge over the commercial property or business assets, depending on whether you want to buy the business itself or you want to buy the freehold property as well (freehold going concern).

A director’s guarantee will also need to be provided as security.

Why speak to us?

Many of our senior mortgage brokers have a number of years of experience in commercial and business loans.

As credit experts, they:

  • Can properly assess your situation and provide you with solutions that best suit your practice needs.
  • Know how to get you approved the first time around.
  • Build a strong case with the right lender that will offer you a significantly reduced interest rate.

Discover if you can borrow up to 100% of the commercial property value and 100% of the fit-out and equipment costs for your veterinary clinic.

Call 1300 889 743 to speak with one of our specialist mortgage brokers today.

Tips on buying an existing clinic

One of the most important things you can do when searching for a veterinary to buy is not to get drawn in by promises of turnover.

Unlike some other industries, the practice is not nearly as important as the practitioners running the clinic, particularly if they’ve been there for many years.

Reputation is everything when it comes to the world vets so there are a few things to consider.

Have a transition period and a non-compete clause

With the help of a qualified solicitor, you should negotiate with the current operator a transition period of anywhere between 3-6 months.

You’ll find that practitioners would prefer it this way since they want you to continue to successfully run practice going forward.

Just to ensure that the contract is in your best interests, you should negotiate building in a non-compete clause into the contract in order to prevent the current owner simply setting up shop down the road.

You may even want to organise for the practitioner to send a letter or email out to clients explaining the change of ownership but ensuring that they will stay on board to ensure a smooth transition.

Make sure the vet matches your skillset and experience

There’s no point buying a practice that specialises in emergency and critical care (like a hospital) if your skills are in oncology or cardiology.

Clients would expect a certain level of fast and accurate care and if you can’t deliver, your reputation will quickly deteriorate in the community.

Understand what you’re buying into

It’s really important to understand what you’re getting for your money when you’re buying a veterinary practice.

For example, you’ll normally agree to take on all liabilities owed to staff, including any sick leave, annual leave or long service leave. An estimate of these liabilities will be deducted from the agreed sales price.

Depending on the size and nature of the vet, staff entitlements can outweigh goodwill so the purchase price should be negotiated with the help of your solicitor.

You should also consider what equipment and medical supplies, if at all, are included in the purchase price. This will vary depending on whether the practice is a specialist clinic or not and, again, this can be negotiated when it comes time to setting an agreed purchase price.

The lease term

Generally, 3-5 year lease terms are appropriate but it really comes down to how much work the practice premise needs.

Five-year lease terms or longer may be required if major construction and fit-outs are required over the period that you’re running the practice.

The good thing about a long lease is that it provides you with stability to firmly establish your practice in town and protects you from having to move in case the landlord decides to sell the premises.

Tips on assessing the practice premise

As a general rule:

  • Who are your competitors? Are they direct or are you offering speciality work like diagnostic imaging or dermatology?
  • Is renovation work required to make the practice look good? First impressions are important to clients.
  • Consider the number of consulting rooms and whether there is the capacity to expand in the next 5 years. As your practice grows, it’s often cheaper to renovate than to sell and buy another clinic somewhere else.
  • What are the demographics of the area and will you generate enough business?
  • Unlike renting a residential property, capital and renovation work comes at the cost of the lessee, not the landlord. Build and pest inspections can cost a few hundred dollars upfront but it can potentially save you thousands of dollars in the future.

Get expert advice

You may be qualified to treat animals but it doesn’t mean you have the skills to start and manage your own vet clinic.

Independent financial and legal advice is crucial.

Before you even speak to a commercial mortgage broker, sit down with your accountant and explain what you’re intending to do.

They can properly assess your financial situation and they may even put you in touch with an accountant that has experience in establishing vet practices.

They can give you an idea of what kind of money you’ll likely need to outlay to get yourself up and running. They can even advise you on an ownership structure that will best benefit you from a tax perspective.

As you start to search for possible locations or established practices to purchase, a business broker or commercial buyers agent can help.

They can even negotiate the terms of the terms of the heads of agreement with the current owners.

Ready to speak with a mortgage broker?

Call us on 1300 889 743 or complete our free assessment form and find out if you can borrow up to 100% of the property and business value with a veterinary practice loan.

  • Adam L.

    Hi, it’s stated above that we’ll need to provide a BAS statment if we’re currently contracting. I’d like to know how banks assess these statements.

  • Hello Adam,

    Most of the lenders add up the G1 or total sales figure for the last four quarters and then assess using 40% of this figure, or use the income you have declared, whichever is lower. There are also lenders that use 50% of the G1 figure or a slightly different percentage depending on the type of industry you’re in. Lenders also look to see if your income fluctuates significantly.

    You can find out more about this and get an estimate on your BAS income here:
    https://www.homeloanexperts.com.au/mortgage-calculators/bas-statement-income-calculator/