Achieve Vet Practice Ownership Despite Student Loan Debt
Looking to Buy
You’ve completed years of schooling and may have needed student loans to finance your education. Now, you are wondering how you could possibly own a business with so much debt.
A veterinarian’s student loan debt may not be an impediment to practice ownership. Owning a practice may even help you eliminate your student loan debt faster. Practice owners typically earn higher salaries than associates, may be able to amass greater wealth, and should acquire additional financial rewards such as return on investment in practice ownership.
A survey of veterinary practice owners in Benchmarks 2015: A Study of Well-Managed Practices reported average total compensation of $298,611 annually.
Buying a practice does mean incurring more debt. As the debt or loan for the business is paid down, equity is built. Equity is the value of an asset after deducting its liabilities. For example, as payments are made toward a home mortgage loan, equity is built in that real estate.
Most loans are for fixed periods, often 10 years for a business purchase and 25 years if the purchase includes real estate. After paying off the practice debt in full, the owner has assets of significant value he or she can sell. This includes the practice’s goodwill and the business real estate.
On the other hand, a veterinary associate who decides not to take on practice ownership is limited in wealth accumulation to that which he or she can save in investments and retirement accounts (eg, 401K plan).
It is absolutely possible to qualify for a practice loan. Even a veterinarian with high student loan debt who may have to demonstrate discipline, credit worth, and good character can achieve practice ownership.
Make student loan payments in a timely manner. Avoid major purchases that increase personal debt unless absolutely necessary. Credit cards are acceptable, but avoid developing high balances. Paying monthly credit card balances in full demonstrates responsible credit use.
A veterinarian who has assumed high consumer debt along with student loans may not qualify for a practice loan.
Gaining Professional Experience
A veterinarian with a goal of practice ownership may work for several years to gain practical experience. This is beneficial in demonstrating that he or she has the character and skills necessary to be a capable practice owner. This time should be spent with clients and patients in the examination room, making diagnoses, creating treatment plans, and establishing a strong professional reputation.
A veterinarian who has taken these developmental steps should be able to find a veterinary lender willing to help with the right practice opportunity such as one that suits the applicant’s personality, matches his or her practice management style, and has a strong cash flow.
The potential veterinary practice should earn enough revenue after expenses (including wages, payroll taxes, medical supplies, lab fees, insurance, utilities, marketing and advertising, accounting and legal services, office supplies, and bank fees) so the new owner can draw an adequate salary to support his or her needs, pay the practice loan, and repay the student loans.
A high amount of student loan debt should not keep a veterinarian from aspiring to own a practice. Taking the necessary developmental steps to become an attractive candidate to lending institutions may help lead to practice ownership sooner than you may think.
The team at LenDRgroup Consulting cares about the long-term success of your veterinary practice. We get to know you and your business in order to customize our practice financing and business consulting services to meet the needs of your practice and your career.
Our lending platform consists of 300+ dental and healthcare-specific lenders. It was developed with the purpose of helping dentists, veterinarians, and physicians. Let us help you achieve practice ownership and eliminate your practice financing obstacles!
To date, we have helped hundreds of veterinary professionals like you start, expand, and grow their practices. LenDRgroup Consulting recognizes and understands your business needs and can help you avoid costly mistakes. So, let’s get started.
Contact us today for a consultation.