Medical and dental practices, clinics, and small outpatient facilities are often set up like public services to the patient’s point of view, but you’re still a small business at the end of the day, and that means you need to think about your business strategy like a business owner. That means knowing when leasing is the most cost-effective way to access office space, equipment, or even company-owned vehicles in the case of home healthcare companies. So, should you buy your office space? If so, where do you get healthcare financing to cover it? The short answer is yes, and also, lots of places. Let’s break it down.
Advantages To Ownership
Leasing is great if you need an office right away and you don’t have down payment capital, but owning a building means that you have an opportunity to pay it off and lower your facilities overhead to just property taxes, upkeep, and utilities. That’s a significant savings if you dig down and fund it, but it also requires significant working capital. There’s also the issue of long-term loan financings, which could have you paying lease-sized payments for decades. On the other hand, you could finance a bigger building than you need, renting out offices to other businesses for additional income. The right strategy for additional rental units could wind up turning your office space investment into another income stream that pays for the loan while providing you a modest income stream to cover utilities and upkeep.
Healthcare Financing Options
Traditional commercial real estate loans are a lot like mortgages, they require a big down payment and commit you to amortizing payments over decades. That’s often the best case, but it can require you to come up with as much as 30% down, which can be difficult for small companies. SBA loans lower the required down payment and help make approval easier for businesses that create jobs, so they work for small practices. Luckily, healthcare companies have their own industry-specific financing that provides a path forward. In many markets, a loan designed to provide your business with flexible working capital at controlled interest rates is enough to cover a modest office space for a small practice, and those loans tend to be just 3-7 years, with no down payment.
Why does the healthcare financing industry make these flexible practice loans available? It’s simple, your business is essential and your professional standing has value from a risk-assessment perspective. As a result, you have an option that lets you close on a small building quickly, with controlled payments and the option to pay it all off early if you have windfall income.
