DC to DC: Sourcing finance when starting your own practice — part 1

Initially, I used a small local bank when sourcing finance for some of the equipment needed for my new practice

It’s a few years since you graduated from school. You’ve been working with another chiropractor, and you’ve learned a lot. But now you want to step out and start your own practice. Besides everything else that you need to think about, one thought is constant — sourcing finance, and thinking ‘Where do I get the money?’

David W. Lask, DC and owner of Ask Dr. Lask Wellness Center in St. Louis, Mo., has been a solo practitioner with his own private practice for 25 years. He answered our questions, and what follows is our interview edited for length and clarity.

When chiropractors decide to open their own businesses, what are the first things they need to think about in regard to sourcing finance?

They need to think about several things regarding financing:

• How much will they need to borrow?
• Who will they borrow from?
• Do they have relationships with bankers or investors?
• What kind of equipment will they need?
• How large of an office space?
• Do they have collateral?
• What’s their credit score?
• What is their risk tolerance?
• How much of their own money are they putting into the deal?
• What is their student loan debt load?

These are just a few of the factors that come into play regarding financing a new practice. The answers to these questions will guide how much credit is extended and also the terms of the loans. The better your credit score and lower your debt-to-income ratios, the more likely to get favorable terms from a lending institution.

What financing options tend to be available for chiropractors?

Small business loans are certainly available for souring finance for opening new practices. In fact, banks love to lend money for medical equipment.

Initially, I used a small local bank to source financing some of the equipment needed for my new practice. Credit unions can also have very favorable terms so definitely check with them. Ultimately, I ended up with a larger national bank that could fulfill more of my practice needs as I grew my business.

Investors are a possibility for financing if you have difficulty getting a bank to lend you enough money to open the practice of your dreams. Bringing in outside investors may be necessary if you are planning on opening a large multispecialty clinic and having MD, PT, NP, and other specialists in your clinic.

There are companies that specialize in medical clinic financing or other non-traditional financing, but remember that these specialist companies are likely to charge higher interest rates and fees since they know you were unable to get traditional financing.

What are some ‘must-do’ tips to find the best options?

Definitely talk to other chiropractors. See what your buddy did in regard to sourcing finance. Also, start building relationships with bankers and people in finance.

I joined a networking group, went to chamber meetings, and got involved in my local community. Bankers are eager to meet young business professionals who are building new businesses and will use their bank for their deposit business.

Lines of credit are necessary to secure when you have a slow month or two and need to potentially borrow some money to meet all of your monthly obligations. Additionally, meeting and “interviewing” various bankers and credit union officials, will give someone the chance to compare rates, service, convenience, and products that that particular financial institution offers.