Veterinary Business Loans: What Are They and How Do You Qualify?

Starting or expanding a veterinary practice is a deeply rewarding opportunity, but it’s also an expensive one! Whether you’re purchasing equipment, hiring staff, or renovating an office, the costs add up quickly.

Fortunately, there’s a variety of financing options to help overcome these obstacles and take your veterinary business to the next level. Below, you’ll find the ways you can start your own practice, invest in its improvement, and get it funded.

Options for Buying a Veterinary Practice

Before securing financing for your veterinary business, it’s important to first figure out how you’re going to grow your practice. Different avenues could have varying requirements to get started, maintain operations, and allow you to change as an owner. 

Below are the 4 main ways to get your veterinary business going:

1. Starting a Practice from Scratch

This option involves building a practice from the ground up. You’ll need the money to cover finding and securing a location, equipping an office, building a client base, and maintaining a staff. While this option is the most time-consuming and expensive, it can also be the most rewarding and flexible in terms of how you are able to run your practice.

2. Buying an Existing Veterinary Practice

This option involves buying an existing veterinarian practice that’s up for sale. This route is usually quicker and less expensive than starting from scratch. However, the practice may come with pre-existing staff members, clients, and business systems that are difficult to change or fail to align with your long-term vision. 

3. Buying a Veterinary Franchise

This option involves purchasing the rights to use a pre-established business model, brand, and set of systems from a franchisor. It can be a great choice for those who want the support, experience, and resources of a larger organization. Using a name brand’s business plan can also make you more attractive to lenders. However, franchises can be more expensive to start, charge ongoing fees, and limit the changes you can make as an owner.  

4. Buying into an Existing Veterinary Practice:

This option involves becoming a partner in an existing veterinary practice. While this can be a less expensive option than starting a new business (or  franchise), it likely also comes with less control over the decision making and running of the business. 

Veterinary Practice Financing: How Does It Help Your Business?

Before getting a loan, it’s also important to consider how financing can make a difference in your future business. That way, you’re better able to anticipate future costs and opportunities for improvement. You’ll also have a better idea of what questions to ask potential business partners (i.e. a franchisor) about the support they provide and the changes they’ll allow you to make. 

How financing can improve your veterinary practice: 

Cash Flow: Financing can provide a veterinary practice with the necessary capital to cover operating expenses, purchase inventory, and make necessary repairs and upgrades to equipment. The right loan can keep a practice running smoothly even when there are fluctuations in demand.

On-Going Education Costs: Veterinarians must finish a certain number of hours of continued education each year. The financial strains on your business that come from you (or employees) being away from work, along with tuition costs, can be alleviated with proper financing. 

Staffing: Financing can help your business attract qualified staff members to take on more patients and increase your revenue. Additionally, it can keep cash flow steady whenever you’re understaffed or are in the process of training new hires. 

Changing Patient Demand: If patient demands decrease or increase for your practice, financing can help you take the new conditions head-on. Whether that means hiring new team members, purchasing more efficient equipment, or offering a different line of service, you’ll have the capital to quickly adapt your practice.

Equipment: A standard animal clinic’s equipment includes scales, autoclaves, surgery tables, monitoring systems, x-ray machines, and a lot more. This equipment is expensive to buy and replace, but financing will help ensure your care-providing essentials remain in place. 

Inventory: An animal clinic is often also supplied with standard inventory items that may include drugs, creams, hand sanitizers, tissues, pet foods, pet toys, and more. Financing can help you make sure your practice is fully stocked with the inventory it needs to keep customers, animals, and staff members happy. 

Insurance: Your practice and its workers need to be protected. In the event of a workplace injury or a malpractice lawsuit, you can’t afford to be overly exposed. Financing helps protect your business in the event of a crisis and will allow you and your employees to breathe easier during work hours. 

Property: Financing can lower your monthly payments and increase your assets by enabling you to purchase your office space outright. Additionally, it can be used to renovate an existing space or acquire a new location to improve or expand your services. 

Marketing: Through the right marketing and advertising efforts, you can increase your business’s presence in the eyes of your ideal target market. Financing can give you money to put into improving your website, social media presence, and physical branding efforts (ex: billboards) to attract more ideal clients. 

Latest Technology: People want the best care for their pets, and your practice can set itself apart with the latest care-providing technology. Financing helps you overcome the high-cost barriers for equipment to perform tasks such as microfracture detection, ultrasounds, laparoscopy, and even 3-D printing. 

Veterinary Business Financing Options

As a veterinary business owner, you have a variety of financing options available to help get your business off the ground or expand its services. That said, it’s worth knowing how your options relate to one another, and which may be suited best to your practice’s specific needs. 

Bank Loans

You can always head to the bank to obtain financing for your veterinary business. With lower interest rates, higher lending amounts, and longer repayment periods, a local bank can be one of your best options. Additionally, some banks will even offer loans that are specifically tailored to veterinarians starting or expanding their practices. 

That said, banks can also have some of the most stringent requirements. You may need a comprehensive business plan along with a strong credit score to be approved for a loan. Additionally, you may be required to provide collateral to secure the loan amount. 

Lines of Credit

Lines of credit are a flexible funding option for veterinary business owners. They provide access to funds as needed rather than with a large, one-time lump sum. They’re also provided without the need for reapplication, and after you make a repayment, your line of credit will replenish and return to its original value. 

This form of financing can be especially useful for veterinary practices, which may have unexpected expenses due to unforeseen changes in demand or breakdowns in equipment. It can also be used alongside other forms of funding. A line of credit can provide a much-needed safety net while waiting for approval on another type of loan.

Franchisor Financing

If you’re opening a veterinary business that’s a franchise location, it’s worth seeing if your franchisor offers in-house financing solutions. It’s also important to see if the franchisor has specific lending partners that offer competitive loan terms to their franchisees.

Keep in mind that franchisors may also have their own financing criteria. In many cases, franchise applicants must meet minimum thresholds in both net worth and amount of liquid assets. Additionally, a franchisor may require a certain amount or type of experience within the veterinary field to secure financing. 

To find out the financing specifics of your franchisor, it’s typically best to speak with them directly or obtain the information through their website. 

SBA (Small Business Administration) Loans

Small Business Association (SBA) loans are small-business loans that are backed by the federal government. They can be used to service a variety of needs including startup expenses, property acquisition, and equipment financing.

There are multiple types of SBA loans. Type 7(a) loans are a common go-to given their high maximum loan amount of $5 million and more flexible repayment terms. However, type 504 loans or a microloan may be more appropriate for your business depending on your unique situation. 

If you’re opening a franchise location, it’s worth taking the time to see if your business meets the SBA’s eligibility requirements. But regardless of the type of veterinary business you’re intending to open or expand, it should be noted that SBA loans are generally harder to qualify for. Not only do they have more stringent requirements, but they’ll also require you to go through an extensive application process where you’ll need to provide detailed information on both your business and the intended use of any financing you receive. 

Alternative Lending

Alternative lending can be a great funding option for veterinary business owners. Nonbank lenders have far less restrictive requirements for approval. Applicants can get the funding they need without having a strong credit history, detailed business plan, or collateral.

Additionally, alternative lenders typically approve and fund loans at an accelerated rate compared to traditional lenders like banks. Their loans can also be used to fund a wide range of business activities. This makes acquiring capital much easier, and it allows veterinary business owners to quickly adapt their business to meet pressing demands.

Veterinary Practice Acquisition Loans

Veterinary practice acquisition loans are loans specifically designed to provide funding for the purchase of an existing veterinary practice. These loans can be used to cover the cost of the practice itself, as well as any necessary equipment or inventory.

Lenders will typically require information about the practice you’re purchasing, which may include its financial statements and tax returns. Additionally, you may be required to provide collateral in order to secure the loan.

Equipment Financing

Equipment financing can be a valuable funding option for veterinary business owners looking to purchase or upgrade equipment for their practice. These loans provide the necessary funds to acquire the equipment, without the need to use valuable working capital or tie up personal assets as collateral.

This can be especially useful for veterinary practices, as the cost of equipment such as x-ray machines, ultrasound equipment, and surgical instruments can be quite high.

Another benefit of equipment financing is that it can be structured with flexible terms, such as deferred payments or seasonal payments, which can help maintain the cash flow of your business. This can be particularly helpful to veterinarians who may experience seasonal fluctuations in customer demand.

To apply for equipment financing, business owners typically need to provide the lender with information about their business, including financial statements and tax returns. They may also need to provide information about the equipment being purchased, such as the purchase price and any warranties or maintenance agreements.

Veterinary Grant Programs

Veterinary grant programs can be a valuable funding option for veterinary business owners looking to start or expand their practice. The financial assistance they offer doesn’t need to be repaid, and it can be used to cover a range of expenses such as your practice’s equipment and operational costs. 

While the availability and competition may vary, it’s worth researching and applying to any veterinary grant programs that are available to you. Try to find opportunities that are aligned with your practice’s specific needs or initiatives.

How to Apply and Qualify for a Veterinary Loan

To apply for a veterinary loan, you’ll typically need to provide the lender with information regarding your income, credit history, and the purpose of the loan (ex: to purchase equipment). You may also be required to provide collateral, such as real estate or equipment, to secure the loan.

Whether or not you’ll qualify for a veterinary loan usually depends on factors related to the strength of your credit score, income history, and business plan. You may also need to have a certain amount of experience or education in the field of veterinary medicine. Additionally, your ability to provide enough collateral may impact your chances of approval.

It’s always worthwhile to check with multiple lenders and compare their rates and terms before applying for a loan.

Funding a Veterinary Business with an Alternative Lender 

When it comes to funding a veterinary business, traditional lending options may not always be the best fit. You may need terms that are more flexible to your unique circumstances. For this reason, an alternative lender, like UFS and its Jumpstart LoanSM may be your best option for funding your practice.

Benefits of Working with an Alternative Lender

Quick Approval and Funding: Traditional lending can take weeks or even months to process, but alternative lenders often have a much faster approval and funding process. This can be especially beneficial for veterinary business owners who need to make quick purchases, such as buying equipment or restocking their inventory. It can also keep your business more nimble in adapting to changes in consumer preference or demand.

Flexible Terms and Rates: Alternative lenders often offer more flexible terms and rates than traditional lenders. This means that business owners can choose a repayment plan that works best for their specific needs, rather than being locked into a one-size-fits-all loan.

Less Stringent Approval Requirements: Traditional lenders often have strict requirements for loan approval, such as a high credit score and a long business history. Alternative lenders, on the other hand, often have more lenient qualifications and may consider other factors such as your personal creditworthiness and household income.

Tailored Services: Alternative lenders offer a variety of loan products that are tailor-made to match the specific needs of a business. For veterinary business owners, this can include equipment financing, working capital, and inventory financing.

No Collateral Required: Most alternative lenders don’t require collateral for loan approval, unlike traditional lenders. This can be a major plus for business owners who may not have assets or equity to put up as collateral.

Alternative lending can be a great option for veterinary business owners who are looking for fast, flexible, and tailored funding options. By considering alternative lending options, business owners can access the funding they need to start or grow their practice and provide the best care for the animals they serve.

How Unsecured Funding Source Can Help

At Unsecured Funding Source, it’s a privilege to help our veterinarian clients expand and improve their businesses. All of our loans come with quick pre-approvals, competitive rates, and a simple application process. 

Whether you’re looking to start your own business from scratch, buy into an existing practice, or start a franchise location, we’ll be able to help you secure the financing you need. You won’t have to worry about providing collateral or a detailed business plan to get started.

Additionally, our new Jumpstart LoanSM is specifically designed for franchisees. So if you’re looking to start a practice under an existing franchise, please check out this exciting new loan offering.  

If you’re interested in starting or growing a veterinary business, let’s talk! We’re here to help you cover whatever costs your practice demands. You can reach out to us at 866-475-4254, or you can apply online now.

Editor’s Note: This article was originally published in September, 2021. It has been updated for comprehensiveness.

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