Let’s face it, financing the purchase of a medical office building can be a daunting task. Because of the high cost of building improvements (customized plumbing, construction of exam rooms, lead walls for x-ray or surgery units, etc.) and the additional costs for furniture, fixtures and specialized equipment, purchasing and improving a medical office can become a complex and expensive endeavor.
But there’s a solution! Whether you’re just opening your first practice, or are ready to open a second, third or even tenth medical office, the SBA 504 Loan Program is ideally suited to help you. “SBA 504 loans are a great tool for medical professionals,” said Doug Kinley, President of Small Business Growth Corporation (Growth Corp). “We’ve worked with countless medical and healthcare businesses in our 25 years as a Certified Development Company. It works for them because, in contrast to conventional financing, the 504 offers attractive financing terms and down-payments as low as ten percent.”
Why SBA 504 Loans Are Perfect for Buying or Expanding Medical Practices
- SBA 504 loans can finance any hard asset, such as the purchase of real estate, purchase of land, construction of a new building, purchase and renovation of an existing building and/or the purchase of new equipment. Plus, as long as there is owner-occupied commercial real estate, the loan can include total project costs, such as: appraisals, architectural costs, surveys, furniture, office equipment, phones, security systems, landscaping, parking lots, signage, etc. Basically anything involved in the real estate. Takeaway: financing total project costs reduces upfront, out-of-pocket expenses and allows medical professionals to preserve their cash.
- 504 loans can offer 90 percent loan-to-cost financing. While conventional loans typically require a 20-30 percent down-payment, the 504 typically finances 90% of the total project costs, including the land, construction/renovations, soft costs and closing costs. Takeaway: 90% financing is a clear advantage as the medical professional is able to preserve capital and use it to grow their practice in other ways.
- The SBA 504 Loan Program provides low, long-term interest rates. The historical five-year average interest rate for 504 loans is 4.46%. The low rates are then fixed for 20-years for real estate purchases or 10-years for new equipment. Takeaway: The long loan amortizations allow for smaller monthly payments thereby minimizing the impact on business cash flow.
The low, fixed interest rates being offered by the SBA 504 Loan Program for a building purchase can help medical professionals, by a wide margin, to beat the high lease rates and unpredictability offered by today’s leasing market.
The variety of medical professionals that have utilized the 504 Loan Program is remarkable. We’ve seen everything from family practice doctors to dentists, chiropractors, physical therapists, mental health professionals, substance abuse treatment facilities and many more.
If you’re a medical professional with dreams of purchasing or expanding your medical practice, discuss the SBA 504 Loan Program with your local financial institution or the experts at Growth Corp. What you’re able to achieve with the assistance of the SBA 504 Loan Program may just surprise you!