As a healthcare professional, becoming an entrepreneur and owner is a big step. Surrounding yourself with seasoned professionals such as an accountant and a banker to help you through the process is a must. While some steps are clear, the process of obtaining loan for your optometry practice can be confusing. Here are three aspects that will affect your credit application.
First, it is important to know that banks generally associate a risk to each sector based on its historical performance and economic conditions. Together with the company and borrower profiles, this determines the terms of the financing.
Take optometry clinics, for example. Financial institutions generally have a favourable outlook on this sector due to several factors, including rising demand driven by continued exposure to screens, the growing proportion of the aging population, good revenue potential and an acquisition value that allows optometrist owners to easily repay their loans.
The banker will analyze the financial statements of recent years and projections (usually over three years) to measure the success of the practice in question. Using historical performance data from optometry practices and industry benchmarks, the banker will compare revenues and expenses (actual and projected) with those of other practices. He will then verify whether the amount requested for acquisition or start-up purposes can be repaid from operating revenues and whether the business has the necessary leeway to withstand unforeseen events.
One of the determining factors in applying for financing is the borrower’s profile. The banker will verify certain elements in order to draw up a portrait of the practice’s manager. In addition to the level of experience, one of the elements analyzed is the level of assets and debts held. This must be sufficient to guarantee the loan and inject capital into the business if necessary. In the case of young optometrists, it is considered normal not to have accumulated significant wealth from the outset.
A credit bureau report is then analyzed. The credit score, credit utilization rate and payment defaults are all checked, providing an overview of the client’s credit history.
The acceptance of a funding application therefore depends on several points of the overall analysis. Having ongoing communication with your banker and involving them early in the process will help you put together a strong plan that will allow you to achieve your goals.
Getting involved in the early process with finance professionals and experts on optometry entrepreneurship such as Vision Entrepreneur program, will help you put together a strong plan that will allow you to achieve your business goals.
Wishing you the best of success!