A Short Guide to Business Loans for Veterinarians and Veterinary Practices

In addition to spending years gaining their knowledge, skills and experience, many veterinarians eventually want to start their own practices. Business loans enable veterinarians to cover necessary expenses in the early stages of their practices and ongoing expenses as they develop their practices. Here we’ll cover some of the business finance options for veterinarians.

Having the correct equipment is crucial for having an effective and successful practice. Advances in technology and normal wear and tear make it necessary to upgrade equipment. Specialised veterinary equipment, such as anaesthetic systems, pumps, monitors, autoclaves and autoscopes, can be quite expensive. This is where business loans come in.

For a number of reasons, a veterinary practice will have temporary cash flow challenges that need to be solved. Short-term loans, business overdrafts and business lines of credit can provide the working capital needed to cover temporary shortfalls. Get tips for controlling cash flow from What Is a Cash Flow Statement? A Short Guide for Small Business. 

A growing veterinary practice can quickly run out of space. Also, reception areas and practices rooms need to be updated due to normal wear and tear and to keep a professional and modern image. The high cost of renovating veterinary practice areas makes it necessary to seek business finance.

All medical professionals need to continuously learn to keep up with the latest advances. This training can be quite expensive, so a business loan can make it possible to upgrade professional skills and knowledge.

Having the professional expertise and professional premises are only the beginning because you need to market your practice attract new customers. Effective marketing is essential for starting and growing a veterinary practice. Short and medium-term business loans can be used to finance marketing campaigns.

Regardless of the type of veterinary practice loans you choose from, you will want to make sure that you get the appropriate return on investment to make it worthwhile. Often, investing in new equipment, new premises or hiring staff deliver the return on investment needed to repay the loan and make a profit.

When you use a business overdraft, you are able to have a negative balance in your transaction account up to a predetermined limit. You only pay interest on the amount of money you have overdrawn, not the total overdraft amount. In addition, you will also pay an establishment fee and monthly fee as long as the overdraft remains open. You will also need to pay interest on the amount you are using from the overdraft. When your cash flow situation improves, you can repay the overdraft and get your bank balance back into surplus.

Having higher interest rates than other types of loan, business overdrafts are viewed as a short-term solution to solve cash flow shortages. Learn more at What Is a Business Overdraft?

A business line of credit gives you a pool of funds to draw from. Like a business overdraft, you only pay interest on the funds you use, not the total amount. With no set repayment schedule, you repay the money as your cash flow situation improves. Typically, the minimum amount for a business line of credit is higher than that of a business overdraft and the interest rate is lower. This makes a business overdraft more suitable for medium and long-term finance.

A business credit card can be a finance option for veterinary practices. One help point is that most business cards have an interest-free period from the date of the charge (usually 55 days). So if you pay your balance in full each month, a business credit card can provide free short-term finance. The major shortcoming with business credit cards is that many have high interest rates. So if you carry a balance for a long time, you can end up paying a large amount of interest. Another drawback with business credit cards are their annual fees. These can be quite high but you get something in return, such as points, rewards or free travel insurance.  Learn more about business credit cards. 

Veterinarians looking for equipment finance will find a number of options available. Sometimes the item purchased serves as collateral for the loan, so no additional collateral is required. Learn more about equipment finance.

This is often what comes to mind when people think about business finance. It’s a short to medium-term loan. The borrower makes regular set payments, such as monthly, until the end of the loan term ends and all principal and interest have been repaid. A few drawbacks of bank terms loans are the amount of paperwork needed to apply for the loan and the time it can take to get approved. Sometimes it can take up to two months to find out if you are getting the loan. Waiting so long is not very helpful if you need funds in a hurry.

A commercial loan is typically used for large and long-term purchases, such as purchasing an existing practice, buying your premises or doing a major renovation. Commercial loans are secured with a commercial or residential property. Since they can be used to fund major long-term projects, commercial loans can help veterinarians improve and expand their practices. Learn more about commercial loans.

In recent years, unsecured business loans for veterinarians have become more popular. This is due to how fast and easy it can be to get an unsecured business loan. Financial technology companies (fintechs) use online technology to make the process as simple as possible for borrowers. For instance, with Moula the application takes around 10 minutes to complete. In addition, your finances and other factors are analysed online quickly, safely and securely. Based on this analysis, you will find out if you have been approved within 24 hours.

Being unsecured, with no collateral attached, means the interest rate is higher than for a secured business loan. However, if you are looking for a fast short-term business loan, an unsecured online business loan could be the answer.  As a short-term business loan, the overall interest you pay during the term of the loan could end up being lower than the interest paid for on a long-term loan with a higher interest rate.

Find out more about unsecured business loans from Moula.  

For a comprehensive guide to business finance, see our Complete Guide to Business Loans.

Also, check out our business loan calculator to get an estimate of principal and interest repayments for veterinary practice loans.