What Is Alternative Financing? Is It For You?

Whether you are a new physician building a practice or an experienced physician who has an established practice, you may have to consider why and how alternative financing will help you obtain capital for your business.

 

What is alternative financing?  Alternative financing is capital and financing solutions from a non-traditional source, such as a commercial financing broker. Why alternative financing? Given the ongoing mergers, acquisitions and consolidation of traditional sources like banks, many privately-owned physician practices often lack the history, size or scale that “fit” the rigid requirements of banks. So how can alternative financing help you in your medical business?  Following are some examples.

 

The first example is a medical practice that, no different from other businesses, carries day-to-day expenses of running the business. It must have enough cash flow or operating capital to cover expenses from payroll to marketing and medical equipment. It can be challenging for some medical practices to obtain business loans for working capital from banks that typically require extensive collateral or other guarantees that the money will be repaid by the business. In addition, it is becoming more common for banks to require substantial personal guarantees, such as the physician-owner’s home, other assets or high value collateral. 

The second example is when a younger physician sees a growth opportunity to expand or buy another practice from a retiring physician. The former may lack the financial history that banks require or other assets for a personal guarantee. Alternative financing can provide the necessary capital for this growth need. 

A third example of how alternative financing can be helpful is when physicians are considering acquiring commercial real estate property, either to own or to lease, in order to create a passive income stream from rental property and as an investment for building long-term wealth. Alternative financing can provide the commercial real estate financing solutions needed to acquire commercial property including office condominiums, mixed-use commercial or multi-family properties. 

Malecki & Brooks Law Group, LLC provides introductions to professional contacts who can help our clients grow their practices. One of our trusted contacts for the situations described above is William Chu, Partner, Insignia Financial Services. He can be reached at (708) 203-2258 or William.chu@insigniafs.com.

For legal assistance with transactions mentioned above, such as selling or buying a practice or property, or for further information, please contact Melinda Malecki or Aileen Brooks.

 

Articles distributed by Malecki & Brooks Law Group, LLC are advertisements and summaries for general information and discussion purposes only.  They are not full analyses of the matters presented, legal, or otherwise, and may not be relied upon as legal advice. 


 

 

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