To the moon! Lending activity among small healthcare companies and providers has exploded over the last 30 months. PayNet’s Small Business Lending Index reports lending activity in the healthcare sector is up more than 30% from the previous all-time high. It turns out that when lending contracts in almost all sectors at once and banks thirst for deposits at levels not seen in decades, all attention goes to doctors and medical sectors.
This is bad news for independent small business lenders, right? Not so fast.
It’s very fair to expect a high level of competition in earning the financing business of a growing medical practice. But with a little creativity, independent small business lenders may still carve out their place. Here are a few key areas to consider:
Expertise in the less preferred sectors: Chiropractors, physical therapists and med spas are a few examples of sectors within healthcare that are growing but less favored among traditional lenders.
Ownership Transition and Partner Buy-In: With more physicians looking to retire in the next five years than we’ve ever seen, helping practices work through new partner buy-in and ownership transition with creative financing alternatives that reach beyond bank limitations may be a particularly frothy opportunity for small business lenders.
FF&E and Facility Expansion: This collateral is often a tougher underwriting conversation with traditional lenders. By specializing in the assets and project “airballs” that banks may struggle to find creativity with, small business lenders can carve a unique niche for an industry that seems to be expanding facilities everywhere.
Building a “Product” For a Need: Recently, we learned of an independent small business lender that targeted practices investing in new imaging technologies for the first time. They sold a six-month working capital solution to fund the promotion of the capabilities in partnership with a local marketing firm. By taking a long-time solution and positioning it against a common need, they found an audience that was all too eager to embrace the speed and simplicity over rate and bank complexities.
Conclusion
Rate isn’t king. Creativity is. Despite all the focus on lending to small business healthcare firms by the largest lenders, opportunities still exist for independent small business lenders if they are willing to embrace creativity. Just ask yourself, what kind of out-of-the-box things could you do for A and B medical-related credits? Build solutions around them and go, fight, win!
