Many chiropractic buyers have heard about the current incentives for buying a chiropractic practice with an SBA loan, so we are getting a lot of questions about the basics of how an SBA Loan works.  Here’s a quick primer on SBA loans so you can understand how they may benefit you.

Buying a Chiropractic Practice with an SBA Loan – The Basics of SBA Involvement

First, it’s important to understand that the SBA does not actually lend you the money to purchase a chiropractic practice, a bank or other lender does.

Instead, the SBA acts as “insurance” for the bank. This is helpful for both the bank and you, the Buyer.  From one angle, the SBA is another set of eyes looking upon and approving the transaction.  That’s a benefit to you as the Buyer because the SBA (and ultimately) the bank will not approve a bad purchase.  They don’t want to lend you the money and watch your default on your loan because the business was overpriced or a bad deal.

The bank also benefits here because, on the odd chance that the loan does default, the SBA will actually pay off the loan to the bank.  So it’s easy to see why the bank likes SBA backing as well.

Buying a Chiropractic Practice with an SBA Loan – The Process

To acquire a loan to purchase a chiropractic practice, you apply to a bank and in many cases, you will be applying for SBA funding through that bank loan application. Technically, you do not have to apply for SBA financing and you can choose to finance through the bank’s private or local funding options.

But again, there are good reasons to utilize SBA funding.  From the Buyer’s perspective, the bank applications will be 95% identical from bank to bank when you go the SBA route, so this also allows you to comparison shop by submitting your loan applications to several banks.

Requirements for Buying a Chiropractic Practice with an SBA Loan 

One of the biggest reasons buyers go the SBA loan route is that these loans have several advantages over most private loans:

  • Most SBA loans do not require additional collateral to secure the loan
  • SBA loans have a low downpayment minimum (10% and in some cases, 5%). –> 2023 UPDATE — with Seller financing, it is now possible to get an SBA loan to purchase with a downpayment as little as $0 — see our post here –> Zero Down Chiropractic Practices for Sale: How the New SBA Rules Can Go In Your Favor.
  • SBA loan can be guaranteed for any amount up to $5,000,000 (enough for most chiropractic practice purchases)
  • SBA loan term length is up to 10 years

Certainly, these benefits do come with some eligibility requirements. But these are pretty basic.  For example, to be eligible for SBA loans you must:

 

NEXT STEPS If You are Considering Buying a Chiropractic Practice With an SBA Loan

Now that you know a bit more about Buying a Chiropractic With an SBA Loan, if you are looking to purchase, it’s time to act quickly!