One of the most common questions we get from prospective buyers in ANY season is whether this a good time to buy a chiropractic practice. Prospective chiropractic buyers pose this question in any and every marketplace during every economy because every buyer (and seller) wants to be able to “time the market” so that they can get the best deal possible on a chiropractic business.
Of course, during times of economic peace and prosperity, some Buyers worry that they will overpay for a practice because the “tide is high.” During times of economic instability (such as the 2020 Pandemic or Great Recession), Buyers are concerned that the economy won’t support their business and they will purchasing durign a stressful time. And of course, there are always local events and personal life situations that impact a Buyer’s thoughts on purchasing and “timing it right.” So I thought I would share a few things with you on the process of a practice purchase so that you would better understand the impact that has on a good, better, or “best” time to buy a chiropractic practice.
While the time to buy a chiropractic practice is related to what’s going on in real estate, the finance industry, and the current economy, most Buyers do not understand the steps or details involved in purchasing a chiropractic business enough to comprehend how they can (or cannot) impact the timing of the market.
If we dive a notch deeper, a better understanding of this process may reveal positive trends going on in the marketplace currently.
1) Downpayment Requirements Are the Lowest EVER — In 2018, the SBA changed their lending requirements from the normal 10% downpayment to secure a loan (based on the purchase price) and they lowered it to 5% — if the Seller was willing to extend some Owner Financing to the Buyer. In 2023, the SBA changed their lending requirements AGAIN and 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.
2) Loan Rates are Still Historically Low – if you choose to move forward towards a practice purchase, there is a significant advantage to processing a loan application now, in that the loan rates for practice acquisition purchases are still historically low compared to other times throughout the history of acquiring bank financing for chiropractic practice sales.
3) Low Collateral Compared to High ROI — if you think about the fact that you can purchase a practice with 10% down that will pay you back in revenues over the course of your career, the numbers can really go in your favor. If you secured a practice with just $30,000 down that paid you a personal, owner’s income of $100,000 per year (or more) for the rest of you career – that would be an excellent investment. Even better, unlike stocks, you have control over that investment. And better than real estate, you can derive income while you own the asset AND when you sell it down the line! That’s one big reason why buying a business makes great sense.
4) Low-Cost Commitment – One final item that few prospective chiropractic buyers understand is the fact that, in most cases, the loan process does not require any financial commitment until they have approved your loan. Most practice purchase loans go through several stages and at the start, the Buyer is typically not required to commit any money to the bank to acquire the loan (at least for the lenders that we work with). Prior to funding the loan and establishing a closing date for the practice purchase, a “good faith deposit” and/or downpayment will eventually be required. But that is further down the line. So “worst-case scenario” if you are approved for a loan and you feel the timing is still bad due to the Coronavirus situation or marketplace conditions, you can decline or delay the loan by NOT making a good faith deposit or downpayment until you are ready to move forward. So you have the time to really do your homework before you buy!
Need to Learn More about Buying a Chiropractic Practice (& Loan Options)? Consider our FREE ON-DEMAND webinars and videos designed to help you learn more about buying or financing a chiropractic practice.
Need to FIND a Practice to Buy (Or an Associate Job or Ownership Opportunity)? Our FREE Practice Match service will help you do exactly that! Just fill out the form, tell us your interests and let us find you a great fit!