Many chiropractors are wondering if this is still a good time to buy — here’s why it’s still a GREAT time to buy a chiropractic practice!
Even though the SBA incentive deadline that was associated with the CARES Act is now over, there are still some very strong reasons that the current marketplace is good for potential buyers of a chiropractic practice. Sure, you missed out on the SBA making the first 6 months of your loan payments for you — but if we look at the math, there are still many reasons to buy.
For starters, let’s clarify what you missed, so you can move on to bigger and better things. For SBA loans that closed prior to September 27, 2020 the SBA had a program in place whereby they would essentially make the first 6 months of payments on your behalf. Depending on the size of your practice that you were purchasing that could have saved you thousands of dollars. To make things consistent moving forward, let’s just assume that you are planning to borrow $300,000 to purchase a practice. That would roughly mean, you would have saved approximately $18k in loan payments. But quit crying, there’s still more to save and I’ll show you why it’s still a great time to buy a chiropractic practice.
Obviously, the amount you save (or spend) in your chiropractic practice purchase is contingent on a few things:
- Interest Rates are Still Very Low — here’s where the real good news comes in — interest rates are extremely low right now! So, using the same figures as above, yes you might have missed out on $18k through the SBA incentive. But if you bought the same a couple years ago or prior, interest rates were significantly higher. For example, the above was calculated at a 6% interest rate. If you borrow $300,000 at an 8% interest rate, the difference in what you’d be paying over the life of the loan is roughly $36K due to the higher interest! In effect, you could miss the SBA deadline but time the interest rates right and still come out ahead –by a factor of 2x! Here’s the kicker though – no one can predict how long these low rates will last which is why (again)…this is a great time to buy a chiropractic practice!
- Downpayment Rates are Historically Low — even better, downpayment rates are at historical lows! That is, the lowest we’ve ever seen them. Here’s how it works: in order to qualify for a purchase loan, banks like to see that you put some “skin in the game” and have a downpayment towards the purchase price. Historically, many banks wanted a downpayment of 20%, 25% or even higher in order to secure this loan. (This is the reason that so many chiropractic practice sales in the “old” days were Owner Financed). But there’s good news for TODAY! In the current marketplace, the SBA is requiring only 10% down and in some cases, it is possible to get a loan with a downpayment as low as 5%! Another reason this is a great time to buy a chiropractic practice!
- Marketplace Timing is Right – Baby Boomers the third factor is the timing of the chiropractic marketplace in general. Typically, if there are few practices available and many buyers, that’s called a Seller’s Market. On the opposite side of the fence is a situation where there are many Sellers looking to get out compared to the number of buyers, which would then be termed a “Buyer’s Market.” At this point in time, we’ve got a healthy balance between the two. There are definitely an ample of amount of Sellers looking to get out due to the fact that the Baby Boomers represent an age-bracket with a lot of people – some of whom are chiropractors. This fact alone is putting lots of businesses on the market – in all professions.
- COVID concerns & the hassles of running a post-COVID chiropractic business – lastly, as we enter the “new normal” with states opening back up, many practices are still operating with precautions in place or additional procedures necessary to keep things running in this COVID environment. Here, the emotional or logistical burden for some doctors (particularly older ones) is more than they care to bear. In other words, they don’t want to continue practicing like this. They are later in their career. Perhaps they don’t need to practice and so…it’s time to hang it up in their mind. What does that mean for you – the buyer? Yet another reason this is a great time to buy a chiropractic practice! There are robust practices entering the market where the owner is financially secure and selling because they don’t want to deal with the hassles — which can be a great opportunity for you!
Check out our chiropractic practices for sale listings for some great practices – at a great time to buy a chiropractic practice!
If you’re wondering if or how to finance your practice, you may also want to check out our FREE Webinar on Chiropractic Practice Financing 101 – where you can learn all about it!