Whether the practice is small or large, there are many ways to finance the sale of mental health practices. One common source of financing is through inheritance or investment. In such cases, the current owner is paid after the sale is completed, while the new owner takes over the practice. This is an efficient and transparent process. The next step is to determine the buyer’s source of funding. Many buyers opt for a CCAR or business line of credit. These structures help both the existing and new owners secure financing the sale of mental health practice.
504 loans
A 504 loan is a financing option offered by the U.S. Small Business Administration to qualified businesses. These loans can buy real estate, design and build a practice, or purchase equipment and improve an existing one. The SBA 504 loan program allows up to $5 million for qualifying projects. However, before you apply for a loan, you should carefully review the guidelines and criteria for the loan.
The SBA estimates that recovery act funds will support approximately 18.5 billion in 504 and 7(a) loans to small businesses. This funding will cost approximately $354 million over the next ten years. The benefits of this program are numerous. The 504 loan program offers a 20-year fixed-rate loan and requires a small cash injection from the borrower. However, it is not the best solution for every practice.
Business lines of credit
There are several different ways to obtain financing to sell your mental health practice. Business lines of credit are available from many traditional lenders and alternative lending sources. These credit lines can be used for several different purposes, including purchasing computer equipment, office furniture, and other essential items. A business line of credit allows you to withdraw money as you need it and is repaid over time. However, business lines of credit should only be used for legitimate business expenses, such as the purchase of equipment or furniture.
A business line of credit works more like a business credit card. You get a small amount of money that you can use whenever you need it, up to your credit limit. Another benefit is that it is flexible, allowing you to draw down the funds only when you need them. You only pay interest on the amount you draw, so you can make payments whenever it’s convenient for you. In many cases, a business line of credit is much less expensive than a traditional loan.
