A market analysis report published in 2018 predicted that the chiropractic industry would expand at a compound annual growth rate (CAGR) of 4.32% through 2025. This report also stated that the industry was valued at $12.26 billion in 2017, and for good reason: Chiropractors are a common treatment for a number of conditions, including chronic pain, which is covered by many insurance plans.
If you are an established chiropractor and need funding to keep your practice running, grow your patient base, or expand your reach, here are some ways you can find small business loans for chiropractors.
The challenges of obtaining small business funding for chiropractors
Long before the COVID-19 pandemic, chiropractors struggled to obtain small business funding. Traditional lenders often view chiropractors as high-risk borrowers for two reasons. First, chiropractors often lack collateral to put up for a loan. Second, they may have substantial student loans, as being a chiropractor requires at least an advanced degree. While these two reasons primarily explain lenders’ hesitance, chiropractors’ risk of medical malpractice lawsuits may also impede lenders from approving them as borrowers.
Despite these challenges, chiropractors can still obtain small business funding. Read on to learn more about small business loans for chiropractors.
Financial options for chiropractors
Small business loans for chiropractors – especially loans with affordable rates – aren’t always easy to find, but they’re far from impossible to obtain. Your options include SBA loans and other non-government assistance that you can learn about below. As you decide which funding option is right for you, note that some small business loans for chiropractors have longer approval periods and higher rates and fees than others.
The SBA 7(a) loan program
If your practice qualifies for a low-cost SBA 7(a) loan, you may want to choose this funding option. That’s because chiropractors often enjoy the low monthly payments, long payment terms, and low rates of SBA 7(a) loans. These loan characteristics can help you to stabilize your practice, save you money, and grow your company.
Your SBA 7(a) loan can go toward costs including:
- Working Capital – Working capital is the amount of cash your practice has on hand for day-to-day operations. Experts often view it as the metric most closely related to a company’s health. To calculate it, subtract your current liabilities from your current assets. A negative difference indicates a need for working capital, which your SBA 7(a) loan can help you obtain.
As a chiropractor, you should always have enough working capital to keep your practice afloat, even in turbulent economic times. Use the money from your SBA loan to obtain working capital through equipment purchases, new employee hires, and third-party services such as advertising and marketing. - Debt Consolidation Loans – Use debt consolidation loans to refinance your practice’s current merchant cash advances, daily or weekly payment loans, short-term business loans, or high-interest business loans.
- Commercial Real Estate – If you need to relocate or open a second practice, you can use your SBA 7(a) loan to purchase owner-occupied commercial space for your practice. Alternatively, you can use your SBA 7(a) loan to refinance your current commercial real estate mortgages.
Advantages of SBA 7(a) loans for chiropractors
Small business lending experts usually see SBA 7(a) loans as the “gold standard.” Their low rates and 10-year terms (25-year terms for commercial real estate loans) are especially favorable to small business owners, including chiropractors. Additional SBA 7(a) loan advantages include:
- Wide use of funds
- Availability in all 50 states
- No prepayment penalties
- Affordable monthly payments
Requirements for chiropractors to apply for SBA 7(a) loans
Below, you’ll find a list of criteria to expect when applying for SBA 7(a) loans. Before reading this list, you should know that no two lenders have exactly the same borrower requirements. For example, some lenders will require you to present your practice’s business plan, but others (including SmartBiz Loans) do not require this.
- You must be a U.S. citizen or lawful permanent resident
- You must be at least 21 years old
- Your practice must be based in the U.S.
- Your practice must be at least two years old
- You and your practice must be on-schedule with all government-related loan repayments
- Your practice must have no outstanding tax liens
- Your practice must have no recent settlements or charge-offs
- Your personal credit score must be above 650
- You must not have bankruptcies or foreclosures in the past three years
How to apply for an SBA 7(a) loan for your practice
Step 1: If you meet the above requirements to apply for an SBA 7(a) loan, go ahead and start applying. Read more via the SmartBiz Loans page about SBA Loan Requirements for Existing Business to learn more.
Step 2: Applying for loans means lots of paperwork, so start preparing it all now. You may want a financial expert such as a bookkeeper or accountant to assist you with gathering all your paperwork.
Step 3: Decide which lender you’ll borrow from based on the following considerations:
- Strong reputation
Learning to trust your lender can involve reading a lot of fine print. Before digging into the micro, look at the macro. Browse your lender’s reviews on Consumer Affairs, Google, or TrustPilot to verify that your lender is trustworthy (but be sure you’re reading reviews by actual people). - Availability
Choose a lender that you can reach by phone or email whenever you need assistance. That said, making contact should only be the start – you should verify that your lender will assign you a representative familiar with not just your company and application, but your whole industry. If not, you should choose a different lender. - Transparency
Your lender should always be crystal-clear with you. If you have to push hard for your representative to detail your loan’s annual interest rate or APR, that could be a bad sign. - Obvious loan terms
Transparency doesn’t stop at your representative. Read the fine print of your loan agreement – if you struggle to understand it, then you may want to look for another lender. Complicated fine print may hide unfavorable payment schedules and loan costs, so look for a clearly stated total loan amount in addition to collateral requirements, prepayment penalties (if applicable), and required payment frequency and amounts. - Fees
Interest and repayment should be your two main fees. If you see many more fees than these in your loan agreement, consider a different lender. You should also check that your agreement says all fees are due before loan funding, during your loan’s lifetime.
The SBA 504 loan program
The SBA launched the 504 loan program to provide small businesses with a pathway toward low-cost funds for expansion and modernization. An SBA 504 loan might be right if you’re planning to buy commercial real estate for your practice, and it’s also useful if your practice meets the public policy goals of your local community development corporation (CDC). If it does, your CDC could cover as much as 40% of your project cost, your 504 loan could cover up to 50%, and you’d be responsible for the remaining 10% via a down payment.
The SBA microloan program
Through the SBA Microloan Program, you can access loans of up to $50,000 if your practice qualifies as a very small business or microbusiness. Small business owners including chiropractors can use SBA microloans for all purposes except real estate purchases (which you can fund via SBA 7(a) loans) and debt payments.
Non-SBA loans and other funding options
SBA loans aren’t your only funding options as a chiropractor. That said, your other possibilities are likely to have shorter terms, higher rates, and larger payments. These possibilities include:
Business lines of credit
Use a business line of credit to borrow money of at most a preset amount proportional to your credit. While this funding route may allow you access to less funding than will a term loan, it may still offer certain advantages.
Business lines of credit only include interest fees on money that you actually use. You can borrow money whenever you want until you hit your maximum, and since most business lines of credit are unsecured, you likely won’t need to put up collateral. Read more about business lines of credit via the SmartBiz Loans blog Small Business Lines of Credit Pros and Cons.
Business lines of credit resemble business credit cards in that both are revolving lines of credit. However, only the latter continues to work after you hit your maximum (though, of course, you’ll have to pay your balance before using your card again). Additionally, business lines of credit include none of the potential spending rewards available through business credit cards. Learn more via the SmartBiz loans blog 5 Business Credit Card Myths.
Merchant cash advances
If your practice allows clients to pay through credit and debit cards, you may be able to seek funding through a merchant cash advance (MCA). An MCA gives you advance funding that you’ll repay over time either through making regularly scheduled payments or funneling a small percentage of all your transactions back to your lender. The convenience of the model usually hides extremely high APRs that can be unfavorable for your practice. Learn more via the SmartBiz Loans blog What You Need to Know About an MCA.
Bank term loans
When you need funding quickly but don’t qualify for SBA loans, bank term loans could be helpful. Usually, you can use bank term loans to obtain working capital, purchase new equipment, and refinance your debts. If you pursue bank term loans, inquire about prepayment penalties, rates, possible loan amounts, and repayment terms.
Why Choose SmartBiz Loans?
Need funding to rebuild your business? Don’t waste time going from bank-to-bank filling out multiple applications. SmartBiz helps you find the best financing for your unique needs whether that’s an SBA loan, Bank Term loan, or other financing. About 90% of qualified applications we refer to banks are funded and our financial professionals are on hand to answer your questions. Discover if you’re pre-qualified here without impacting your credit scores** and read the SmartBiz 5-star customer service reviews on TrustPilot.
