Veterinary practice financing and loans

Securing the right financing for your veterinary practice can be a catalyst for steady growth—creating opportunities to expand services, upgrade equipment, and ultimately provide better care for your patients.

This article explores financing options in the veterinary industry, from traditional business loans to practice acquisition loans, helping you choose the right funding solutions for your unique practice needs.

What are the options for financing a veterinary practice?

Today's veterinary practices have access to diverse financing solutions designed to address specific practice needs and growth stages. Each option offers distinct advantages depending on your practice's current needs, financial health, and long-term objectives.

Traditional bank loans

Conventional bank loans remain a cornerstone of veterinary practice financing, particularly for established practices with strong financial histories. They provide a lump sum that you repay over a set period, typically 5-10 years. These loans typically offer competitive, fixed interest rates and flexible terms for practices that meet their stringent qualifications.

Banks evaluate practice revenue, credit history, and collateral when considering loan applications. While the application process can be rigorous, approved loans often provide substantial capital with predictable repayment schedules that support long-term planning.

SBA loans

Small Business Administration (SBA) loans offer government-backed financing options that often feature more favorable terms than conventional loans. These programs can be especially valuable for practice acquisitions or major expansions, with lower down payments and longer repayment terms than traditional bank financing.

The SBA 7(a) program, in particular, provides funding of up to $5 million for:

• Buying, refinancing, or improving real estate and buildings
• Either short-term or long-term working capital 
• Refinancing current business debt 
• Purchasing and installing machinery and equipment (including AI)
• Buying furniture, fixtures, and supplies 
• Complete or partial changes of ownership (buying a practice)
• Any combination of the above 

While the application process can be more complex than it is for other types of loans, the government guarantee may give some practices a better chance of loan approval.

Lines of credit

Lines of credit provide flexible working capital that you can draw on as needed. Unlike term loans, revolving credit lets you borrow and repay funds repeatedly up to your approved limit. You only pay interest on the amount that you actually borrow, and, as you repay those funds, they become available to borrow again.

This flexibility makes lines of credit ideal for managing seasonal cash flow fluctuations, unexpected expenses, or inventory purchases. Many practices maintain a line of credit alongside term loans to ensure they have ready access to working capital while preserving their long-term financing structure.

Equipment financing and leasing

Specialized equipment financing helps practices maintain cutting-edge technology without depleting capital reserves. These loans—which could come from a bank or credit union or from the equipment vendor itself—use the equipment as collateral, often resulting in faster approval and competitive rates.

Equipment leasing provides an alternative that may offer tax advantages while ensuring access to current technology. Many leases include maintenance coverage and upgrade options that help practices stay current without major capital investments.

Practice acquisition loans

Like other types of loans, practice acquisition financing comes with an application process that's designed to determine whether the new owner will be able to repay the amount being borrowed. The answer often comes down to the value of the practice being purchased.

How much are the practice's tangible assets worth? What's the current patient base? Is the practice located in a thriving, growing area, or is the local population declining? Loan officers will consider all of these factors, as well as the practice's revenue and expenses.

Practice acquisition loans typically offer longer terms to allow for reasonable practice transition timelines, helping the new owners manage cash flow as they step into the new business. Some acquisition loans also include working capital provisions for the same reason. This comprehensive approach helps preserve the value of the practice while positioning the new owners for success.

Private investors and venture capital

Beyond traditional lending, practices may be able to access funding through private investors or venture capital. This kind of investment comes from individual investors or venture capital firms that provide capital in exchange for equity in your practice—often bringing business expertise and industry connections along with their funding.

Advantages include potentially larger funding amounts, no monthly payments, and financial advisors for business guidance. The main drawbacks are giving up partial ownership of your practice, the potential loss of autonomy in decision-making, and pressure from your investors to outpace market growth.

How financing can impact veterinary practice growth and operations

Financing decisions can shape every aspect of your practice. The right structure can give you the short-term cash you need to cover your operating expenses along with your debt obligations, security in case of changing market conditions, and access to additional funding for long-term expansion.

Starting & buying a veterinary practice

Opening your own practice requires careful financing approaches to address their unique challenges. New practices often require some runway to achieve profitability, demanding financing that aligns with realistic revenue development timelines.

Acquisitions are more likely to generate immediate revenue, but they still require careful evaluation of both practice value and transition costs. Effective financing packages often combine multiple funding sources to address both purchase price and working capital needs.

Veterinary equipment financing

Strategic equipment investments can dramatically impact practice capabilities and profitability. Modern diagnostic and treatment equipment often pays for itself through increased service revenue and improved patient outcomes, but these choices require careful analysis of the potential return on investment.

Smart financing strategies balance technology needs with financial prudence, often using specialized loans or leases that preserve working capital while maintaining access to current technology. This approach helps practices expand capabilities without compromising financial stability.

Expanding your veterinary practice

Practice expansion financing supports growth through new locations, service additions, or increased capacity. Successful expansion often requires coordinated funding that addresses both immediate construction or renovation costs and the working capital needed during growth phases.

Thoughtful expansion financing considers both short-term needs and potential long-term impact on practice value. Combining different funding sources can help create flexible structures that support sustainable growth while managing risk.

How to qualify for veterinary practice loans

Strong loan applications demonstrate the viability of your practice and your capacity to repay the loan. Understanding lender requirements and preparing clear documentation can significantly improve your chance of credit approval and potentially secure better financing terms.

Strengthening your credit profile

Building strong business credit requires keeping your personal and practice finances separate while establishing positive payment histories with vendors and existing creditors. Monitor your personal and business credit reports regularly to identify and address potential issues early.

Many practices benefit from starting with smaller credit lines and vendor accounts to build credit history. As credit profiles strengthen, practices often qualify for larger loans with better terms.

Creating a comprehensive business plan

Effective veterinary practice business plans include market analysis, growth strategies, and detailed financial projections. Lenders look for realistic revenue forecasts supported by local market data and clear operational plans.

Your business plan should demonstrate a thorough understanding of both veterinary medicine and practice management. Include an analysis of local competition, population trends, and specific strategies for building and maintaining a strong client base.

Demonstrating practice profitability

Clear financial documentation helps lenders evaluate practice health and loan repayment capacity. Organize financial statements to show revenue trends, profit margins, and key performance indicators (KPIs) specific to veterinary medicine.

Regular review and updates can help identify areas for improvement while ensuring documentation stays current for funding opportunities. Consider working with veterinary-specific accountants who understand industry metrics and reporting standards.

Collateral and down payment considerations

Most practice loans require significant collateral, often including equipment, real estate, or other business assets. Understanding collateral requirements early can help you prepare while maintaining adequate operational reserves.

While down payment requirements vary by loan type and lender, most require substantial owner investment. Planning ahead for these requirements can help you maintain financial stability during the borrowing process.

Access credit that scales with your business with BILL

The BILL Divvy card¹ offers veterinary practices flexible credit² that can grow with your business. The card also comes with BILL Spend & Expense, free-to-use software that streamlines your accounting workflows with real-time expense tracking and budget control.

Build your credit profile, control your budgets, and get the visibility you need for effective practice management.

¹The BILL Divvy Card is issued by Cross River Bank, Member FDIC, and is not a deposit product.

²Credit lines are not guaranteed and will be determined upon application approval.