StudentDC Interactive

I recently received an email from a grad who was concerned about the economic situation and her ability to get a loan.  Here is how I replied:

I have been talking to a lot of new DC’s who are getting loans from banks.  There are certainly still loans available from traditional banks, but, as the SCORE person suggested, they require some collateral/cash on your part, or a co-signer.   Your excellent credit is definitely a plus.

Here are some possibilities:

Leasing.  NCMIC is one place I would suggest trying to get an equipment lease.  They may also have other funds available in addition to the leases.

Non-traditional financing.  I have been writing about other places to get loans that are more “non-traditional.”  Two I have written about are BCS Business Credit and Wirth Business Credit.  I would try Wirth first; I’ll be interested in what they say.  Their interest rates will be higher than a bank, but they may be more willing to talk to you.
SBA Loan Guarantees. The SBA works with intermediaries (non-profit organizations) who will do “micro” loans (up to $35,000) for certain types of businesses.  Women-owned businesses are one of these types, as are veterans businesses.  ACCION USA is one of these organizations.
You might also try your state business development office.  They also help women business owners.

Another possibility is to get a pre-approval by the Small Business Administration.  If they approve you, you can take that to a bank and it might help persuade the bank to give you a loan.  Check with your local SBA office.

The website Business.gov provides a way for you to search for available SBA loans, micro-loans, and state loans and grants.

Oh, yes, and search the Chiropractic Economics website for more!  This is not a complete list, but it will give you a start. I’m not saying it will be easy, but there are still options out there; you just have to be very persistent and keep trying things.  I wish you success!  Please let me know if you are able to find financing for  your startup.

I just talked to a new grad who talked to several banks and got a startup loan with only 10% down and no co-signer.  I also have heard that SBA loan money is getting harder to come by, but I heard of someone else who got an SBA-guaranteed loan.

Can you still get a loan, despite the dificult credit situation?  It depends:

• It depends on the bank.  You have to keep looking, making changes in your request, talking to bank after bank.  If you go to 10 banks, don’t give up. Maybe the 11th will be the one that says “yes.”
• It depends on the region of the country where you are, the state where you are.  The first instance above was out west.  Banks and SBA offices in other states might not be so willing to give.  I’ve never been able to figure that one out.
• It depends on your personal financial situation.  Especially your credit rating.  Banks are requiring higher FICO scores, over 700 and even up to 750 now.  Know your credit score; if it’s low, think about how you will overcome that number.
• It depends on how much you are asking.  Cut down your request to an absolute minimum.  What do you REALLY need, as opposed to what you think you want?  The less you ask for, the better your chances of receiving it.

A note of encouragement:

Perseverance is a great element of success. If you only knock long
enough at the gate, you are sure to wake up somebody.       — Longfellow

In my last post, I talked about the importance of  making sure you have all the insurance coverage you need.  One type of insurance that I didn’t mention is disability coverage.

When I talk with new DC’s about insurance, I usually put disability coverage on the list.  I usually get a blank stare and I can see that they don’t really register its importance.  But even if you are “well adjusted” you could be in an accident or have a disabling illness.  I know disability insurance is an additional expense you think you can live  without, but don’t wait until you need it - it will be too late.

Three companies specifically provide disability insurance for chiropractors.  Investigate the features and costs for each and get disability insurance as soon as possible.

ChiroSecure

Chiropractic Benefit Services

NCMIC

Also, be sure to read this informative article from a recent issue of Chiropractic Economics about disability insurance.

If I had a nickel for every time I’ve been asked that question, I’d be a millionaire.  And if I knew the answer to that question, I’d be a billionaire!

I recently heard from a young DC who had associated for several years, had about $25,000 in cash and assets, and a credit rating over 700.  Sounds like a slam-dunk, yes? Well, no.  That’s why he was writing me, for some help.  Here is what I suggested:

1. Go directly to the SBA in your area and see if you can get pre-approved.  The SBA might even know of a bank that might be willing to take you.  With a pre-approval letter from the SBA, you might have a better chance of getting a bank to talk to you.
2. Get involved with networking in the community where you want to be.  Go to Chamber of Commerce meetings, other community events.  What you’re trying to do is get personal contacts with bankers in the area, showing them that you’re interested in the community and that you’re serious about opening a practice.  Ask lots of questions, talk to people about your plans, get them involved.  You never know what might happen.
3. Cut down on the amount you are requesting.  Keep the asset purchases to a minimum and get some money for working capital. Consider what you absolutely must have to start.  People will understand if you don’t have a lot of fancy office furniture.  You can always buy more later.
4. Consider an additional credit card with zero interest.  This is usually a last resort, but with your credit score, it should be possible.  Then spend carefully.  After a few months of getting money in from patients and showing good financial statements, you might be in a better position to go to a bank and ask for a loan. 

I hope these suggestions help.  I know there’s no one magic answer; it’s a matter of persistence and flexibility.  Keep on – you will find a way.  Let me know if I can help or if you need my opinion on your business plan.

In addition, here are a couple of articles from StudentDC.com that might help:

Finding collateral for your startup loan   and   Obtaining an SBA loan guarantee. 

A fellow blogger wrote a post today about credit reports, saying you should avoid “Freecreditreport.com” because of the fine print.  Read her post here:  http://www.yieldingwealth.com/want-your-credit-score-be-prepared-to-pay-for-it/

Here’s a suggestion when you’re going to banks to apply for your practice startup loans:  Go to annualcreditreport.com and pay for the three FICO scores.  Then take the entire report, plus scores to each bank.  Show them the report instead of letting them “hit” your credit score. 

Here is a Chiropractic Economics article you might find helpful: 9 facts you need to know about credit

And here is a StudentDC article about Checking and Repairing Your Credit.

One of the first things a banker will want to do when you come in to talk about a startup loan is to check your credit.

You need to check your credit first to make sure everything is correct and that old negatives have been removed.  But credit reports are very confusing.  Here is a great video from  that takes you step-by-step through a credit report.

Read more about checking and repairing your credit on the StudentDC website.

“With the economic situation right now, is this a bad time to start or buy a chiropractic practice?” If you are graduating from chiropractic school right now, you’re probably wondering if you are graduating at the wrong time. Sure, gas prices are high and going higher, and people in some areas of the country are having trouble paying for their homes. But health care is a pretty “recession-proof” business. People will always need health care, and if people understand the value of chiropractic care, they will keep coming back. Sure, you may lose a few people who have to drive a long distance to get to your office, but you may pick up others who don’t.

This might be a good time to consider buying an existing practice rather than starting a new practice. Why? You will have a built-in patient base and employees who know how to run the practice. You may also have an easier time getting a loan for an existing practice, since it has a track record that a bank can rely on.

The answer is:  probably, but you will have to pay more to do this.  (In interest, I mean.)Here are some suggestions to work on to increase your credit rating: 

50 tips

Ways to increase your credit score

I was asked if putting your student loans into deferment or forbearance would have a negative effect on your credit rating.  As usual, I have to say “it depends.”  In this case, it seems to depend upon the lender, and the credit rating service. 

First, you will need to understand the difference between deferment and forbearance.

Deferment is a time when you can suspend payments on student loans.  This is the more common situation, and you can get a deferment for such reasons as being in school, graduate studies, and economic hardship.

Forbearance is another way to get your loan payments suspended, and it is usually reserved for situations when deferment cannot be granted.  Here is a good website which explains both situations in more detail:  http://studentloan.citibank.com/slcsite/repay/defer/1a6b.asp 

Be aware that, in both cases,  interest will continue to accrue on your loan, and it will need to be paid at some point.  So the amount of your loan will continue to increase, even if you are not making payments for a time.

If the credit bureau (Experian, Equifax, or TransUnion) sees that you are not making monthly payments on a loan, they may consider this a negative.  You would have to write the credit bureau and explain.  If you otherwise have good credit, it probably won’t affect it much.  If your credit score (FICO) is low, it would be another thing that would lower your score even more. 

Here is a good article from eHow with some suggestions:   http://www.ehow.com/how_2002591_avoid-loan-deferment.html