When it comes to financing for your healthcare practice in this environment, there are a number of factors to be taken into account prior to signing a loan agreement. Among the variables to consider are the phase of your practice (e.g. fresh start-up, existing practice purchase, expansion, etc.), the type of loan product that you will need (e.g. working capital, real estate financing, equipment financing, or a mix of several types), and the debt service structure as it relates to both your short-term and long-term financial goals.

While each of these factors is important to your decision making process, and each is worthy of a feature article in its own right, there are several often overlooked considerations that are equally important. Today, we will explore some of the advantages that community banks can offer.

Advantage No. 1: Personal relationships and organizational fit matter

Let’s face it, a loan is a contract, plain and simple. Depending on the situation, you and your business will be bound by this contract for a period that could span decades. Understanding the long-term financial commitment that each party is making to one another, it is important that you feel comfortable with the bank administrators who will decide upon and service your loan.

With that in mind, there are some important questions to ask during the loan shopping process. Is the bank decision maker able and willing to meet in person?  Is he or she located within your state?  What will their responsiveness be like when you need further assistance? 

In many instances, community banks have a distinctive edge in these customer service related matters. They are often positioned to provide personalized service, and decision makers are more often than not available to meet first hand. These aspects go a long way towards ensuring that your lending experience is a positive one.

Advantage No. 2: Local knowledge can make all the difference

From a bank’s perspective, your loan is an investment. Their decision to make the loan will depend largely on their perception of whether or not they will realize their anticipated return on that investment. Different banks have different risk tolerances, along with varying practices with respect to determining risk levels. 

This is where local knowledge comes in. Loan executives at community banks tend to have their finger on the pulse of their surrounding business communities.  They often look beyond macro-level geographical and industry related economic data, digging deeper into the state of the local economic climate as they go through the vetting process.

Local decision makers also tend to have good working relationships with CPAs, attorneys, and construction contractors in the area, which can help facilitate various stages of the lending process. All of this could potentially improve your chances of establishing favorable loan conditions and making sure things go smoothly throughout the entire process.

Advantage No. 3: Investing back in your community is a win-win

The interest that you pay on your practice loan is what drives bank profits. As your community bank profits, its available lending base increases, and additional funds become available for the bank to lend to other local businesses.  This model helps to drive economic growth in and around your community, spurring small business investment and creating jobs.

Though it is not always the case, the probability of your interest payments being invested back into the local community tends to be greater with a local bank than it is with one that has holdings across multiple states or regions. 

Make the choice that fits your situation

If you take one thing away from this article, it should be that, when it comes to your financing situation, there is not a “one size fits all” solution. Every healthcare practice has a different set of circumstances, and it will take some research on your part to determine which bank best suits your needs.  Be sure to look beyond the advertising campaigns and consider all of the factors that matter to you, including those that I have laid out today.  Doing so will help to ensure that you establish a banking relationship that will benefit you and your practice for years to come.

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