With U.S. credit markets frozen, veterinarians might believe
small-business refinancing is a lot like winter: cold and difficult
truth, bankers say, is that as the feds slash interest rates, loans are
thawing in the small-business lending sector — at least for medical
professionals, including DVMs.
Now is the time to refinance, Dr. Laurie Ward, of Cortez, Colo., says.
who refinanced with a local bank last October, now saves $1,043 a month
after rolling her two business loans into one at a 6-percent, five-year
fixed interest rate.
“Lenders were falling all over to help me
in any way they could. I was just floored. When all the banking stuff
went down, I thought I would be in trouble. I didn’t think it would
work,” she says.
Matthew Sutton, a loan officer with Bank of
America, isn’t surprised, although he’s heard that business lending has
tightened up within some commercial banks. Still, with home mortgage
rates at a 40-year low, it’s natural for some of that cheap money to
trickle into the business-borrowing sector.
“A good indication
of that will be at NAVC (North American Veterinary Conference, Jan.
17-21), where we’ll see which veterinary-specific lenders are still
attending,” he says. “I can’t speak for the marketplace, but at Bank of
America, it’s business as usual. We’ve been picking up a lot of
business. Rates are low all over the place.”
When asked for
numbers, Sutton refuses to get specific, except to say that,
“variable-rate lending is at an all-time low” and interest rates can
“range from 6 to 10 percent.”
But the lowest rates only will
come to those with “extraordinarily good credit scores,” says Marsha
Heinke, DVM, CPA, owner of consulting and accounting firm Veterinary
Practice Made Perfect. After all, the refinancing boom is in the home
mortgage market, not with business lending, she says.
don’t see anyone getting rates below 6.25. Considering the risk in
lending to businesses and given the tight credit market, it’s my
personal belief that veterinarians aren’t going to see better than what
they’ve got,” she says.
Don Stock, manager of PNC Bank’s
medical segment, refutes that assessment, adding that veterinary
medicine is one of his fastest growing sectors. With the recent
acquisition of National City Bank, PNC plans to house 37 bankers
devoted solely to healthcare deals.
It’s the type of business that lenders are interested in because the risk is low, he says.
another bank’s debt is new business to us, and we’re taking it,” Stock
says. “With the way rates are today, veterinarians are purchasing their
own buildings as well as refinancing.”
The key, Bank of
America’s Sutton says, is to be sure that refinancing makes sense from
a cost standpoint, which includes fees and payoff penalties.
“There’s a lot more to it than rates,” he says.
one of the reasons Ward decided to go local when choosing a refinancing
deal — a move she recommends for other veterinarians.
goal was to get away from the faceless corporation,” she says. “We
decided to stay local and try to bring the money into the community as
much as we can. We’ve got to stay local to get through this recession.”