Owner Financing – Is It Back Again?

Years ago it was the only way to get financing on the veterinary practice, with some financing available on real estate with a sizable down payment.  In the glory days (1998-2002) buyers could expect 100% financing on the practice and often on the real estate too.  Rarely did buyers use down payments in excess of $25,000.  Times have changed.  Even in high   (profitable) practices, some lenders are requiring owners to provide partial financing.  Siting they want the seller to still have some skin in the game.  Practices succeed or fail after sale based upon the buyer’s abilities, not who holds the paper.  Having sellers finance part of the transaction makes sense in tight cash flow deals or those with unique circumstances however the current trend from major banks seem to be more of an objective passed down from the boardroom limiting exposure than a creation out of necessity.   Be aware that some sellers can’t (need to pay of existing debts) or won’t (no tolerance for risk) carry money back on the purchase.  This means higher down payments for buyers.