SBA-backed loans offer aid for cash-strapped doctors

Practice Management. By Bob Cook, AMNews staff. July 24/31, 2006.

When it came time to figure out how to get a shot of cash to help his practice, Xiaowen Wu, MD, a solo family physician in Alpharetta, Ga., did what more and more doctors are doing: He sought a loan backed by the Small Business Administration.

Dr. Wu represents one of 1,175 practices that took out $256.3 million in SBA-backed loans in the government's fiscal year 2005, up from 1,073 loans for $219.5 million in 2004, which was up from 964 loans for $166.2 million in 2003, according to data supplied by the SBA. That's not counting practices who used SBA-backed loans to open imaging centers, specialty hospitals, ambulatory surgery centers or other ancillary facilities.

It's easy to see why SBA-backed loans would gain in popularity. Depending on the lender, a physician could put no money down and offer little collateral, yet still walk away with enough money to not only, say, build a new office, but also to fill it with equipment and furniture, and have enough working capital to get through the first few cash-strapped months. And unlike more traditional lending services, all these purposes can be satisfied with one loan, one application and one monthly payment.

Dr. Wu said his $275,000 loan is the extra juice that will allow him to leave his rented office for a new facility, as well as stock it with state-of-the-art equipment.

"The major advantage of SBA is, you get the loan," said Matthew Parker, vice president of commercial finance for Coffman Capital in Oldsmar, Fla., which handles SBA loans for doctors. "It's getting what you want. Because most lenders, if they don't have the SBA guarantee, won't give you what you want."