Hard Assets for Small Business Loan

Assets are very important in obtaining a small business loan. Business loans

are either secured or unsecured. Unsecured business loans have always

been difficult to get. In the current market, unsecured business loans,

especially for larger amounts, are virtually unavailable.

This leaves secured business loans. The security that is taken by lenders

are assets. What kind of asset is desired by lenders? The more liquid, the

better. Liquid means if, and how easily, an asset that is held by the lender

can be converted into cash by the lender. Banks like to get

certificate of deposits or listed stock for business loans as collateral because it

virtually assures the lender that the loan will be repaid to them even

if the customer cannot repay.

Most business owners don't have or don't want to give certificate of deposits or

listed stock as collateral for a business loan. If they have these types of assets,

and the business owner agreed to allow them to be pledged for a small business

loan, then they will not be available for future loans.

This leaves other assets such as accounts receivables, real estate with significant

equity, or equipment to use as assets for a business loan.

Physician loans

Hard assets is one of the most common types of collateral that physicians have.

For the eye doctor in Texas, he could not factor his receivables because

his volumes were too how, and he did not want to factor his credit card

receivables to get a small business loan because it has to be repaid in

four to twelve months. The term on the hard asset based product

was up to 60 months so he wanted to proceed on this option.

In the interim, he indicated there wasn't much he could do about the

reimbursement rates, other than raise his own rates. He has no choice

but to do this, otherwise he can't get needed revenues out of his practice.

Health insurance companies are aware this is one of the reasons physicians

are raising rates and physicians frequently indicate that they have to spend

more on administrative staff to handle the phone work with the insurance

companies that sometimes challenge the billing.

Medicare Reimbursement Reductions

Just this week I had two Physician funding requests for which the purpose was to shore up cash flow due to some of their medicare payment reimbursements being put on hold in one case and lower medicare receipts in another case.

The Physicians were looking at an alternative small business loan due to their financial statements not being as strong as the banks want. Their net income was too low. I recommended an asset based small business loan to both. They used their existing equipment assets as collateral.

Physician Loans

I speak with physicians frequently and many have told me that the reimbursement
percentage that insurance companies pay has gone down. Many are
also getting less from Medicare at the federal and state level. Some doctors
have higher service rates in part for this reason and the lower reimbursement amounts
have caused practice cash flow problems and greater difficulty securing
physician loans.

An eye doctor in Texas recently told me he is only being reimbursed at 70% to 80%.
As a result, physician loans needs are becoming greater.

Physician Funding Challenges

Many physicians and dentists in the last ten years plus, have faced increased challenges and
difficulties in a number of areas, including their cash flow and their abilitty to obtain financing.
One of the more recent reasons for cash flow challenges has been insurance claim
reimbursements. This challenge, the resulting need and prospects for financing
will be discussed.