The question “Is it okay to buy chiropractic with student loans?” is a question we are often asked by chiropractors considering switching careers to buying a chiropractic business or leaving their assistant job.

This is a good one.

After all, if there’s no way to buy chiropractic with student loan debt – then DC has eliminated one possible career path and they could be forced to move on to an unpopular assistant job or take the risky path of starting from scratch practise.

The surprising answer is this:

While it’s no secret that many chiropractors enter the profession with a significant amount of student debt, your chiropractor student loans will no prevent you from purchasing exercises. Yes, you read that right—the zero amount after student loans won’t scare off bankers and lenders familiar with chiropractic acquisitions. The reasons are as follows:

Banks view debt differently

Probably the biggest reason you can buy chiropractic with student loans is the simple fact that banks don’t think about debt the way you or I do.

For example, if a friend asks you to borrow $10 for a bite to eat, you might not hesitate to lend them the money. But if a friend asks you to lend them $10,000 out of kindness, most people will take the request seriously. And most likely, it will depend on your friendship level, the friend’s credibility, the circumstances of the need, the repayment terms, and a whole bunch of other conditions that might make you say “yes” or “no” to the request.

Banks, on the other hand, are in the business of making money by borrowing money and then investing their money to make more money. Banks understand that all lending is a risk, and they are trading that risk for the hope of a greater return or investment.

This is how banks see it differently.

A bank would view lending $10 to a friend as a risk just as lending $10,000 is a risk. But a $10,000 loan will give a greater return because the bank will earn interest on the loan (compared to a $10 loan) and because they can use leverage to invest larger amounts for greater return on investment.

Well, your student loans do have risks. But for banks, all lending involves risk. The key to their decision is not whether there is risk, but the promise of return. Of course, if you have less debt, the risk may be lower. But banks don’t just lend to people without debt. If that’s the case, few people would qualify for a mortgage. Instead, the bank’s position is to weigh the risk of the loan (including the risk faced by the debtor) against the return on the loan. If the incentive is deemed attractive, then the loan will be approved.

That’s not to say banks ignore debt, or that banks find certain levels or types of debt unattractive.If you want to borrow money to buy chiropractic care, you need to understand that a key part of the approval process is that the lender will look at all Debt — student loans, car loans, home loans, etc. — is about cash flow. The lender will then add up all the payments required to meet your monthly debt obligations, and they will then determine whether the chiropractor will be able to pay the money back to the lender.

So, in other words, your student loans are only one piece of the puzzle. What’s more, the amount of other debt you have (and your history of timely payments) will affect the equation as much, if not more, than your student loans.

Some Banks Understand Healthcare Professions

The second reason banks can help with student loan purchases for chiropractic care is that some banks understand the appeal of medical loans.

There are two key points here:

First, some (but not all) banks understand that healthcare loans are a good risk. They understand that while you may have greater debt than other borrowers, you also have greater earning potential as a physician.

Second, any lender Specializing in Healthcare Loans Understand that most chiropractors — like most dentists, doctors, and other health professionals — will be saddled with student loan debt.

Generally speaking, this phrase (“specializes in healthcare loans”) will separate the majority of banks that approve your loan from the ones that ultimately reject it. After all, your financial situation is the same. The price and profile are the same for the businesses you buy. The biggest difference lies in the bank’s understanding of the chiropractic market.

You’ll find that banks that don’t specialize in chiropractic acquisition loans will usually ask you to put more money down as a down payment, owners will offer more seller financing, approve smaller loan amounts, and end up usually offering less to the chiropractor loan.

Possible red flags do exist

While these facts do help with buying chiropractic with student loans, and historically, they make the current market an attractive time to buy, we haven’t gotten into the massive “speculation” of a lot of subprime loan products just yet Lending times are like what we saw in real estate before the recession in the early 2000s.

Past financial missteps can hurt a buyer’s chances of getting a loan. Specifically, chiropractors will find it most challenging to get approved if they have a poor record paying off debt.

Yes, that means a short sale or foreclosure can hurt your financing efforts. Past bankruptcy will severely limit the number of lenders, if any, willing to work with you (especially if your bankruptcy has been less than seven years old).

Even your current financial situation can make things difficult if lenders see multiple past due payments or high credit card debt.

The last step towards the future

When you decide to buy a clinic, you need to realize that financing a clinic is slightly different than getting a mortgage to buy a house, so be prepared for a different sequence of events and allow plenty of time for the process.

Most banks can give you a conditional loan “pre-approval” within a few weeks, and then it takes several weeks (usually 4-6 weeks) to go through the underwriting and financing process.

In other words, don’t quit your assistant job just because you’ve found a clinic you want to buy because it will take a month or more to close the sale – unemployment without income can easily jeopardize your loan situation.

In the meantime, if you’re considering buying a practice, the “time” is right when it comes to financing opportunities – now it’s up to you to move forward and take advantage of the fact that you can buy a chiropractic practice with student loans !

Need to learn more about buying chiropractic (and loan options)? consider our Free webinar on Chiropractic Financing 101: What a Chiropractor Needs to Know About Buying Chiropractic and Getting a Purchase Loan.

Need to find a practice to buy (or an associate job or an ownership opportunity)? Our Free Practice Matches Services will help you do just that! Just fill out the form, tell us your interests, and let us match you!