Real Estate Financing for Physical Therapists

While physical therapists are in demand everywhere, the success of your practice often hinges on finding the right location for you. Patient accessibility, proximity to other healthcare providers and market forces determine where a physical therapy practice will best thrive. If you are an owner of a successful physical therapy practice, you may be considering buying your own building rather than leasing. This will ensure that you remain in your chosen location without being priced out by rising rent. It will also create greater equity and enhance the value of your business.

With help from a Certified Development Company (CDC) like TMC Financing, the Small Business Administration (SBA) 504 loan can help a physical therapy practice buy its current premises, or buy or build new facilities. The 504 loan can also be used to purchase equipment with a long service life, which is another big need for physical therapists.

Real Estate Is Important for Physical Therapists

Physical therapists have one of the highest levels of job satisfaction in the country. They also have exceptional job security, as there is a labor shortage in the field. The profession appears on numerous lists of jobs in highest demand, and demand for the job is expected to rise by 25% by 2026, thanks to an aging populace and increasingly comprehensive insurance coverage.

The priorities of site selection depend on your specialty or specialties. A physical therapy practice might choose a location close to the hospital or physicians’ offices where its patients are referred from, in the case of post-operative therapy or sports rehab.

Other practices will want to lock down a location where the market is open and competitors are outside convenient traveling distance. This approach is used by speech and language pathologists and others that deal with relatively narrow specialties. If you have a cash-based physical therapy practice, you need to look at the demographics of the area you will serve, since cash-based services are favored by the well-to-do. Practices that focus on elderly patients, such as those with arthritis or disorders affecting balance, will want to be in an area where there is a significant elderly population.

In addition to finding the right location, a physical therapy practice needs to find the right building. This may be a building that provides greater handicapped access than the minimum prescribed by law. Extra-wide automatic doors at the entrance, wide corridors and highly customized restrooms may be needed.

Your neighboring businesses also bear considering. If your practice is not housed in a standalone facility, you may do well in a complex surrounded by complementary businesses—physical therapy practices that offer different therapies to the same segment of patients, or thematically related business, such as a tutoring service next to a speech therapist or a day spa where an elderly lady can relax after a session of mobility exercises.

Finally, the physical therapy industry is highly regulated. This is seen at the state level with rules on what kind of patients require a physician’s referral, as well as in local zoning regulations. Care must be taken to follow all applicable regulations, as failure to do so would be an expensive mistake.

Financing a Real Estate Purchase with a 504 Loan

The 504 loan is designed to help small businesses prosper, and it is ideally suited to the needs of an expanding physical therapy practice. A 504 loan can be used to:

If you own your premises now, you can use the 504 loan to expand or upgrade them. If you are looking to move, you can buy a building with the 504 loan or build one from the ground up. If you build new facilities, the 504 loan serves as the permanent financing. The 504 loan has a term of 10, 20 or 25 years, a fixed, below-market rate and no balloon payments.

The 504 loan is administered by a Certified Development Company (CDC) such as TMC Financing, and loans are granted in conjunction with a conventional lender that provides 50% of the total project cost. Your CDC facilitates the SBA loan for up to 40% of cost, or $5 million ($5.5 million if the project is eligible for the SBA’s Green Energy Program). You provide 10% of the project cost as a down payment.

If you buy facilities, you can lease out up to 49% of the space. If you build, you can lease out 40%. This could provide you with a permanent source of extra income and allow you to create a synergistic environment with a neighboring business. It is also worth remembering that the 504 loan can be used for large equipment purchases as well.

The 504 loan provides flexible and affordable financing for small business. You can find out more about it from one of TMC Financing’s 504 loan experts. TMC is an SBA Premier Certified Lender, and has funded projects worth more than $9 billion across California and Nevada, resulting in the creation of an estimated 60,000 jobs. With over 35 years of experience, TMC can help you find the financing that is best for you and guide you through the 504 loan process. Contact TMC Financing today.

Barbara Morrison

Barbara Morrison

Barbara Morrison, a local small business advocate and civic leader, founded her first company TMC Financing in 1981. TMC is a Certified Development Company that provides commercial real estate financing to small business owners via the SBA 504 Loan Program. TMC consistently ranks among the top certified development companies nationwide, and has funded projects worth more than $9 billion across California and Nevada. Nearly 5,000 small businesses have benefitted from this financing, resulting in the creation of an estimated 50,000 jobs. TMC is also the No.1 SBA 504 hotel lender in the United States. Barbara is also the founder of Working Solutions, a Bay Area microlender whose mission is to provide micro entrepreneurs, particularly low-income individuals, women and minorities, with the access to capital and resources they need to start a successful business.
Barbara Morrison