- The Lending Equation (3/3/2019)
Common Sense Commercial Loan Criteria
Character. This is demonstrated by credit and most recently, credit score. Have you paid your bills in the past? Judgements? Percent debt against credit lines greater than 30%?
Capacity to Repay. This refers to the actual ability of the borrower to repay the debt and how this will be done. This can be from the earnings from a business, cash flow from the investment property, or, the sale of the investment property. It could even be a forward commitment from a long-term lender in the case of the initial loan being short term.
Collateral. Collateral is what will be liquidated should the borrower not pay the loan when due. Note: the lender requires a margin above the loan amount to cover collection costs should it come to that.
Liquidity. This is what the lender considers “Plan B”. In case the primary means of payback fails, you need at least “interest carry” in the bank until the situation is corrected. NOTE: this can also be satisfied in some cases by stable and substantial earnings of the borrow. Either from his/her “day job” or proven by historical tax returns where assuring the continuity.
“Skin in the deal”. The lender wants to make sure the borrower is taking great care of the collateral, doing everything possible to assure the project’s success. There is no better way assure this than the borrower’s hard cash investment in the project/property/collateral.
Conclusion: Whether a hard money loan, conventional, conforming loan, hybrid or alternate conforming loan, one or more of the above “always” come into pay. When the loan is reviewed by the lender, the transaction must make sense. Some new investors have been taught there is 100% hard money available. It does not fit into the equation since it costs 35% of the asset value to foreclose for non-payment. Thus, the maximum loan to value is 65%. Make sense?
If one of the above is weak, a strong “other” may compensate making for a loan approval, again, make sense?
- Real estate portfolio benefits? (2/7/2019)
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for [with properly leveraged funds], and managed with reasonable care, it is about the safest investment in the world.” Franklin D. Roosevelt. See GPA Capital/Investopedia Article
There is no better way to experience not only capital gains, but, long term stabilized income. Appreciation is an added benefit to this as well.
For this reason, as the economy is “heating up” GPA Capital has developed the tools you’ll need to take full advantage of these opportunities. See our website for useful tools including express loan applications. Here is a guide to help you choose the right business loan, or, if you’re interest in investment, please give a call for a one-on-one.
- Commercial Loans That Close (2/5/2019)
Now that you’ve printed out the GPA Capital 2019 Planner contained in our last blog, it’s time to get going. We’ve streamlined our website and focused on our “Core Business” of “Lending”. Please stay tuned for updates. We wanted to get the year started off right. We’ve aligned ourselves with wider and deeper Capital Partners. We’ve seen the results already; January was a banner month.
Loan application are easier and quicker for 2019. You can apply directly on-line for each of the three main products:
- Express Real Estate Loan Application
- Express Investor Real Estate Loan Application
- Working Capital and Operational Loan Application
- 2019 Funding Prep (12/28/2018)
To help you map out your profitable 2019, GPA Capital designed an exclusive planner for our readers [Planner]. This includes a full range of what you need to become more profitable, expand, fulfill your capital needs. For the next two weeks we are offering a no-cost review to help you learn your option to maximize your cash flow.
For a confidential consult, hand-write (or type) your input on the attached planner and fax back to my private fax line 866-892-1167.
As always, thank you for your trust and confidence!
- Owning your office has great advantages. (9/21/2018)
Additional revenue, say by providing Nerve Conduction Velocity (NCV) and/or Cardiac Studies in there practice, rather than referring out in one’s medical practice can easily provide the 10% down payment for an SBA loan. Owner occupied by 20% and 80% leased out – your rent is covered. Here’s a matrix with shows the details:
Description SF Lease/SF Gross Annual Lease Per MO Current lease data 3,000 $15.00 $45,000 $3,750 Building Purchase 15,000 Owner Occupied 20.00% 3,000 $0 Tenants 80.00% 12,000 $15.00 $180,000 $15,000 Gross Income $180,000 Vacancy -10.00% ($1,500) Expenses -25.00% ($45,000) CADS $133,500 P&I PMT ($45,656) Taxes & Insurance 3.00% ($15,750) NOI $72,094 ROI (cash on cash) 137.32%
- Working Capital, Patient Care: Nerve Conduction Velocity: Benefits and Detail (8/2/2018)
Summary: Many physician ask us about working capital and loans. In many cases, the solution is right in front of them. Below is a summary of NCV testing which provides both, enhanced patient care, assuring better outcomes and increased working capital for the medical practice.
- Convenience: Patient stays right within the comfort zone of your practice with familiar location and office.
- Timely: Patient is scheduled for test in days (not months) so their pain can be addressed more quickly.
- Friendly & professional testing technician: Our certified technicians are professional, and patient focused.
- Rigorous report: Tests are read board-certified neurologist and provide an extensive report in 2-3 days.
- Continuity of Care: As insurance guidelines dictate, the patient may be tested every 6 months while the condition being treated remains. Ongoing testing will allow doctors to track the progress of the complaint and/or treatment to determine if it is improving or worsening.
- Therapy support: Reports verify and define the need for the treatment plan – including physical therapy.
- Patient out-of-pocket: Given the number of patients on high-deductible plans combined with the fact that 40% of Americans are unable to cover an unexpected expense of $400 or more, co-pays and deductibles can be a major problem for many. Depending on the billing model chosen by the practice, the patient’s co-pay can be zero to minimal. (see page 2)
- Patient Care and Control: Physicians maintain supervision of patient care for better Continuity of Care.
- Quickly confirm or alter your patient’s treatment plan as needed. Testing corroborates injuries and, therefore, confirms medical necessity. This validates your CPT code.
- Extensive reports on patient so that treatment plans are defined or modified in a timely fashion.
- Liability: Solid documentation to support treatment plans and verify patient outcomes and progress.
- Revenue: Allows practice to capture more potential patient revenue which can result either in re-investment into the practice and/or net income to the shareholders.
- Patient referrals: In-house diagnostics sets your practice above others. This positive patient experience leads to their referrals of other patients within their center of influence.
- The Ugly Truth About Merchant Cash Advances (6/14/2018)
If your practice has either struggled financially in the past, or is struggling right now, you know the pressure is overwhelming. This leaves many doctors in a panic to take any deal available, including bad deals like a Merchant Cash Advance (MCA)*. To make things worse, once you’re in an MCA, you’re “un-bankable” to most other lenders until it’s paid off. Learn more about MCAs here.
We’ve had many doctors ask us if we can get them out of MCA’s that are putting a huge squeeze on their cash flow. Yes, we can!
GPA Capital will refinance your MCA (and other short term debts) into a long-term SBA Loan. But this is Step 2. Step 1 in the GPA Capital Plan is to first increase your Internal Capital Growth dramatically, allocating that revenue to pay off any MCA or other business/personal loans.
GPA Capital uses this reported income for those six months to qualify you for a long-term SBA loan. Apply Here so that we can get you out of this pressure and on the right track.
*On the average, Drs. receive 6 to 8 MCA solicitations/MO, yep and 24 hour funding to boot!
- A “make sense” proposition! (5/15/2018)
Many healthcare providers that come to us for commercial loans find the revenue from implementing a new service like Range of Motion and Muscle Testing provides the income they need without a loan (under $100k). For larger loans, they find that by implementing this, they don’t use their Operating Capital for Debt Service. The service costs you and your patient nothing (you make $3-10k/mo based on frequency), improves your level of service, patient loyalty and improves outcomes.
Find out more here: ROM/Muscle Testing Handout
- Financial Trends 1st Quarter 2018 (3/3/2018)
by: Charles Pope, Certified Commercial Lender
February was a “banner month” for GPA Capital’s funding program. THANK YOU! Yes, we helped many Medical Practices with their Finances, but, we also learned what’s trending in today’s Healthcare Financial Environment and, as promised, we are sharing what’s trending:
- A large percentage of physicians who “threw the towel in” several years ago, sold their practice and went to work for a larger company, e.g., a hospital, realized that “that” was not a panacea and are re-entering private practice.
- That being said, the game has changed over the past several years. We can now define the PPR (Potential Patient Revenue) more accurately than ever. This allows the provider to see less patients, provide higher quality of care and receive more income. This allows us put these systems in place for our clients, enabling us to accurately forecast income which, in-turn, is used to demonstrate the physician’s ability to amortize borrowed funds.
- A much larger “Sales and Marketing” budget is now required. This is not only true for the roll-out, but even in a debt consolidation refinance, the fresh start budget has proven to be necessary to break the mold of the downward spiraling cash-flow.
- Why a capital company endorses mobile diagnostic testing? (2/8/2018)
Simple – GPA Capital’s clients have found that implementing it not only improves the quality of their practice, the additional revenue makes it much easier to pay back their loans. With over 25 years of mobile diagnostic testing and hundreds of satisfied physician clients across the country, GPA Capital’s mobile diagnostic imaging partner guarantees Better Patient Outcomes, Continuity of Care, and Increased Revenue.
7 Facts Primary Care Providers Need to Know About Mobile Diagnostic Testing
1. Patient Comfort and Convenience
Patients prefer the familiar surroundings and service of your office and staff.
2. Patient Care and Control
Physicians maintain supervision of patient care for better Continuity of Care. Quickly confirm or alter your patient’s treatment plan as needed.
3. Patient Retention
Your practice experiences improved patient retention through in-office testing and reducing referrals. Most importantly to your patients, we do everything we can to cover your patient’s deductibles (up to $1,000).
4. Board Certified Radiologists, Neurologists, and Cardiologists
Notable interpreting physicians are experts in their fields and give accurate and timely diagnostic evaluations.
5. Capital Expense Control
This program costs you nothing – no costly outlay for testing equipment, additional staff, or supplies. In fact, you are paid a “Fair Market Rent” of $1,000 every day of testing and you bill for all follow-up visits to review the test results.
6. Clinical Services
A full array of the most valuable diagnostic testing and superior patient service capability.
7. Decades of Expertise
From skilled and compassionate technicians to notable board-certified physicians, GPA Capital and our imaging partner’s management expertise is an invaluable addition to your practice team.
Here’s a quick video explaining the process and how easy it is to begin.
To explore adding this to your practice, get started here.
- Chiropractic Care and Diabetic Peripheral Neuropathy! (1/12/2018)
Diabetes is a leading cause for Peripheral Neuropathy, as 60% of those with diabetes will develop this painful condition. Although chiropractic isn’t a cure for Peripheral Neuropathy, it should be an integral part of any diabetic patient’s treatment plan.
“Chiropractic care is an effective treatment for Peripheral Neuropathy because it targets the root cause for a patient’s pain symptoms; we do not simply rely on medication to numb this pain. While chiropractic care is not a ‘cure’ for Peripheral Neuropathy, it is an important part of an effective treatment program.” Chiropractor Paul Raveling.
Raveling also believes that early diagnosis and treatment may reduce the severity of the motor nerve and sensory nerve damage, as well as help patients with the management of the disease. Therefore, Nerve Conduction Velocity (NCV) and Electromyogram (EMG) testing should be a pivotal part of every chiropractor’s diabetic patient’s treatment plan. GPA Capital writes this into our business plans for our chiropractic clients (PCPs also), as we focus on the top two business strategies 1. better patient outcomes and 2. better practice cash flow.
For this reason we created just published the attached white paper to bring clarity to this subject [click for whitepaper].
- Planning a Profitable 2018: A Daunting Task (12/29/2017)
Whereas Cash Flow is the “life blood” of any business, recording, collecting and analyzing your business’ operations is the “heart.” The goal, always, is Continuity and Diversity of Income. Therefore, successful practices start their fiscal year with a plan that describes the strategic goals of the organization, its financial and other resource needs. Capital partners such as banks may require a formal business plan before approving credit. GPA Capital has developed a Planning Tool to help our followers and clients. You will benefit by reviewing these Top 10 Strategies:
Strategies I: Strategic plan
Strategies II: Budget
Strategies III: Legal
Strategies IV: Finance
Strategies V: Insurance
Strategies VI: Credentialing/Third-party payors
Strategies VII: Facilities
Strategies VIII: Staffing
Strategies IX: Practice Management
Strategies X: Banking Relationship
For further assistance and direction, feel free to complete GPA Capital’s brief Medical Practice Questionnaire at no cost or obligation.[Start Here]
- Top 10 Reasons Physicians’ Commercial Loans Are Declined. (12/14/2017)
Whether expanding your existing practice, purchasing a practice or planning your exit, at some point you will be planning to borrow funds for your Medical Practice. Each loan is like “going to battle” with a bank. Listening to the horror stories of our clients who have come to us after being shot down for their commercial loan request, we felt that it would help future borrowers to share what we have learned. Below is the short list and attached is the whitepaper.
- Applying with the wrong lender. Simple, but the number one reason.
- Lack strong “compensating factors”
- Can’t properly document your income
- Inexperienced loan officer or mortgage broker
- Your reasons for seeking a long don’t make sense.
- You don’t have a solid business plan.
- The outside conditions are too risky.
- Picked the wrong type of venture or initiative
- Sandbagged by a know-nothing appraiser
- Bushwhacked by new rules
GPA Capital tailors each unique loan for its providers to best serve their needs. Equally as important, we structure the loan package for minimum chance of being declined. Plus, we always have backup plans 2 and 3. Funding to a conclusion is our goal. Please review the material and should you decide, you can get started here.
- Art & Science Behind Healthcare Borrowing (11/15/2017)
As commercial financiers with decades of experience, we recognize that successful healthcare borrowing requires both “art and science.” Unfortunately, many providers don’t understand this and after weeks spent rounding up documents and filling out forms (then more weeks of waiting), 62% of loan applications still get turned down due to inadequate paperwork or poor communication.
Producing a successful commercial loan package requires 2 different skill sets. In school, most people are either good in English/Creative Writing classes (art) or good in Math classes (science) – or if not good, at least prefer one or the other. However, a successful commercial financier must excel in both.
- Writing: Clearly summarizing a borrower’s past (especially details surrounding issues like bankruptcy), the current status of the practice and then presenting future goals that lender’s buy into is crucial. Two fundamental rules in writing are “know your audience” and “know your subject.” By having an MBA in Finance and decades as both a commercial loan officer and commercial loan broker, Chuck Pope at GPA Capital has both rules covered. Knowing how loan officers analyze loan packages and the skill developed from writing hundreds of them himself provides the skill required to focus on each application’s highlights and downplay any deficiencies. Like any good biography, the story must lineup with the facts – in this case, the attached financial documents.
- Math: Analyzing and extrapolating critical data from often thousands of pages of various personal and business financial documents going back years is hard. Then repackaging that data into clear and concise documentation that even the busiest loan officer can quickly find is even harder. By understanding exactly what data loan officers and underwriters are looking for, GPA Capital knows that, with a multitude of loan types and access to hundreds of lenders, with the right financial documentation, there is a fit for almost every situation.
By working closely with our clients, we craft loan applications that provides the required financial documentation and is framed in the best light possible. The result is a much faster loan with the best rates and terms available.
For more on this subject, get the free PDF Art & Science Behind Borrowing
To begin the loan application process, fill out this Confidential Conference Request.
If you have any questions or comments, please contact us at:
- The Existential Threats and Solutions to Small to Medium Practices (10/25/2017)
Part 3 of our educational series on Finance for Physicians. Now that you understand the fundamentals we laid out in week 1 educational series and week 2 educational series, our Healthcare Lending Team created the next whitepaper “The Existential Threats and Solutions to Small to Medium Practices”. Enjoy!
- How to think like your banker: GPA’s guide to lending (10/17/2017)
By understanding the fundamentals of how your banker analyzes potential loans, you become a much more formidable borrower. Plus, an educated and knowledgeable borrower is our best client.
Your banker subscribes to the “5 C’s” which he learned in banking school. We put together this informative eBook that is part of a 5 part series to bring you current with the state of the borrowing industry and how you might leverage your resources to improve your practice’s financial situation. The Five C’s Whitepaper, Educational Series 1 of 5. Enjoy!
- Understanding Replacement Reserves and Disaster Recovery (9/15/2017)
Understanding Replacement Reserves in View of Storm Season
- The topic of replacement reserves is often confusing for medical practice owners:
- How much should be set aside for replacement reserves?
- Should replacement reserves be included in net operating income?
- How do replacement reserves impact cap rates and value?
What are Replacement Reserves?
Replacement Reserves are funds set aside that provide for the periodic replacement of building components that wear out more rapidly than the building itself and therefore must be replaced during the building’s economic life (short lived items).
These components typically include the replacement of the equipment, furniture, hardware, software, file storage and most assets that are part of your practice.
Now, with the advent of hurricane season in the South and East, tornadoes in the Midwest and the myriad of natural occurrences everywhere in between, an “anticipatory disaster reserve” can now be justified. This is all handled within your budgeting process, i.e. Sources & Uses of Funds.
How much should be set aside for replacement reserves? You should start by working with your insurance agent, what is the “risk rating” in for your area and adjust replacements accordingly. A good rule of thumb is to:
- Estimate replacement value along with shipping, labor and training
- Subtract the insurance coverage
- Add 30 days Gross Earnings (based off your prior years 1120)
- Include 3X marketing expense to recapture lost market share.
Replacement reserves are an important line item in any healthcare business. Capital expenditures are necessary for Continuity of Income. Yet, many people gloss over the reserves for replacement line item and often exclude it completely from the NOI calculation. The fact is that, if you include it after Earnings and before Tax it will not affect your capitalized value and it will demonstrate sound management and planning which is critical for your sustainability. This is also an excellent time to “put adversity to work for you” and get up to speed with your practice analysis, diversity of income and compliance measures including payment performance programs.
- The Science and Art of a Flexible Budget (9/8/2017)
Some medical practices never manage to establish a budget, and many others establish a budget and never look at it again. As GPA Capital receives a loan request, we have a discovery session which can reveal too much overhead in proportion to the revenue being generated. Failure to identify the problems, and provide appropriate solutions, results in a working capital shortage and inability to meet current debt service not to mention future debt service for practice improvements, practice expansion, and may cause diminished practice value whether selling, purchasing or refinancing.
The science is to understand and implement an easy to maintain flexible budget and not a static budget. Assure that you seek qualified help to create continuous budgeting, not rolling. The art is to use this tool to identify and create diversity and continuity of income. To bring these two together, you must have a flexible, continuous budget which will then open your horizons to predictive financial modeling and achievement of your financial goals.
- 8 threats and solutions to physicians independence (9/1/2017)
GPA Capital recently updated its “assessment of threats to physicians’ independence” we now share the results of our Physicians’ Independence Research Update.
The bottom line… most physicians are finding it hard to compete in the current healthcare environment and at the same time, they would rather “not” go to work for someone else, retire, or worse yet, sell their practice for pennies on the dollar because it’s not generating the income it should be. Not only is our survey revealing, but so are the comments gleaned from our team of experts.
Consistent with debt coverage and additional cash available at the end of the month, GPA Capital has put together a program which specifically addresses the concerns of today’s independent physicians.
Looking forward to serving your capital needs for your new office, acquisition, expansion or refinance. Complete this short form [Express Loan App] and get it back me, (confidentially, of course). 24 hour loan approval in most cases.
- MIPS: Loan Acquisition and Maintenance (8/29/2017)
Written by: Jim Tate
We have reflected in earlier posts the critical importance of achieving a high MIPS score. Reimbursement, practice value, and professional reputation are all directly impacted by a MIPS score. Here is yet another collateral impact of a MIPS score: the ability to obtain and maintain a loan. A tip of the hat to my friends in the healthcare finance business over at Grice, Pope and Associates who alerted me to this pearl of wisdom.
First, a little financial loan lesson from Wikipedia on the infamous debt service coverage ratio:
“The debt service coverage ratio (DSCR), also known as “debt coverage ratio” (DCR), is the ratio of cash available for debt servicing to interest, principal and lease payments. It is a popular benchmark used in the measurement of an entity’s (person or corporation) ability to produce enough cash to cover its debt (including lease) payments. The higher this ratio is, the easier it is to obtain a loan. The phrase is also used in commercial banking and may be expressed as a minimum ratio that is acceptable to a lender; it may be a loan condition. Breaching a DSCR covenant can, in some circumstances, be an act of default.”
So there you have it. The DSCR is based on the documented ability to have enough cash flow to repay a loan. Although there is variation among lenders, a DSCR greater than 1.2 is good enough to obtain a loan. Many providers and practices will find if they are below 1.2 they will have difficulty getting a loan. If your cash available to service a loan should drop, as might occur when a low MIPS score suddenly triggers a reduction in Part B reimbursement, you might be in trouble. You could face difficulty in obtaining a new loan. Even worse, if you have an existing loan with DSCR covenant, you could immediately be in default. In 2019 potential Part B negative adjustments can be up to 4% and will increase 9% in 2022. Forewarned is forearmed.
The reasons to make a priority of achieving a high MIPS score continue to mount. Next week I’ll have another one for you.
- Medical Factoring Explained (Debt Free Funding) (8/25/2017)
High deductibles with increased co-pays are making Working Capital (cash flow) harder to come by. We see this at GPA Capital by the increased number of calls looking for long-term loans. However, many times we are able to help practices with a debt free solution that provides – and even increases – their cash flow.
In the past, Medical Factoring has only been available to hospitals and other large facilities. However, GPA Capital and our investors have created a Factoring Program tailored to small and medium healthcare practices. [1 minute video].
For clarity of the problem and multiple solutions, we dove tailed the summary above with this family physician’s actual case study. Next week we will give you some pointers on how to compete with the “big box” national dental chains moving into your area.
We look forward to serving your capital needs through our wide range available options. Simply complete this short Working Capital Form to get started.
- Increasing Cash Flow, Medicare Part B Reimbursements (8/22/2017)
CMS estimates that 58% of Medicare Part B billing comes from providers who will be subject to the MIPS program. What you do the remainder of 2017 will affect your reimbursements in 2019 and very well can cause increase or decrease in your patient population. GPA Capital announces its MIPS web page for our readers and clients. As financiers, it’s critical not only to provide capital by loans, but also revenue enhancements, reduced costs and revenue boosters.
Get started here: [Learn]
- Case Study: 5 successful financial strategies for your medical practice or planning your exit (8/17/2017)
Considerations often overlooked when financing, particularly when planning your exit:
1. Direct access to the decision maker. 24 hour approval capability.
2. Obtain a practice analysis to maximize to your business value.
3. Survey the capital markets to assure the best rate/terms and loan structure.
4. Make sure you are using all revenue sources available for your specialty.
5. Make sure you are compliant and paying zero for merchant fees
GPA Capital recently arranged a $375,000 loan for the acquisition of a 30-year-old dental practice in South Florida. The operating Dentist was retiring and the existing office manager of 20 years purchased the business. The Manager partnered with one of the existing 1099 employed Dentist. GPA Capital arranged 90% financing on the purchase of the business and provided an additional $40,000 in operating capital to the new owners. Prior to the practice valuation GPA Capital implemented a strategy for cost savings, patient growth and revenue enhancement. Here is a white paper worth your reading [CLICK]
We look forward to serving your capital needs through our wide range available options. Simply complete this short Telephone Appointment Request to get started.
- Welcome to the GPA Capital Blog (8/15/2017)
Announcing the GPA Capital Blog where GPA will be bringing you news on Financing, Revenue Enhancements, Compliance and other topics that are important to you, our physician clients. As our loyal readers and followers, we will share with you our global and proprietary access to state-of-the-art Financial Solutions to meet your challenges.