Why doctors are coming to a private lender

Doctors are usually some of the easiest people for a bank to lend to, because the income is high, stable and easy to verify, so it surprises people when a GP or a specialist ends up talking to a private lender. What we've found is that it's almost never about the doctor's income. It's about timing, or structure, or a business that's grown faster than the bank's paperwork can keep up with.

We work with specialist medical finance brokers, and these are the situations we see most often. The examples are based on real enquiries, but the numbers and details have been changed so nobody can be identified.

A tax debt that stops the bank

A doctor who owns a growing practice business fell behind on tax after a couple of tight years, and other lenders had said no because of the debt. They owned several investment properties with good equity.

A private loan of around $3.5 million, secured across those properties and well inside our LVR limit, could clear the tax debt and consolidate other debts, with no cash out. The term was short, under a year, with the first few months of interest capitalised and the rest paid from the business, and the exit was a refinance to another lender once the tax was cleared and there were a few months of clean repayments on the record.

Why it suits a private lender: the tax debt is what stops mainstream lenders, and it's also what the loan fixes. Once it's paid and the conduct is clean, the doctor is a straightforward borrower again.

A purchase that depends on a future lease or approval

We also see doctors buying property they plan to develop or lease to a healthcare operator, where the plan relies on an approval or a lease that doesn't exist yet. Lenders will value that property as it stands today, which often means as land, and that limits how much can be borrowed.

Why it's worth knowing: if your plan relies on a future lease or approval, expect the loan to be sized on today's value, and bring the approval or the signed heads of agreement if you've got it.

Buying a medical centre while the bank takes its time

This is the scenario medical brokers raise with us most. A group of doctors, or a single practice owner, finds a medical centre or a strata medical suite they want to buy. The vendor wants a short settlement. The bank likes the deal but its commercial credit process takes longer than the contract allows, especially if there's a lease to review, a business valuation to complete or a new entity to set up.

A short-term private loan can settle the purchase on time, secured against the property being bought (and sometimes other property the doctors own), and the bank loan then refinances us out once its approval comes through. The practice keeps its settlement date and the vendor doesn't walk.

Some doctors plan to hold the building in their self-managed super fund long term. Super fund borrowing has its own strict rules, so that's a conversation for your accountant, financial adviser and the bank, and it's not something we lend into. Our role is simply the timing gap, so the purchase doesn't fall over while the long-term structure is sorted.

Why doctors choose to use us

• Speed. We normally settle in 5 to 10 business days once the valuation is in.
• Certainty. Once we've given a credit answer, we settle on it, and we don't re-trade terms at the last minute.
• It's a stepping stone. Most of our medical clients will refinance to a bank once the timing or the tax issue is sorted, and we set the loan up with that exit in mind.
• Everything's upfront. You'll know the total interest, every fee and what you'll pay out at the end before you sign.

Our loans are for business and investment purposes only, from $1M to $20M, secured by property on the East Coast. If you're a doctor, a practice manager or a medical finance broker with a deal that's stuck on timing, send us the scenario.