Five Advantages of Owning Rather Than Leasing

5 Advantages of Owning Rather Than Leasing

Have you thought about owning space for your practice? Many veterinary practice owners confront this question at one point or another. Should you purchase commercial property or continue to lease? The answer varies.

New vets or start-up practices may benefit from leasing, providing the flexibility to move and grow. In general, it cost far less up front to lease commercial space compared to a real estate investment. For new practice owners, lease agreements free you up from the responsibility of property ownership, such as onsite maintenance. However, with lease agreements, you are not investing in your own future. Veterinarians with a strong client base and clear picture for the future should consider the benefits of owning.

  1. Long Term Investment

When you combine practice ownership with property ownership, you are investing in your long-term wealth. While property values are not as low as they were a few years ago, it is safe to assume they will continue to rise. As you pay down the note, you are building equity and net worth. By diligently growing your practice, you will be able to sell both the business and real estate when it is time to retire. Alternatively, you could sell just the practice and lease the property, allowing for a source of income during retirement. Building equity now will have long-term benefits.

  1. Tax Benefits

Real estate property owners enjoy tax advantages unique to ownership, including depreciation allowances and mortgage interest deductions. This deduction reduces overall taxable income, improving cash flow that you can reinvest in the business. Consult with a CPA or financial advisor to fully understand how a purchase would affect your particular circumstances.

  1. Stability

When you own the property, you can more easily plan for long-term costs associated with the property. Without the variables associated with lease agreement renewals, it is easier to project the annual costs for the practice according to your mortgage contract, insurance and estimated property tax. You can plan for the long-term without having to worry about increased lease payments or a cancelled lease.

  1. Control

When you own the business property as well as the practice, you have the control to develop, operate and modify the building to your needs as the practice grows. You aren’t at the mercy of the landlord’s guidelines for space modifications and can adapt your building infrastructure to accommodate future developments in veterinary medicine and growth of your practice.

  1. Commitment to the Community

By owning your building space or building a new practice, you show your community you are here to stay. Involvement and trust in the community will go a long way with customers and future customers. Consider refreshing the space if it is an older building. If you are planning a ground-up construction project, consider the aesthetics and practical needs of a vet practice. An architect and builder experienced in the vet space can help ensure success.

If the advantages of owning rather than leasing seem to be a good fit for you practice, you will need to decide on a ground-up construction project or purchasing and renovating a space.

There are several factors to keep in mind when looking to purchase commercial real estate for your practice. When looking for a location be sure it is close to your client base. Staying within 5 miles of you current location is a good rule of thumb; however, that can vary depending on your location. Once you’ve selected a location, make sure it is zoned for a veterinary practice, including overnight boarding.

Purchasing commercial estate has its advantages, and you will want to know how much you can afford before getting too far into the process. Based on the practice’s historical financials and the business’s cash flow, the lender will determine what the practice can support. Working with a lender experienced in veterinary financing will help the lending process run smoothly.

If you are looking to finance a ground-up construction project, the loan amount will include the cost of the real estate, design, and build. In addition, soft costs such as appraisal reports, surveys, permits, fees, title, EPA reports, supervision frees, construction interest carry allocation, and working capital will be included in the loan proceeds. Also, consider funds for new equipment and unexpected Change Orders. Knowing the maximum about you qualify for will allow you to plan your project accordingly.

Some lenders today – particularly those with experience in the veterinary industry – offer flexible loan packages that may include up minimal equity requirements and loan terms extending up to 25 years. These loan terms allow you to avoid a large down payment as well as benefit from lower monthly payments.

Purchasing the real estate where your practice will reside is an expensive investment. However if the property is suitable for your practice and is capable of supporting long-term growth without overtaxing your current cash flow, it can provide a solid foundation on which to build your business and future.


What You Need to Know About the Underwriting Process

Underwriting Process

In the underwriting phase, you will work directly with the underwriter assigned to your loan. The underwriter verifies and analyzes documents submitted during the application phase to determine accuracy and creditworthiness. The underwriter will complete a cash flow analysis and full review and analysis of other pertinent financial information related to both the business and the individual(s) seeking the loan. Additional financial details may need to be submitted to the underwriter analyzing the business. This information will be part of the credit memo, which is presented to the credit officer who ultimately approves or rejects the loan request. Specific questions regarding paperwork can be addressed directly to your underwriter.

 

By understanding your story, how you got where you are today and your plans for the future, your underwriter will be your advocate and assist you throughout the review process. When your loan is approved, you will receive a commitment letter with the terms and conditions of the loan. Once you provide your signature, you will move into the final stage of the loan process.


Live Oak Bank Announces New Division – Live Oak Trust

Live Oak Bank is excited to announce a new division of the bank, Live Oak Trust, offering Funeral and Cemetery Trust Services. Through this service, Live Oak Bank continues its dedication to the death care industry and expands its services to funeral home owners and cemeterians nationwide.

With a singular focus on funeral and cemetery clients, Live Oak Trust is committed to the administration of preneed funeral, cemetery merchandise and services, and perpetual care cemetery trust funds. Live Oak Trust is comprised of a team of professionals with over 200 years combined trust experience who understand the funeral and cemetery industry. Currently, Live Oak provides trust services in 18 states across the country.

“Expanding our death care services with the addition of Trust provides tremendous opportunity for Live Oak Bank as well as the funeral home owners and cemeterians who choose us as their fiduciary representative,” stated Chip Mahan, CEO of Live Oak Bank.

“With a combination of over 50 years of industry experience, we are proud to lead this team of experts to provide superior trust solutions,” commented Steve Jackson, CEO, and Rich Fisher, President of Live Oak Trust. “We will be able to navigate clients through a highly complex and regulated environment.”

The Live Oak Trust team has extensive experience and industry knowledge, enabling them to streamline the administrative and operational process associated with these accounts. To maintain the highest level of proficiency, Live Oak Trust has an in-house legal team that continually monitors state statues and regulations to ensure trust accounts are in compliance with current laws. Having such a keen industry focus and specialists on board, enables Live Oak to offer an exceptional level of service to the client.

 

Contact
Steve Jackson, CEO Live Oak Trust
910-212-4709

Rich Fish, President Live Oak Trust
910-212-4715


SBA Loans Gaining Ground In Self-Storage Financing

Self-Storage Financing

After more than 20 years in self-storage manufacturing, Terry Campbell left to bring a different product to the industry — Small Business Administration (SBA) loans.

In March, Campbell joined Wilmington, NC-based Live Oak Bank, a preferred SBA lender for several niche industries. Campbell was tapped to lead the bank’s new self-storage division. Before his new role, Campbell directed sales and marketing at a self-storage building manufacturer.

SBA loans weren’t available to the self-storage industry until five years ago, and Campbell said they’ve been underused because many banks aren’t knowledgeable about self-storage. The SpareFoot Storage Beat spoke with Campbell to learn more about self-storage SBA loans.

Read Full Article here: http://news.sparefoot.com/1551-sba-loans-for-self-storage


What is Cash Flow? | Managing Existing Debt

What is Cash Flow? Pt. 5
Managing Existing Debt

Another way to improve cash flow is to look at the current business debt because the terms of a loan can greatly affect cash flow. A balloon payment (a large single payment required at the end of the term to repay the remaining principle balance of the loan) has a dramatic impact on your cash flow when it is due. For example, a loan with a ten year amortization and a five year term will balloon in five years, requiring a) the remaining five years of principle to be repaid at the end of the term or b) the loan to be refinanced. A loan with a balloon can leave the borrower at risk for higher interest rates when the term ends.

What is the loan term or the period of time over which your loan is to be repaid? Shorter loan terms naturally have higher monthly payments. What is the interest rate on the loan? A higher interest will also increase the amount of cash leaving the business each month.

Refinancing current debt on your loan may be one way to improve your cash flow. Seek a loan with a 20-25 year term, no balloon payments and competitive interest rates. By comparing your current monthly payment to what your new monthly payment could be, you can see if refinancing will free up cash for your business. These monthly savings provide an opportunity to make improvements to your funeral home, to increase marketing efforts or expand your business.

For example, by taking advantage of Live Oak Bank’s competitive rates and 25 year amortization, one of our borrowers was able to save $9,850 per month on a $1,300,000 loan. With savings of $118,200 per year, our borrower was able to increase advertising efforts as well as make much-needed improvements to his facilities. While your situation might be different, you may still be able to capitalize on superior loan terms.

Understanding your business’s cash flow will help you determine the degree to which it needs to be improved. By taking the necessary steps to find savings and create guidelines for your business, you can increase the financial strength of your funeral home.


Build Your Dream Veterinary Practice

Build Your Dream Veterinary Practice: How Proper Planning Can Make It Happen

Presented by: Brian Faulk, Live Oak Bank, and Kelly TerWisscha, TWC

The experts from Live Oak Bank’s veterinary lending team and TWC combine their experience to walk you through what to expect and prepare for your veterinary practice construction project. This comprehensive approach connects the design, build, and financing. Whether you are in the planning stage or the middle of the process, this talk will provide you with the steps to take to ensure a successful build.

Download a copy of webinar presentation: Build Your Dream Veterinary Practice

 

 


What is Cash Flow? | Managing Receivables

What is Cash Flow? Part 4
Managing Receivables

Once you’ve created a budget, it’s time to look for ways to bring and/or keep money in the business. One very important aspect of cash flow is collecting receivables in a timely manner. Take a look at how long you have waited for payments historically. What is your approach to collecting payments?

Given the nature of the business, you will encounter families in various financial situations. The service and care you provide is of utmost importance not only for the families but also your business’s reputation. With that understanding, it is equally as important to the health of your business to have an approach or policy in place to collect payments. Understand how long can you wait for payments until it affects your cash flow. It is important to give this policy careful thought and drive consistency the best you and your staff can.

Along these same lines, you will want to understand the impact of trust and preneed accounts. In these contracts, the earnings are accumulated until the contract holder dies. Therefore, the earnings are not an immediate effect on cash flow until the services are rendered. That is to say, the trust and preneed insurance policies play a very important role in the future revenue stream of the funeral home. While important to future, the impact on today’s cash flow is dependent on your state’s statutes.


Live Oak Bancshares, Inc. Files Registration Statement for Initial Public Offering

Wilmington, N.C.June 22, 2015 – Live Oak Bancshares Inc., parent company and registered bank holding company of Live Oak Banking Company, a national online banking platform for small business lending, today announced that it has filed a registration statement on Form S-1 with the Securities and Exchange Commission (SEC) relating to the proposed initial public offering of its common stock. The number of shares to be sold and the price range for the proposed offering have not yet been determined. Live Oak Bancshares plans to list its common stock on the NASDAQ Stock Market under the ticker symbol “LOB.”

Sandler O’Neill & Partners, L.P., Keefe Bruyette & Woods, Inc. and SunTrust Robinson Humphrey, Inc. will act as the book-running managers for the offering.

A registration statement relating to these securities has been filed with the Securities and Exchange Commission, but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time that the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. The registration statement Live Oak Bancshares has filed with the SEC can be obtained by visiting EDGAR on the SEC website at www.sec.gov.

The offering will be made only by means of a prospectus. When available, copies of the preliminary prospectus may be obtained by writing to Sandler O’Neill & Partners, L.P., Attn: Prospectus Department, 1251 Avenue of the Americas, 6th Floor, New York, New York, 10020; emailing syndicate@sandleroneill.com or calling (866) 805-4128, writing to Keefe, Bruyette & Woods, Inc., A Stifel Company, Attn: Equity Capital Markets, 787 Seventh Avenue, 4th Floor, New York, NY 10019 or calling (800) 966-1559, or writing to SunTrust Robinson Humphrey, Inc., Attn: Prospectus Department, 3333 Peachtree Road NE, 11th Floor, Atlanta, GA 30326; emailing STRH.Prospectus@suntrust.com or calling (404) 926-5744.

— Download Release

Micah Davis
Marketing Director
Direct: 910-550-2255
micah.davis@liveoakbank.com


Lasertron FEC center to open in Henrietta

Check out the latest news from our FEC customer, Jim Kessler who is under construction for a Lasertron FEC in Rochester, NY. Construction started three months ago, and more than $4.2 million will be invested in the new business. Lasertron will provide guests the option of playing in two giant multi-level laser tag arenas. A session is comprised of four six-minute games played back to back, and the Kesslers say players can burn up to 1,000 calories when playing two sessions.

Read the full article here: Lasertron Center to Open in Henrietta