3 Tips for Veterinary Construction Financing

construction financing

At Live Oak Bank, we have the opportunity to finance veterinary construction projects across the country. While some factors are consistent with any industry, veterinary practices have unique requirements and considerations.  Here are 3 tips from our years of experience with veterinary construction projects.


Determine the maximum amount of financing your practice can support

You want your new construction to increase business, not crash your business because you bit off more than it can handle. Instead of first paying an architect to design a spectacular new building only to realize later that the financials of your practice cannot support the associated debt, go into the design and build process understanding what you can afford. You will want to work with a lender with experience in veterinary construction financing. Based on historical financials and the business’s cash flow, the lender will determine what the business can support.

When determining the loan amount, obviously the cost of the design and build are a large portion of the proceeds but don’t forget to include the expense of all soft costs such as appraisal reports, surveys, permits, fees, title, EPA reports, supervision fees, construction interest carry allocation, and working capital. These costs add up and a portion of the loan proceeds will need to be dedicated to these types of expenses. How about funds for new equipment? Is there a feasible contingency fund for unexpected Change Orders? Knowing the maximum amount you qualify for will allow you to plan accordingly.


Select the real estate for your veterinary practice

When selecting a new location for your practice, you will want to stay close to your current client based. Staying within 5 miles of your current location is a good rule of thumb; however, that can vary depending on your located. Don’t be afraid to map out your customer’s zip codes to make sure you are staying in a convenient location.

Once you have identified a lot, make sure it is zoned for a veterinary practice including overnight boarding. A good survey of the lot will help you determine the buildable square footage and setback lines. Also, don’t forget to take a look at what’s around the lot. Are there any environmental concerns due to nearby gas station or repair facilities that may cause issues when the environmental survey is performed?


Determine the team you will need to complete the project

Veterinary practices have unique needs when it comes to the design and build. Few other businesses regularly have their patients using the bathroom on the floors. Engaging an architect, contractor, and lender with experience in veterinary construction is extremely important. The plumbing, HVAC, electrical, and flooring should be specific to the needs of a veterinary hospital. Their prior knowledge of the nuance and specific needs can help prevent errors and costly delays. Experienced team members will guide you in these decisions and help you understand the timeline of your project. Keep in the mind that change orders do happen, and they can be expensive and push back the completion date. By assembling an all-star team up front, you can reduce frustration and make your experience smoother.