Veterinary practice owners across Massachusetts are thinking about financing: adding exam rooms, buying new imaging or surgical equipment, bringing on a partner, or expanding into a larger building. Searches for veterinary practice financing and loans have climbed over the past year.
Whatever the plan, the lender’s first question will be about your numbers. Here is how to get your books ready before you ask.
What lenders typically want to see
Every lender has its own requirements, but most ask for some version of:
- Profit and loss statements for recent years and the current year to date.
- Balance sheets for the same periods.
- Tax returns, prepared by your CPA.
- A list of existing debts: equipment loans, leases, lines of credit.
- Sometimes a cash flow statement or forecast, showing the practice can carry the new payment.
The common thread: the lender wants to trust that your financial statements are accurate, and that they agree with your tax returns.
Five things to fix before you apply
1. Reconcile everything
Every bank account, credit card, loan, and line of credit should be reconciled to its statement, through the most recent month. A balance sheet with unreconciled accounts invites questions.
2. Get equipment and loans right
Equipment purchases should be recorded as assets, and financing as liabilities, with each payment split between interest and principal. Loan balances in your books should match the lender’s statements. This is one of the most common errors in practice books, and one of the first things a lender notices.
3. Separate owner compensation clearly
Salaries, draws, and distributions to owners should each be recorded where they belong. Lenders want to see what the practice earns before and after the owners are paid.
4. Keep the building separate, if you own it
Many practice owners own their building in a separate entity. Those books should be kept separately, with rent between the two recorded consistently. We keep both sets of books for practices in that situation, because they are part of the same picture but separate businesses.
5. Make the books agree with the tax returns
If your books and your filed returns tell different stories, sort out why with your CPA before the lender asks.
Before you apply
Tick each one once it is done.
0 of 5 done
A real example
Here is one from our practice work, with the client’s name and the amounts left out. A practice wanted to expand its space and needed financing. We organized its bills, reviewed the financials with the owner, and worked alongside the practice’s CPA. The practice obtained financing and expanded its space.
The lesson is less about any single report than about teamwork: the owner, the CPA, and the bookkeeper working from the same clean numbers.
Can the practice carry the payment?
Before you sign, it helps to know whether the new payment fits. When it is part of the engagement, we build short-term cash forecasts: cash on hand, set against payroll, supplies, upcoming bills, and decisions like an equipment purchase. It is the conversation to have before the commitment, not after.
A veterinary practice that grew with clean books
“LBS, LLC has managed our books since we opened in 2006. In the past few years, our growth has exceeded all expectations, and Liliane has been instrumental in organizing our finances as we reach each new level. She is knowledgeable, reliable and most importantly 100% trustworthy”
Frequently asked questions
We do not arrange financing. We prepare accurate books and reports, work with your CPA, and help you understand your numbers before you talk with a lender.
If your books need cleanup, start a few months before you plan to apply. Clean, reconciled books take time to produce, especially across several years.
Our practice clients are in Massachusetts, and we welcome inquiries from further afield. All of our work is done online.
Start with a conversation
If you own a veterinary practice in Weymouth, Hingham, Marshfield, Plymouth, or anywhere in Massachusetts and financing is on the horizon, request a free consultation. Prefer to call? 781-924-1489.
This article is general education, not tax, legal, or lending advice.