I would appreciate members' advice or comments on this situation.
We have finally found a practice opportunity in the area we have been looking in for over 6 years. This is a great location for us and will definitely be profitable based on our research and our offerings. If we do not move on it, a competitor will definitely do so and we will be locked out.
Now the situation is that we had opened our first practice in a different location just over a year ago using a practice loan. So when we talk to traditional lenders (including the one we have the first loan with), they are reluctant to finance this 2nd practice due to the short time between the two practice starts even though we are very profitable at this first location. We have enough cash reserves in our corporation from the first practice as well as from retained earnings over the years to cash flow this 2nd practice acquisition as well as to run it without issues until it becomes fully profitable by itself. But we also have been researching financing options and came across the alternative lenders like OnDeck who it appears can finance this without as many restrictions as the traditional lenders. But of course their APRs are much higher (probably in the 10% range compared to 5.9% to 7.9% for traditional) even though they say they can do 6.9% for prime borrowers which we probably are.
So which path do you think we should take?
1) Cash flow using our reserves?
2) Use alternative loan and pay it off within a couple of years?
And what are the possible pitfalls or disadvantages of each path? Any problems with our whole plan in the first place? Appreciate suggestions.
We have finally found a practice opportunity in the area we have been looking in for over 6 years. This is a great location for us and will definitely be profitable based on our research and our offerings. If we do not move on it, a competitor will definitely do so and we will be locked out.
Now the situation is that we had opened our first practice in a different location just over a year ago using a practice loan. So when we talk to traditional lenders (including the one we have the first loan with), they are reluctant to finance this 2nd practice due to the short time between the two practice starts even though we are very profitable at this first location. We have enough cash reserves in our corporation from the first practice as well as from retained earnings over the years to cash flow this 2nd practice acquisition as well as to run it without issues until it becomes fully profitable by itself. But we also have been researching financing options and came across the alternative lenders like OnDeck who it appears can finance this without as many restrictions as the traditional lenders. But of course their APRs are much higher (probably in the 10% range compared to 5.9% to 7.9% for traditional) even though they say they can do 6.9% for prime borrowers which we probably are.
So which path do you think we should take?
1) Cash flow using our reserves?
2) Use alternative loan and pay it off within a couple of years?
And what are the possible pitfalls or disadvantages of each path? Any problems with our whole plan in the first place? Appreciate suggestions.
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