Vets Fare Relatively Well During Current Credit Pinch

Veterinarians remain one of the top three most reliable professions to lend to, joining dentists and physicians.

Despite the upheaval in the U.S. financial landscape, veterinarians remain one of the top three most reliable professions to lend to, joining dentists and physicians.

Experts say the availability of veterinary business loans has stayed stable as well.

Working off the concern of member veterinarians, the American Animal Hospital Assn. conducted a study of the economic impact on practice revenues.

Of the veterinarians polled, 93 percent said they were working off of actual data as opposed to a gut feeling. Fifty-six percent reported a revenue increase in the first six months of 2008 compared to 2007, while 28.4 percent said their revenue had fallen.

About 79 percent of those polled in the AAHA Rocky Mountain Market Research survey said they do not anticipate a decrease in total revenue in the last six months of 2008.

“We had received a number of inquiries, both from the media and from companies in the animal health industry, asking whether economic conditions had resulted in pet owners seeking less veterinary care for their pets,” says John W. Albers, DVM, executive director of the AAHA. “We only had anecdotal information, so we conducted the study.”

Although results may vary by region, the profession’s integrity has remained intact, veterinary lenders report.

Pet Owners Wary
Practitioners’ financial concerns are valid, considering that 68 percent of pet owners polled  last December for a pet-spending survey said they believed their finances would be the same or worse in 2008 compared to 2007.  The Fleishman Hilliard International Communications survey of 665 pet owners was initiated to obtain a better understanding of the ideology of the pet-owning population in trying economic times.

“Although some practices have maintained their value based on practice profit, practices that cater to a price-shopping clientele have been heavily affected,” says Byron Farquer, DVM, ownership transition specialist in the Western regional office of Simmons and Associates Pacific Inc.

 “In practices in very competitive areas and in urban small-animal practices, clients are mortgaged heavily and have been hit hard with job loss and the overall downturn of the economy. These practices largely make their revenue based on volume rather than providing high technology, educated staff and top-notch customer service.

“Clients whose interests are providing the best care versus the most cost-effective are willing and able to maintain proper veterinary care.”

While some industries are reporting a 30 percent revenue drop, veterinarians who disclosed a decrease are typically referring to one of 4 percent to 9 percent, Farquer adds.  “There was some concern over revenue, considering the economic climate,” he says. “However, despite a horrible economy, veterinarians are seeing good stability in their growth revenue.” 

Thinking positively, 61 percent of the pet owners polled said they thought of their animals as a family member and if forced to spend more conservatively, half would continue to spend on their pets.
Loan availability
“Considering their credit history and likelihood of operating on a largely cash basis, veterinarians are appealing to banks that are looking to continue to grow,” says David Lutch, president of Live Oak Bank in Wilmington,  N.C .

“Banks’ ability to grow is in large part stymied due to lack of willingness to lend to each other and hits taken in the mortgage market.”

Recent bank failures and takeovers have had an effect, the experts say, leading to stricter lending policies.

“Although it may not be as easy as in past years, obtaining a veterinary business loan shouldn’t be an impossible feat, but it is more important than ever to obtain a loan from the right bank,” Lutch says.

Although Live Oak has been a unified entity for less than a year, the bank has grown by 215 percent, primarily lending to veterinarians, Lutch says.  

“The main concern veteri-narians may have is obtaining a loan despite their good credit (due to stricter lending policies),” Lutch says. “The majority of the big lenders have been so disrupted by the housing market, they’re less willing to lend and the price of obtaining a loan from the industry is higher. Fortunately there are still lenders who remain largely unaffected by the turmoil.”, a nonprofit online banking site in Cheyenne, Wyo., helps match  veterinarians with lenders.

“The best way to describe it is an eHarmony of the veteri-nary world,” Farquer says. “Veterinarians have been applying for loans at a comparable rate as in years past. This site spares them a lot of footwork and time.”

The  website’s Vet-Vault enables veterinarians to upload and store financial information that lenders require. Information such as tax returns and  appraisals can be stored for future applications.

Banker attendance at the recent Colorado Veterinary Medical Assn. conference and at other meetings has been significantly lower than in past years.

“I haven’t seen a big drop at a conference in banks as vendors until CVMA,” Lutch says. “How long the tightening of lending is anyone’s guess.”

Asked to explain how a veterinarian would acquire a business loan through Chase Bank in today’s market, the company says the relationship typically builds from a checking account.

“Small businesses, including vets, are important to Chase,” spokesman Tom Kelly says. “Generally, the banking relationship starts with a checking account, then the customer gets a business credit card to build a credit history. That history then opens the door to loans and lines of credit for the business.

“A loan usually is not the beginning of the relationship with us.”

Manufacturers of veterinary medical equipment say they’re not selling as much as they would like overall but still see demand for equipment such as digital X-ray systems, largely due to the tax break for business equipment purchases.

“Veterinarians in general tend to shut off their checkbooks in a bad economy,” Farquer says. “It’s the nature of the profession to be cautious. Even the most profitable practices are watching their bottom line closer.” 

Statistics show that veterinary services remain in demand and that practices are growing as a whole.

“Practices that have been able to continue to grow despite the economic downturn are generally growing at a 6.5 percent rate, which is more than double that of the U.S. general public,” Lutch says. <HOME>

Despite the upheaval in the U.S. financial landscape, veterinarians remain one of the top three most reliable professions to lend to, joining dentists and physicians.Despite the upheaval in the U.S. financial landscape, veterinarians remain one of the top three most reliable professions to lend to, joining dentists and physicians.cover stories, practicemgmtBusiness loans, veterinary reliability, loan availability

Leave a Comment