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Question: I Have Great Credit; Why Can’t I Get a Business Loan?
I’ve got a strong personal credit score and my business is doing well, but I can’t seem to get approved for a business loan to improve my infrastructure. Any advice?
Meet our Executive: Dr. Edward Alvarez, DDS, PC/NYCLaserDentist
Dr. Edward Alvarez, Forbes New York Business Council, is the founder and CEO of Edward A Alvarez DDS PC / NYCLaserDentist, practicing in midtown Manhattan. He is a fellow of the World Clinical Laser Institute, the most respected organization dedicated to the advancement of lasers in dentistry. He has lectured domestically and internationally on the topic of laser dentistry.
Answer: Try a Specialty Lender
Having great credit and a successful business doesn’t necessarily mean that a bank will give you a business loan that fits your needs. When I was looking to move my dental office to a new, larger, state-of-the-art facility, I thought getting a loan would be relatively simple. I had a personal credit score in the 820s, my business had grown in the past three years at a multiplier of 1.3 per year, I had little to no outstanding business debt, and seemed to have everything else going my way. I was looking for a relatively modest amount ($500,000) to remodel the space I had found and purchase some new equipment.
What I quickly found out is that traditional banks look at things very differently. I was turned down by TD, Wells Fargo, Chase, Bank of America, and others, unless I was willing to settle for loans in the range of $150,000, with personal guarantees, and a slew of other conditions. It quickly became a reality that if I wanted to grow my business, I would have to either finance myself, find investors, or pay “mafia rates” to finance companies that would charge over 30 percent interest on the loans. Fortunately, I kept searching and found a bank that was accustomed to lending to only dentists, veterinarians, and physicians. They understood the metrics of a medical practice are very different from a gym, restaurant, or other business.
Though it meant a longer vetting process, the “dental bank” loaned me the money necessary to make my expansion come true. They also worked with me after closing to make sure the contractor was vetted and would abide by their contract. In the end, I am glad I went with a lending institution that had the experience in my field, not only to know what I needed to grow my business, but also to guide me afterwards. Lesson learned; sometimes you cannot go with a traditional bank when you do not have a traditional business, and you have to find someone who knows your industry well.