Whether you run a skilled nursing facility, rehabilitation center, outpatient clinic or another healthcare organization, finding the right commercial lending solutions to finance your business operations can be tricky in today’s market. Even if your cash flow is strong, your company can still be denied financing from the bank, especially if your company is new and therefore leveraged.
This is a problem that The Commercial Finance Group sees a lot. Fortunately, due to our familiarity with healthcare financing issues, we’re prepared to provide effective capital funding solutions for your business. In today’s post, we’re going to highlight how we were able to partner with FTRANS Corp., an Atlanta-based cash flow provider, to help a Houston healthcare center get the expansion financing that they greatly needed and deserved. Even though acquiring commercial loans for healthcare organizations is traditionally notoriously challenging, we found a way for one of our many valued clients. Continue reading below to take a closer look!
Financing Challenges
There are many reasons as to why a healthcare organization, such as a skilled nursing facility or small hospital, can have great difficulty in finding the appropriate commercial lending solutions to finance expansion operations or other business practices. Recent economic and industry trends to worldwide financial markets, the United States economy, and health care reform in the United States all play a part in determining a healthcare organization’s access to external capital.
For many healthcare organizations in the United States, operating on cash flow alone – even if it’s healthy, well-managed cash flow – will not support the higher level of required capital spending. Though there have been recent improvements in median hospital profitability and liquidity positions have been looking up, they aren’t likely to be sustainable for many of these small healthcare companies, primarily due to the downward revenue and expenditure pressures that are closely associated with bending the nation’s health care cost curve. Therefore, these organizations must borrow capital to meet growing operational demands.
Capital Access Struggles for Healthcare Organizations
When these healthcare organizations are forced to borrow capital, competitiveness in the healthcare industry then depends on having reliable access to debt at a reasonable cost, terms, and risk. In other words, small healthcare companies that don’t have sufficient capital capacity and access to capital will have to secure various capital and merger partners in order to continue providing their services in their communities.
So what’s the problem with capital access, then? Due to constrained national liquidity since mid-2008, a lot of small healthcare organizations have endured more limited capital access than before. As such, they also experience fewer borrowing options, higher cost of capital, more restrictive terms, less flexibility, and higher risks relative to their available borrowing options. Naturally, larger healthcare organizations have an easier time obtaining sufficient access to capital, whereas smaller companies struggle. Well, that’s where The Commercial Finance Group and FTRANS Corp. step into play.
A Houston Company Needed Help
To reiterate, it has traditionally been difficult for healthcare organizations, especially skilled nursing centers, to obtain commercial lending, irrespective of the state of their cash flow. This is exactly what Darcy Whatley, owner of Baywood Crossing Rehabilitation & Healthcare Center, experienced when trying to obtain expansion financing for her business.
Darcy Whatley opened Baywood Crossing in 2012 with great success, to the point that she plans to open an additional three skilled nursing and assisted living centers in the Houston area over the coming years. She was told that, although her cash flow looked great, the bank could not provide the financing that she desperately needed to grow her business because the company was relatively new and therefore was highly leveraged. The challenges to getting appropriate financing were evident, but there must have been a way to make it happen.
Supporting Healthcare Financing
Fortunately for Darcy, her banker referred her to The Commercial Finance Group for specialized financing solutions. In order to provide Darcy’s skilled nursing facility with a revolving line of credit, The Commercial Finance Group partnered with FTRANS Corp. Here’s what Rodney Schansman, CEO of FTRANS Corp., had to say about the partnership:
“Our software system and back office are specially built to support healthcare organizations. This puts us in a unique position to provide much-needed financing to companies like Baywood Crossing.”
Realizing True Business Potential
After the banker gave Darcy the referral to The Commercial Finance Group, a representative met with her immediately to ask about her company’s financing needs and assessed the AR situation. After a responsive, professional and pain-free lending process, Darcy’s skilled nursing facility received a revolving line of credit which allowed her to finance business expansion operations.
Baywood Crossing’s revolving line of credit closed in early March after Darcy financed what needed to be financed, and the construction on her second skilled nursing facility is slated to begin soon. In this situation, The Commercial Finance Group and FTRANS Corp. were able to help yet another business meet their financing challenges, Darcy’s business received the financing that it desperately needed to grow and expand, and the bank who made the initial referral was able to hold onto the company’s non-credit business.
We’re Here To Help You
This was just another example in a long line of helping many businesses, including smaller healthcare organizations, realize and achieve their business dreams. The Commercial Finance Group and FTRANS Corp. are proud to provide receivables financing solutions and accounts receivable factoring services to businesses in need of that extra financial push required to take things to the next level. Looking for more information about our commercial lending solutions? Read more here!
