One of my ongoing challenges as a Medical Equipment Finance Broker is convincing the banks that the Healthcare Industry deserves their very best rates, because the risk of default is next to zero. It’s sad to report that the only two lenders who recognise Healthcare’s low risk are now being forced into using their parent companies’ credit policies, which is pretty much ‘one size fits all’.
The only differential the banks seem to use in determining who gets the best deals is size. According to the RBA, the cost of finance for small businesses is almost 2% more than the finance provided to big business. Furthermore, the terms and conditions are still bordering on the extreme for small businesses with the banks using every means to mitigate their risk, including personal guarantees (family homes are on the line), fixed and floating charges, and more.
But, it just doesn’t make sense to treat private medical practices like any other small business, particularly in view of:
• the principals, who as medical practitioners and specialists, are among the most highly intelligent, motivated, and affluent of all borrowers;
• the business, which is recession-proof; and
• the cash flow, claims for which the federal government pays in most cases on a next-day basis.
With all the talk about risk-rated interest rates, you’d think that at least one of the banks would wake up to the opportunity that is the entire private Healthcare Industry.