Physiotherapy clinic finance for private practices

Private physiotherapy practices with HCPC-registered principals, a trading record, a spread of referral sources and an income mix whose payment timescales are understood usually qualify, whether they trade as sole traders, partnerships or limited companies. Lenders typically look at:

• Income mix and debtor days. How much comes from self-pay, insurers, medico-legal, NHS and corporate work, and how long each takes to pay.
• Referral sources. Consultants, GPs, sports clubs, insurers and employers. A clinic reliant on one surgeon or one case management company carries concentration risk.
• Clinician model. Employed physiotherapists or self-employed associates on a revenue split. Associates keep fixed costs low but may take patients with them if they leave.
• Owner dependence. How much of the diary is the principal's own caseload.
• Registration. Physiotherapist is a protected title, and lenders or their due diligence may check principals on the HCPC register. The HCPC's list of protected titles shows which other clinicians you employ, such as occupational therapists or podiatrists, should also be registered.
• Accounts and credit. Filed accounts, current figures and the principals' credit history.

Equipment finance and unsecured loans for an established physiotherapy clinic typically take from a few days to a couple of weeks once accounts, bank statements and quotes are supplied. Selective invoice finance for insurer or corporate invoices usually takes a few weeks to set up the first time, because the funder checks the payers and the clinic's billing process. Buying a retiring principal's practice commonly takes two to four months, allowing for the lender's review of patient and referral data, the sale contract and lease, and confirming which insurer recognitions transfer. A hydrotherapy pool or premises purchase follows the longer valuation and legal timetable of property lending. A clear income breakdown by payer type is the most useful thing to have ready.

The security taken depends on what the clinic is funding. Shockwave units, reformers and other equipment on hire purchase or leasing are secured on the items themselves. Unsecured loans for fit-outs and working capital rely on personal guarantees from the owners or directors, and sole traders are personally liable in any case. Selective invoice finance is secured on the invoices funded, and a revolving credit facility for a limited company is often backed by a debenture. Practice acquisitions usually involve a debenture over the buying company plus guarantees, while a hydrotherapy pool or premises purchase normally needs a charge over property. Our guide to personal guarantees explains what owners are signing.

The main risk is borrowing to cover a debtor problem that will keep growing. If medico-legal work is stretching the bank account, consider limiting its share of the diary or agreeing interim payment terms with case managers before taking on debt. Equipment bought on the strength of one enthusiastic clinician can stand idle if they leave, so check that more than one person can use it. Most unsecured lending needs personal guarantees. Many physiotherapists trade as sole traders; borrowing of £25,000 or less by sole traders and small partnerships can be regulated consumer credit, which brings additional protections.