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Birmingham, Michigan

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Medical Building Loans, In the Credit Crisis

Posted at Commercial Real Estate Loans by Jeff Rauth

May. 15, 2009

Tagged with: medical property loan, medical property loans

Doctors seeking medical building loans will likely discover that the wide variety of options available to them just 6 months ago, have now been reduce to only a few loan programs. The entire industry is feeling the “crunch” and for the first time since the Savings and Loans crisis of the early 90’s doctors and other medical practitioners are no exception.

Many doctors that are used to having bankers virtually beg for their business, are often surprised to hear their local bank tell them… “No”. There are several diffident issues going on here. The most prominent is that the bank have their own internally issues that are limiting their ability to lend, no matter how strong the medical loan request is.

The main issue with banks is there capital reserve requirements and their equity requirements established by the Federal Reserve’s. You may have heard a lot lately about the controversial accounting rules referred to as Mark to Market. This is a complicated topic but in regards to this article, as the collateral values on banks balance sheets decline, many banks are falling under the equity to debt requirements and are not permitted, per the Feds, to actually lend money. To counter this many banks are trying to raise additional capital or pushing existing borrower out that are highly leveraged, in an effort to get their ratio’s in line, so they can lend again.

Also, as far as Doctors themselves, we have seen many that are also experiencing declines in gross revenues. Most funding sources now, more than before are asking, “how are gross revenues, in 2008 compared to 2007? Increasing or decreasing? And, how much cash does the Doctor have, in terms of saving, checking, stocks, bonds, etc” If the answers to these question are poor most sources don’t want to even look at the loan request. A year ago, most banks could get over virtually anything for a doctor. Not so now.

There are solutions, but as implied, they have reduced.

Jeff Rauth is President of Commercial Finance Advisors, Inc. They close commercial mortgages throughout the US from $400,000 - $10,000,000. 248 885-8797. Medical Building Loan or commercial mortgage loan or SBA 7a Loans

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