The Vision Loans Program, which lends money to independent eyecare professionals who want to purchase or buy into an existing practice, recently celebrated its 200th loan. Funded by VSP Vision Care, Essilor of America, and Vision One Credit Union, the program has provided more than $65 million in loans.
To get a closer look at the Vision Loan Program, Eyecare Business spoke with an optometrist who benefitted from the program, as well an executive who administrates it.Expanding our story from Eyecare Business' April News Section, we take a closer look at the Vision Loan Program,spoke with an optometrist who benefitted from the program, as well an executive who administrates it.Expanding our April news story on the Vision Loan Program, Eyecare Business spoke with an optometrist who benefitted from the program, as well an executive who administrates it.
Aaron Evans, OD
Visual Eyes at Mizner Park, Boca Raton, FL
EB: Where were you practicing before the loan, and why did you want to go into private practice?
Immediately after graduation, I was hired full-time with a well-known small ophthalmology practice in Fort Lauderdale, FL. One of my job requirements was to try increase our patient base and grow the practice. As we grew the practice, it became apparent that my benefits were maxed out in this office and that partnership was not an option. After a little over a year in this private practice, I felt I’d learned enough to run my own practice and be successful.
EB: What are some of the challenges facing ODs trying to buy a practice?
When I purchased my first practice in 2009, the banks were not lending money to new graduates. The other challenge is having confidence that the business you are purchasing is worth the asking price.
EB: Why is it important for up-and-coming ODs to have a program like this available?
Without loan programs like Vision Loans, ODs would have to wait much longer to buy their dream practice. These programs provide 100 percent financing, where most banks want to receive a down payment of 10 to 20 percent. For many new graduates, it requires years to save that amount of money after graduation. These programs also have deferred payment options to allow the OD to have time and money during the transition before having to start paying down the loan payment.
EB: What have you been able to do with or in your practice that wouldn’t have been possible without this loan?
The loan has freed up thousands of dollars for us to remodel and update our practice. Since 2009, we have doubled our size, updated our optical stock, and acquired over $250,000 in vision equipment. Without these deferred payment options, we would not have been able to justify such purchases due to lack of cash flow.
President and CEO of Vision One Credit Union
EB: It’s been 200 loans and $65 million. That averages to about $350,000 per loan. Is that usually the number?
Loan amounts are set per transaction to best suit the needs of the practice. Loans have ranged from $50,000 to over $1.5 million.
EB: How is this unique, or preferable, to a traditional business loan?
Vision Loans have unique terms to help the new practice owner achieve a higher probability of success. Features of Vision Loans not included in conventional bank loans are:
· No down payment required which increases the pool of potential practice buyers
· Reduced payments to alleviate risk during the ownership transition phase
· Financing may include the cost of a leading industry consultant upon purchase or thereafter
· The term of the loan is set to minimize payments, yet pay down the loan balance quickly enough to allow for timely reinvest in the practice and reduce overall interest paid
· Loans for partial practice buy-ins generally do not require the practice assets be pledged as collateral. This lowers the risk in the practice for the other partners and allows the practice to continue to invest in its growth (i.e. remodel, equipment, etc.)
· There are no prepayment penalties
· Vision One has specialized solely in independent eye health care practices since 1951 and understands how to optimize the financing to benefit the independent practice.
EB: What are the plans for the future of the program?
VSP and Essilor have increased their commitment to the program by an additional $10 million. Program loan types will be continuously updated to meet the changing needs of independent optometric practice owners to ensure they are able to compete in this changing and dynamic landscape.
EB: What are the parameters applicants must meet?
The primary requirements include a desire to own all or part of a practice, must be a first-time independent practice purchase, practice cash flow must service debt and provide for personal living expenses.