Healthcare commercial lending market grows

Commercial healthcare loan market grows

Written by Monica Correa on September 20, 2022


Commercial healthcare loan market grows

While commercial loan transactions are slowing down a bit due to rising interest rates at financial institutions, commercial healthcare loans are becoming a growing market in South Florida thanks to an increase in the number of licensed physicians and the expanding population of Florida.

City National Bank is adding a medical division within its private bank lending capabilities in response to a significant increase in the size of Florida’s medical, dental and veterinary practices.

“It’s a growing market for us. We believe that the opportunity to work with these doctors, dentists and veterinarians in their financial situation is important, not only for the bank but for the community,” said Ricardo Garbati, director of private banking at City National Bank.

Applications for medical business loans are increasing in the region, he said. “What we see the most are requests for practice acquisition [loans] for physicians looking to expand their practice, either by purchasing an existing practice or by merging with other practices. We also see many practicing physicians considering setting up their own practice.

The new division of the bank will also seek to cover medical practice financial planning, equipment financing and commercial real estate investments for doctors, dentists, veterinarians, diagnostic centers and outpatient services in private practice.

Five experts join CNB’s private medical banking group, including Frank Nogareda as senior vice president; Shaina Mejia and Gerson Sotolongo, as Vice Presidents and Heads of Private Banking Relations; Leniel Rendon, as Vice President and Cash Management Sales Officer; and Adriel Martinez, as Senior Customer Service Specialist.

According to Florida Health’s 2021 Annual Physician Workforce Report, the number of physicians providing care in Florida has increased by 24.6% over the past ten years, while Florida’s population has increased by 13.5% .

“The main factor driving this growth is the large migration of people to Florida in general, the demand from high income people who have moved to South Florida as well as the income growth that our market has known to locals,” Garbati said. “The demand for skilled medical care…has fueled growth in this area. »

Growth is evenly distributed across South Florida, he added, “with large hospitals acquiring talent from across the country, large dental practices acquiring smaller dental practices, and physicians seeking the opportunity to go alone and feel more comfortable where the economy is than a practice owner.

In addition, other commercial loan markets have stabilized somewhat. “Florida continues to be hot and showing growth, but transaction volume has slowed down a bit,” he said. “We attribute this to rising interest rates, but we continue to see a strong group of buyers [of commercial real estate] as people continue to move to South Florida and other areas.

Pablo Pino, president of the South Florida commercial banking market at TD Bank, said commercial lending is exceeding pre-pandemic volumes, although it is stabilizing across a range of industries due to rising interest rates and inflation costs.

Customers seeking business loans are looking for additional working capital, he said. There is demand for commercial loans for equipment from all fronts, mortgages and cash management services. “They buy equipment and wonder if they should buy [real estate]versus renting”, since rents have increased.

There is pent-up demand in the hospitality industry, he said; also, in food distribution, consumer goods, nutrition and vitamins, airline industries, automobile and auto parts distribution industries. “It seems there has been pent-up demand coming from the pandemic,” Pino said. “A lot of people were holding back.”

Manufacturing and distribution companies buy their raw materials in bulk to ensure they have the materials needed for their production, he added. “Bringing more inventory is going to require more working capital.”

Moreover, with the return to traditional activities in offices, Mr. Pino said, companies are adding the technology they have implemented during the pandemic to their core business.

“We expect that [the medical division at CNB] will continue to grow and the demand for advanced healthcare is not going to change,” Garbati said. “The migration to South Florida has been different than in years past. People are enrolling their children in schools, participating more in the community, so we believe the medical side of the market will continue to be a growth area for years to come.

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