To apply for a Scotiabank loan or line of credit to support yourself and/or your veterinary practice, you will need to go through an application process.

Loans and lines of credit are both good options because they typically charge a lower interest rate than a credit card. 

The best option for your practice depends on your particular situation, the interest rate environment, what the funds are to be used for and how soon you plan to pay off the debt. 

Advantages of a loan

Loans are ideal for large, planned purchases, such as buying diagnostic tools for your practice like an X-ray system or upgrading your customer management software. 

They allow you to borrow a specific amount of money you typically pay back over a pre-determined period of time. If you require additional funds in the future, you will need to apply for a new loan. 

Unlike most lines of credit, loans require you to pay a portion of the principal each month, along with the interest. This means your monthly payment may be higher than with a line of credit. On the plus side, having a fixed payment plan will force you to regularly pay down the principal, which may result in paying the debt off sooner. You also need to ensure you have sufficient cash flow to cover the required payments. When deciding between a loan or line of credit, you must consider your expected future cash flow.

You can choose a loan with either a fixed or variable interest rate:

  • A fixed-rate loan locks in the interest rate and payment amounts. This provides you with the security of knowing your payments will not increase for the term of the loan, which can be helpful if you want to keep your monthly debt payment obligations consistent. It may also be a desirable option in an increasing interest rate environment.

  • A variable-rate loan typically has a lower initial interest rate than a fixed-rate loan, but its rate fluctuates based on changes to prime rate. If interest rates rise, then the related monthly payments may increase (some loans provide a guarantee not to increase above a cap rate). During periods of low interest rates, a variable rate product may be desirable as it reduces borrowing costs. Since every individual’s circumstances are unique, seek advice from a Specialist to find the right option for you.

Consider a loan:

  • When making a large purchase or one-time expense, such as:
    • Purchasing a practice
    • Purchasing more costly equipment 

  • To consolidate several higher-rate debts into one lower-rate loan to save on interest payments and streamline your finances.

Advantages of a line of credit

A line of credit gives you greater flexibility and convenience to borrow funds whenever you need access to credit up to an approved limit. Similar to a credit card, you only pay interest on the amount you draw and each time you pay down your balance, you can draw on those funds again. 

The advantage of a line of credit is that it tends to have a lower interest rate than a credit card and usually a higher spending limit. This makes it a good option for covering larger unexpected expenses or helping you meet your short-term cash flow needs. A Scotia Professional® Plan line of credit can be accessed easily through your ScotiaCard for business, online banking, mobile app, automated banking machine and cheques.

While a line of credit allows you to make only the minimum monthly interest payment, it’s wise to aim to pay it off as soon as possible. You may want to consider allocating funds monthly towards paying down the principal balance. Carrying a balance on your credit line can be a helpful short-term solution, but you want to avoid paying interest for longer than necessary. 

You can opt for an unsecured or a secured line of credit:

  • An unsecured line of credit has a variable interest rate that is tied to the prime lending rate. Your acceptance and credit limit are based on your credit rating. 

  • A secured line of credit typically has a lower variable interest rate than an unsecured line as it is secured by your assets, usually real estate. In addition to your credit rating, your acceptance and credit limit are based on the amount of equity you have in your property, for example.

Consider a line of credit:

  • When you need to cover unexpected or recurring expenses.

  • To manage short-term gaps in your practice’s cash flow or to ensure you have access to sufficient funds if you ever need to cover an unexpected expense. 

Applying for a loan or line of credit

To apply for a Scotiabank loan or line of credit for your personal or veterinary practice, you will need to go through an application process.  

A dedicated Scotiabank Healthcare & Professional Specialist with advice and expertise in the veterinarian industry can advise whether a loan, line of credit, or a combination of these are best for you and work with you every step of the way.

For more information, customized advice and solutions to help you borrow funds to start or grow your vet practice, contact us today