Healthcare commercial lending market grows

Written by Monica Correa on September 20, 2022


The healthcare commercial loan market is growing

As commercial lending slows somewhat due to the rise in interest rates at financial institutions, commercial healthcare lending in South Florida is becoming a growing market as a result of the increased number of licensed physicians and growing Florida population.

City National Bank is adding a medical division to its private bank lending capabilities in response to the significant growth in medical, dental and veterinary practices in Florida.

“This is a growth market for us. We believe that being able to work with these doctors, dentists and vets in their financial situation is important, not just to the bank but to the community,” said Ricardo Garbati, Private Banking Executive at City National Bank.

Demand for medical commercial loans is increasing in the region, he said. “What we see most often are requests for internships [loans] for physicians looking to expand their practices, either by purchasing an existing practice or merging with other practices. We also see many practicing doctors who are considering opening their own practices.”

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The bank’s new business will also cover medical practice financial planning, equipment financing and commercial real estate investments for general practitioners, dentists, veterinarians, diagnostic centers and outpatient facilities.

Five professionals join CNB’s Private Medical Banking Group, including Frank Nogareda as senior vice president; Shaina Mejia and Gerson Sotolongo as Vice Presidents and Private Banking Relationship Managers; Leniel Rendon, as vice president and sales representative for financial management; and Adriel Martinez as senior customer service specialist.

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

“The primary factor driving this growth is the large outflow of people to Florida in general, demand from high-income individuals who have settled in South Florida, and the income growth that our native market has seen,” said Mr Garbati. “Demand for skilled medical care…has fueled growth in this space.”

The growth is evenly distributed across South Florida, he added, “in large hospitals acquiring talent from across the country, large dental practices acquiring smaller dental practices, and physicians seeking opportunities to start their own business and practice there.” to feel more comfortable where the business is in terms of a practice owner.”

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In addition, other commercial credit markets have calmed down somewhat. “Florida continues to be hot and growing, but transaction volume has slowed somewhat,” he said. “We attribute this to the rise in interest rates, but we still see a strong group of buyers [of commercial real estate] as people continue to move to South Florida and other areas.”

Pablo Pino, market president for commercial banking in South Florida at TD Bank, said commercial lending is surpassing pre-pandemic volumes, although it is stabilizing in a number of industries due to higher interest rates and the cost of inflation.

Clients seeking commercial credit are looking for additional working capital, he said. There is a demand for commercial loans for all-front equipment, mortgage loans and treasury management services. “They buy equipment and consider whether to buy it [real estate]versus to lease” as rents have risen.

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The hospitality industry has some catching up to do, he said; also in the fields of food distribution, consumer goods, nutrition and vitamins, aerospace industry, automobile and automobile parts distribution industry. “It seems the pandemic has had some catching up to do,” Mr Pino said. “Many held back”

Manufacturing and distribution companies buy their raw materials in bulk to ensure they have the necessary materials for their production, he added. “To bring a larger number of stocks will require more working capital.”

Additionally, with the return to traditional business in the office environment, Mr. Pino said, companies added the technology they implemented during the pandemic to their core business.

“We’re counting on that [the medical division at CNB] will continue to grow and demand for world-class healthcare will not change,” said Mr Garbati. “Migration to South Florida was different than years past. People are enrolling their children in schools and becoming more involved in the community, so we believe the medical side of the market will remain a growth area for years to come.”

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