Cash-strapped new doctors struggle to buy into practices

24 May 2010

DEBT-laden new doctors are struggling to buy into practices because banks won’t lend them more money.

Some lenders have refused new GPs loans and others are making tougher checks before agreeing to lend, according to an accountancy firm. A combination of student loans, credit card debt and large mortgages are all factors in loans being turned down.

Jeanette Brown, of accountants Dodd & Co, warned the trend could also makes it more difficult for doctors to retire and sell their practice share to new GPs.

She said: “We’ve had the first indicators that junior partners hoping to buy into practices may not be able to get bank loans as a result of already being overburdened with personal debt.”

She said that whilst many banks are still open for business with doctors, new partners may find their requests for buy-in loans turned down if they have large personal debts.

A recent BMA study found medical students graduate with an average debt of £22,821. Ms Brown told healthcarerepublic.com that she had advised two young GPs in the past few months who hoped to buy into a practice but struggled to secure bank loans. One bank asked for profit projections to be demonstrated, which she said was unprecedented in her experience.

She added: “It’s a commonly held misconception that only low earners get into financial difficulties but in my experience it is simply not the case.”