A California bank that caters to medical businesses hopes to strengthen its hand by offering Small Business Administration loans.
First Professional Bank, Santa Monica, announced on April 30 it had received approval and licensing from the federal government to provide guaranteed lending.
The bank plans to target medical entrepreneurs who might not otherwise qualify for credit. In addition, the SBA status will allow the bank to branch outside its niche into traditional commercial business lending.
"We saw a need there for beginning doctors that are starting out, maybe looking to buy a practice," said Eiji Yamanishi, a vice president for $325 million-asset First Professional. Previously the bank "made loans primarily to established doctors."
SBA lending is just the newest weapon the $325 million-asset bank will use to exploit its medical industry niche. In March the bank announced it would provide financing and consultation to help foster medical service organizations on the West Coast.
The bank will start offering the product soon, Mr. Yamanishi said. First Professional will consider requests for real property purchases or refinancing, professional practice purchases, working capital, machinery and equipment acquisitions, and business expansion.
Partnerships are a key part of First Professional's guaranteed lending strategy, Mr. Yamanishi said.
For instance, to help find prospects the bank will establish relationships with the medical schools at the University of California-Los Angeles and the University of Southern California, Mr. Yamanishi said.
"We will make presentations to students and tell them that we have this product available," he said.
The bank also is retaining the Summit Group, a Los Angeles-based SBA consultancy, to help them start the program and structure the loans, Mr. Yamanishi said.
Further, the bank could make guaranteed loans to entrepreneurs outside its niche.
"We would like to do SBA lending aside from the medical field; we have requests coming in all the time," Mr. Yamanishi said.
For example, a billiards restaurant has asked the bank for credit, he said.
The bank will be flexible on whether it holds or sells the loans, Mr. Yamanishi said. Basically, First Professional's actions will depend on its liquidity.
"We're very deposit-heavy right now so we have the ability to carry them," he said.
