ASC / Corporate Loans FAQ
Equipment and expansion financing
Q. What are the terms of an equipment loan?
A. The loan is structured to be fully repaid within the time frame of the remaining useful life of the equipment (up to ten years). Regardless of the repayment schedule, the loan matures within five years from closing.
Q. What happens after five years?
A. If the remaining balance of the equipment loan is not repaid, the loan may be extended for a period of time at the option of Physicians Capital.
Q. What is the collateral?
A. Typically, the collateral is only the equipment being financed by the outpatient center.
Q. Are there any origination fees?
A. No. However, there are legal and filing fees that are due at closing.
Q. Who are the guarantors on the equipment loan?
A. The equipment loan is made to the legal entity (JV, LLC, etc) that owns the outpatient center. The credit strength of the ASC determines whether the corporate owners and/or the management company need to be guarantors. It is Physicians Capital’s preference not to have the physician-owners as guarantors.
Q. Can I accelerate loan payments?
A. Yes. Equipment loans can be prepaid without any penalty or fees.
Special purpose financing
Q. What are the terms of a special purpose loan?
A. It is dependent upon the type and purpose of the loan.
Q. What is the collateral?
A. Although it is dependent upon the type and purpose of the loan, typically such loans are unsecured.
Q. Are there any origination fees?
A. Yes, they typically range between 3% and 5% of the loan amount. In addition, there are legal fees due at closing. On certain center consolidation loans, Physicians Capital may earn an “equity participation fee” in addition to its contractual interest rate.
Q. Who are the guarantors on a special purpose loan?
A. Typically all of the owners, physician and corporate, including the management company, are guarantors on a special purpose loan.
Q. Can I accelerate loan payments?
A. Yes. Special purpose loans can be prepaid without any penalty or fees.
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