Little Loans, Big Returns

If you’re an individual or a small business needing a little help, there’s a microloan for you. This article highlights just two of the many approaches to microlending for veterinary professionals: traditional microloans to help individuals advance in their careers, and government-backed loans to help small businesses get started or grow.

Microloans Can Provide a Boost for Small Businesses

by Constance Hardesty

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Microloans can be used to fund professional development and to launch or grow a business.

If you’re an individual or a small business needing a little help, there’s a microloan for you.

Microloans have come a long way. The idea was launched as an experiment in 1976 when economics professor Muhammad Yunus made a small personal loan to a group of women who made bamboo stools. They used the money to make changes that boosted their productivity and paid off the loan.

Yunus went on to found Grameen Bank to establish microcredit as a financial tool, for which he won the Nobel Peace Prize in 2006. Now, microlending is big business, with banks, nonprofits, and governments offering small, short-term, low-interest loans to individuals and small businesses.

But even though microlending has grown, its roots still show. This article highlights just two of the many approaches to microlending for veterinary professionals: traditional microloans to help individuals advance in their careers, and government-backed loans to help small businesses get started or grow.

Microloans for Professional Development

In the cold November of 2000, Eva Hadzima, DVM, MVDr, and her husband, Maros Pazej, DVM, MVDr, arrived in Calgary, Alberta, with a dream of starting their own veterinary clinic.

Both were graduates of the University of Veterinary Medicine in Kosice, Slovakia, and both had advanced degrees in addition to veterinary degrees. Hadzima had earned a master’s degree in toxicology and started to study for a doctorate in nutrition, while Pazej pursued three years of postgraduate study in honeybee diseases and simultaneously worked at a veterinary practice in Slovakia.

Unfortunately, there were few veterinary positions available in Slovakia. Immediately the couple began an international job search.

Both doctors found work in Finland, but they were determined to settle permanently in a place where there was a solid demand for their skills and which had an easier language to speak.

“I was online on forums, asking everyone if they knew of a place where veterinarians were needed,” Hadzima recalled. When someone suggested Canada, she did not hesitate to investigate.

The decision to resettle was an easy one. “Mountains, animals, Calgary. Done!” she said.

They arrived at Calgary International Airport with one backpack each and almost no money—a new experience for both of them. Despite having little, the doctors harbored high hopes of pursuing the careers for which they had studied.

MM-photo_Courtesy_of_Eva_Hadzima_-_HI_RES.jpgMarcus, Eva Hadzima, DVM, MVDr, Anna-Maria, and Maros Pazej, DVM, MVDr, with the family pets in a field of canola on the sustainable farm they are building.

Like many universities across the world, the University of Veterinary Medicine in Kosice is not accredited by the Council of Education of the American Veterinary Medical Association. Accreditation allows students to immediately practice their occupations without having to complete additional exams.

So instead of starting their own practice, Pazej began work as a technician in respiratory research at the University of Calgary. Meanwhile, Hadzima started out as a groomer and then worked as a laboratory technician at the University of Calgary while volunteering at several veterinary clinics. Over time, both doctors were able to practice surgery and emergency room medicine under the supervision of a licensed veterinarian.

To practice as licensed veterinarians, however, the doctors would have to take tests to prove their proficiency in English and complete both the North American Veterinary Licensing Examination (NAVLE) and the Clinical Proficiency Examination (CPE). At the time, exam fees and associated costs would be more than $10,000 for each doctor.

To raise the funds, the couple worked several jobs, including driving for a delivery truck company and as a groomer at $6 per hour. Six years passed, and Hadzima decided the process was taking far too long. By chance she learned about low-interest loans available from Windmill Microlending.

Windmill Microlending is a Canadian registered charity (nonprofit) that makes low-interest loans to skilled professionals who are immigrants or refugees in need of funding to complete Canada’s licensing requirements.

Windmill posts that, on average, their underemployed clients can see their income double or even triple once they gain the necessary credentials to work in their field of expertise and repay their loans. The repayment rate for Windmill loans is 97.5%.

Confident that she would recoup the costs soon after she earned her credentials, Hadzima applied for a microloan to help pay for the fees and associated expenses. With the loan, she was able to take two months off to study for the exams and travel to Oklahoma State University to take the final CPE practical exam.

While working through the loan and licensing process, Hadzima was already looking ahead. “The next day after passing the practical exam, I opened my first veterinary locum company in Alberta. That’s how confident I was,” she remembers.

GettyImages-1365587257_[Converted].pngToday, the couple’s practice, DeWinton Pet Hospital, Inc., just south of Calgary, is thriving. In addition to the two veterinarians, the practice employs about twenty support staff, including several veterinary students and registered veterinary technicians. It has been AAHA-accredited since October 2010.

Hadzima grew up in an urban environment with no yard for a pet and, as a result, all of her childhood pets were small exotics, ranging from hamsters to rats to snakes. So it’s no surprise that the child who dreamed of becoming a veterinarian devotes most of her professional time to her first love, exotics and especially reptiles.

At present, Hadzima is a member of many associations focused on treating exotics and unusual pets, including the Association of Reptilian and Amphibian Veterinarians (ARAV) and the Association of Exotic Mammal Veterinarians (AEMV).

Pazej treats companion animals, with a special focus on surgery and dentistry. He is a member of the American Veterinary Dental Society and is actively involved in dentistry seminars.

Both doctors are involved in professional veterinary associations, including the Alberta Veterinary Medical Association (ABVMA) and Canadian Veterinary Medical Association (CVMA). Together with Katherine Weston, one of their current veterinary interns, they co-authored the chapter “Laser Surgery Procedures in Small Exotic Animals (Small Mammals, Reptiles, and Avians)” in the book Laser Surgery in Veterinary Medicine (Wiley-Blackwell, 2019).

Hadzima is also the founder and principal of Slovak School-Slovenska Skola in Calgary and is the Honorary Consul of the Honorary Consulate for the Slovak Republic in Calgary.

Although leaving their family and friends behind in Europe was difficult, both of the veterinarians have achieved success that they could never dream of in Slovakia. “Even though the journey was hard, we regret none of it,” they agree.

Twenty years after immigrating, the doctors have a thriving family with two children, Anna-Maria and Marcus; three dogs (Max, Maruska, and Mochi); two tortoises (Speedo and Louis); a parrot (Buzz); an axolotl (Mat); and what Hadzima calls “a gang” of bees. Together, they are building a sustainable farm on acreage in view of the mountains near their veterinary hospital.

Microloans for Veterinary Practices

In the year before the COVID-19 pandemic hit, a recent veterinary graduate and practice owner set out to develop her practice in the midwestern United States. Her plan was simple: double the space devoted to grooming and purchase a tub to bathe large dogs. The cost was only about $3,000, and that was a challenge. Where could she apply for a very small loan?

She turned to a local economic development commission for a microloan. The infusion of cash set her plan in motion, and one thing led to another. In 2022, her practice joined locations with a nearby practice, and she now serves as director of mentorship for a national veterinary services organization.

As this story shows, small, short-term, low-interest loans can be a solid alternative to traditional loans. For veterinary practice owners who do not qualify for conventional loans, practice in small towns or rural areas, have a limited or less than stellar credit record, or simply need to borrow less money than their banker is willing to lend, microloans can offer real advantages.

What You Need to Know About Microloans

Microloans come in many shapes and sizes. You will see them advertised by banks, nonprofits, and even quasi-government offices like community development commissions. Some of these products are conventional loans with a buzzy tag. Others meet all three criteria of true microloans: small principal, short-term repayment, low interest rate.

Many nonprofit organizations that offer microloans (like local economic development commissions) are actually administering funds allocated by the Small Business Administration (SBA). That means the loan is governed by protections established by the federal government. It also means that SBA microloans are available in every state. For these reasons, SBA microloans provide a reliable introduction and a useful benchmark for comparing offers as you shop for a very small loan.

The SBA funds loans of less than $50,000 to fuel growth or launch new businesses. They are meant to serve borrowers who are likely to be denied credit because of the small size of the loan, the borrower’s income or credit score, the business location (small towns or rural areas), and demographics (women, minority entrepreneurs, and veterans).

In 2021, borrowers were about evenly split between men and women, and about one-third of the loans went to businesses in rural areas.

The loans can be used to rebuild, re-open, repair, or improve your practice, with expenditures for working capital, inventory, supplies, furniture, fixtures, or equipment. They cannot be used to pay off existing debts or to purchase real estate.

You can even use an SBA microloan to launch a new business. Let’s say you own a general practice; you could use a microloan to launch a wholly new company, spin off an existing service as an independent business, or boost a side hustle.

Anyone who wishes to launch or grow a company is eligible to apply for a microloan. So if a technician, let’s say, repairs bicycles on the side, she is eligible to apply for a loan to develop that business. To win a loan, the applicant must be a good risk with a solid business plan and credit score.

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Consult your financial planner, banker, or business advisors to help you  consider options, compare and  evaluate offers, and negotiate your best deal.

The SBA does not set minimum credit scores for borrowers. That’s left up to each lender. Investopedia reports that the typical minimum is between 620 and 640.

Although SBA microloans are capped at $50,000, most come in at about $15,000. Loans of more than $20,000 are allowed only if the borrower can show that they cannot obtain credit elsewhere at comparable interest rates.

To protect borrowers, interest rates are regulated by the SBA. In 2021, interest rates for SBA microloans ranged from 6% to 9%, depending in part on the size of the loan and how the funds were used. That compares to other lenders who may charge between 24% and 35%. Also in 2021, the maximum payback term for SBA microloans was extended from six to seven years.

Lenders may also charge a small packaging fee (2% to 3%). And all of the actual closing costs can be rolled into the loan, as long as the total loan amount does not exceed the SBA maximum of $50,000.

It’s crucial to know that SBA microloans are not offered through banks. Instead, they are administered by intermediary lenders called “community development companies” or CDCs. These are nonprofits that pair business training and coaching with loan administration.

Because half of new business ventures fail within five years, the training is crucial. In fact, CDCs typically require that borrowers participate in a training program as a condition of the loan.

What does it entail? The SBA requires all CDCs to offer training in marketing, management, and technical assistance, but each group’s offerings may differ. Some groups offer classes in QuickBooks, website development, Facebook advertising, and online marketing strategies. Others, like the Iowa Foundation for Microenterprise and Community Vitality (IowaMicroLoan for short), offer grants of up to $250 per year so each borrower can choose the training they need.

Is an SBA microloan right for you? First of all, that depends on the size of the loan you need and your qualifications as a borrower. But it also depends on whether you consider the built-in protections, including the training requirements, a help or hindrance.

As you’re searching for small loans, it’s important to explore all of your options. You may find small, short-term, low-interest loans offered by your bank or other organizations. Or, you may discover that another source of funding, like a line of credit or vendor financing, is the best fit for your immediate need.

Whether you are considering a small loan to fund professional development or practice growth, it pays to get expert advice. This article describes just two of the many types of microloans available from various types of providers. Consult your financial planner, banker, or business advisors to help you consider your options, compare and evaluate offers, and negotiate your best deal.

This article does not provide financial or legal advice; for such advice seek the services of a licensed professional. The author has no affiliation with any microlending program.

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Constance Hardesty, MSc, is an award-winning writer and editor serving clients in animal health, business management, technology, and education.

Photo credits: Nuthawut Somsuk/iStock via Getty Images Plus; Photo courtesy of Eva Hadzima

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