Loans for Speech Therapy Business: What To Know
According to the Bureau of Labor Statistics, the demand for speech therapists is expected to increase by 21% between now and 2031. While speech therapists can work in schools, hospitals, or residential facilities, many therapists choose to start a private practice. Starting your own speech therapy business requires funding.
Here's how to secure the right business loans for your practice.
Eligibility Requirements for a Speech Therapist to Secure a Loan
Are you interested in learning how to open a speech therapy clinic? You can use small business loans to cover your startup costs as well as give you some working capital to cover ongoing expenses. Your actual eligibility requirements can vary between lenders, but most financial institutions will expect to see data such as:
Your personal and/or business credit history
Your business plan
Financial projections
Financial records
Your business history, if applicable
Any business collateral (for certain types of loans)
Some lenders will also ask to see financial statements from the past two years. If you're starting a speech therapy business from scratch, you'll need to find a lender who can help you get the capital you need to get started.
Types of Business Loans for Speech Therapists
What kind of loan do you need to open a speech pathology private practice? Like other healthcare professionals, speech therapists might consider the following options:
Traditional installment loans
Small Business Administration (SBA) loans
Equipment loans
A business line of credit
Keep in mind, though, that SBA loans can be harder to get than traditional loans. Since these loans are backed by the American taxpayer, they're often reserved for entrepreneurs who have a longer business history, so they might not be the best option for new startups.
Equipment loans can be helpful, though these are often reserved for specialized medical equipment. Speech therapists have less need for a lot of equipment compared to other healthcare providers, which usually means that an installment loan is the best loan for opening a private practice.
A business line of credit works very much like a consumer credit card, offering a revolving line of credit that business owners can tap into up to a certain amount.
This option is the most flexible, which may be ideal for business owners who are unsure of their exact needs. But because of their comparatively high interest rates and low spending limits, a line of credit is not as useful as a traditional installment loan.
Create a Business Plan for Your Speech Therapy Practice
A well-crafted business plan can show lenders that you know how to start a speech therapy business. But it can also keep you focused as you work to get your speech therapy practice off the ground.
In your speech therapy business plan, make sure to include these elements:
Licensing and Accreditation
Start by including your educational and professional credentials. Most speech therapists possess a master's degree, as well as additional licensing. Licensing requirements vary by state, so if you're not already licensed within the state you're operating in, you'll need to verify your local credentialing requirements.
The same applies to your staff. As your business grows, you may take on additional speech-language pathologists. You'll need to ensure that every member of your clinical team has the appropriate credentials to work with your clients.
Keep in mind that this can be a good marketing tool. Your staff's professional credentials can build confidence in your clients, especially if you can back up your license with years of experience.
Deciding on the Right Location
The right location may depend on your community. The best locations will be easily accessible by car or public transportation, or even nestled in a location that delivers plenty of traffic. Many speech therapists work with children and adolescents, so it may help if your practice is located near a local school.
The right location should also help you create a comfortable setting for you and your clients. For example, if you work with the elderly or disabled, you'll need to ensure that your facility is easily accessible.
And if you work with children, you'll need space that accommodates younger clients as well as provides a comfortable waiting area for parents and guardians.
Finding the Right Staff for Your Speech Therapy Practice
To run a successful speech therapy practice, you'll need help. For starters, you'll need administrative support, such as an office assistant who can help you with scheduling, billing, and other tasks. As you grow, you may find you have an increasing need for further support, such as:
Additional office administrators
Custodial staff
Bookkeepers and/or accountants
HR personnel
And if you want to really expand your practice, you can hire additional speech therapists to join you. Thankfully, small business loans can also be used to cover the cost of payroll, at least until you generate the cash flow to support these additional positions.
Advertising Your Speech Therapy Facility
One of the most important parts of any business is learning how to attract customers. While social media and word-of-mouth offer free ways to get the word out, you'll also need funding to cover your marketing budget. Digital ads and pay-per-click (PPC) advertising can help you reach new clients and grow your brand.
Many times, speech therapy targets specific demographics, which is why speech-language pathologists often work in schools, hospitals, or residential care facilities. But this also means that you can market your business by building a referral network with these other industry professionals, so you have access to a pipeline of clients.
Is a Speech Therapy Business Profitable?
According to the Bureau of Labor Statistics, the average speech therapist makes just over $79,000 per year. But the employment site ZipRecruiter reports that at a private practice, speech therapists make over $110,000, with top earners making over $200,000 per year.
And given that the need is expected to grow in the next decade, private speech therapists can expect these trends to continue.
Costs of Speech Therapy
The exact cost of private speech therapy can vary by provider and the degree of service. One industry publication suggests that the average cost of speech therapy will range between $200 and $300 per hour, though some providers offer half-hour sessions.
Insurance providers — including Medicaid — recognize speech therapy as a necessary service, so the good news is that your clients will generally have their sessions covered by their insurance provider.
Additional Things to Consider
Launching a speech therapy business can be surprisingly rewarding. Here are some additional factors to consider before starting a speech therapy business:
What Type of Speech Therapy Business Makes the Most Money?
The Bureau of Labor Statistics reports that speech therapists make the most money when working in a nursing or residential care facility ($95,010 per year), followed by hospitals ($87,110).
But the BLS' estimate of private practice may be undervalued, with some practices earning well over $100,000 per year. Some of this variation depends on your location, as well as your specific area of specialization. The more you grow your speech therapy practice, the more you can expect to earn.
Where Can Speech Therapists Earn the Most Money?
Speech therapists can earn considerable salaries when working in the following settings:
Nursing or residential care facilities
Hospitals
Private practices
But as noted, the amount you earn at a private practice can vary considerably. Many speech therapists discover that they have a higher earning potential by going into business for themselves — which also means that repaying a business loan isn't a major challenge.
Additionally, many speech-language pathologists choose to open a private practice for reasons that go beyond finances. Opening your own clinic can give you greater autonomy and freedom. It will also allow you to scale your business on your own terms and give you more time to devote to each client.
Is Speech Therapy in High Demand?
The Bureau of Labor Statistics forecasts that an additional 14,000 speech therapy jobs will become available in the coming decade. This ongoing need creates job security and opens new doors for speech-language pathologists in a variety of professional settings, including a private practice.
Is Speech Therapy Different from Speech Pathology?
Speech therapists and speech pathologists are one and the same. The terms are often used interchangeably, since the jobs and credentials are identical. In fact, the official designation for a speech therapist is "Speech-Language Pathologist," or SLP.
SLPs can be casually referred to as "speech therapists" or "speech pathologists." When you advertise your business, you'll include the designation "SLP" in your name to indicate your credentials.
How to Get Clients for Your New Speech Therapy Practice
What's the best way to market your speech therapy practice? Common strategies include:
Social media marketing campaigns
Digital advertising and pay-per-click (PPC) ads
Building a referral network with schools, hospitals, or residential care centers
Hosting in-person educational events aimed at your target market
Creating a referral program with existing patients
You can also publish compelling content through your website and social media channels to build an audience and encourage more unique visitors to your web page. Including a strong call to action will ensure that you convert these visitors into clients.
Installment Loan Options
An installment loan is simply a loan that provides you with a lump-sum payment, then requires you to repay the loan through a series of monthly "installments."
The exact length of your installment loan varies by lender, but most last several years. You'll also pay interest on the loan. The best installment loans will offer a low, fixed interest rate and a loan term that keeps your monthly payments low.
At the same time, not all installment loans are the same. In fact, failing to compare lenders is one of the biggest business funding mistakes to avoid. You can save money by finding a lender who offers you favorable rates and terms, so always compare at least three lenders when pursuing your business goals.
How Fora Financial Can Help
Speech therapy is a rewarding career, and in a private practice, the rewards are greater still. If you need funding, Fora Financial can help. Through our simple online application process, you can get a fixed loan today. To build and grow your business, explore our website to learn more about your financing options.
