Fintech Friday: Loan Doctor

Efma feature

06 December 2019

Loan Doctor is transforming medical practice financing in the United States. Their Founder and CEO, Dr. Edgar Radjabli, spoke with Efma’s Boris Plantier.

What led to the creation of Loan Doctor?

Loan Doctor was formed because of the fragmented nature of healthcare industry lending. Doctors represent the best credit risk and there are a multitude of special programs designed specifically for them to buy or start a practice, buy a home or refinance student loans.

Yet, these programs are not well known, and many individual banks only have some of the products: For example, a bank may have practice finance but not physician mortgages or another bank may have student loan refinance but not have a strong practice finance program.

Loan Doctor was built to be the one source of all financing for healthcare professionals. We've put together partnerships with the top banks in the US (Bank of America, PNC, Citizens etc) that have the best products in the industry.

We have also found that there is tremendous appetite by institutional investors for practice finance loans. This is because these loans are based on the cashflow of existing medical practices who have had predictable and stable revenues even during the 2008 recession. As the threat of the end of the credit cycle looms, practice loans represent the ultimate safe haven asset because they pay almost double the yield than treasuries but are rated AAA A-1 and A-2 and are virtually as safe.

For this reason, banks that do practice finance loans do not resell them and prefer to keep them on their books because they are desirable balance sheet assets, especially during recessions. The high demand and lack of supply of this type of paper presented an excellent opportunity for us. Loan Doctor selects and originates certain loans for origination, which it immediately resells to institutional investors.

Our innovative credit rating technology allows us resell on a per-loan basis, avoiding the complexity and expense of traditional tranche securitization. As a result, we have opted to grow this business organically and incrementally, rather than raise a large amount of capital first.

To do so, we launched a unique product, the HCF High Yield CD which is available to consumers. Similar to a bank cd, the funds on deposit are used for loans. Unlike a bank cd, because the loans are immediately resold, there is no underlying credit risk.

We generate revenue from interest on cash and cash equivalents which back the CD, as well as from the resale of the loan. Our focus on technology and efficiency allows us to accept a much smaller spread on the funds, and thus pay back an industry leading yield to depositors.

Could you present Loan Doctor's offer?

For doctors, it's the only place they need to go to for any financing needs. They know that we will always have the best rates and terms in the industry. There's no need to go shopping around and wasting time talking to bankers, because Loan Doctor does all that work for you upfront, and simply presents you with the best product.

Our business model is lender agnostic, which means we are compensated the same for any product we offer (whether through a lending partner or directly) and thus our only incentive is to offer the best product for each client.

For consumers, the HCF High Yield CD offers the best currently available terms in the industry. The current rate is 6% APY with a 1-month, renewable term. This compares favorably with typical bank CDs at 2.5 to 3% and is made possible by our unique business model. Our minimum balance is $1000 and there is no maximum amount per customer (although there is an aggregate maximum capacity).

What's coming next for Loan Doctor?

Loan Doctor's focus will remain on the healthcare industry for the foreseeable future. As our lending business grows, so will our consumer deposits, as they both need to grow organically together. We have opportunities for other loans outside of practice finance that we can integrate into our model and be able to resell quickly (thus keeping the CD deposit funds free from underlying credit risk). Our goal is to become the top lender in the healthcare industry, and originate $1B in healthcare lending by 2025.
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Keywords : Credit , Specific customer , Fintech , SME/Corporate

Geography : USA