Q:

Dear Dr. Margolies

I am having trouble obtaining funds to start my practice about $50K which includes six 
months of working capital from banks.  One woman suggested that I work for someone 
first to build up net worth. What do you think?  How do you feel about using credit cards 
for this?

A:

Thanks for the e-mail. Be very careful starting out that you do not create headaches you 
will regret later. Credit can come back and bite you. Using credit cards with the high 
monthly interest rates is the wrong way to go. I always told the students at LUCC that the 
best way to establish finances for an office start up with no credit history or collateral 
would be a loan from parents or other family members. It is a risk but they can take out a 
$15-20,000 home equity loan as assurance .. collateral .. for the bank if you default. You 
actually get the loan with their co-signing and you make the payments and build up a credit 
history. Rather than using all the money have a line of credit to be used as needed. Today 
home equity interests rates are very low and they can write off the interest on their taxes. 
Risk is they must pay the loan if you default or lose their home. But you won¼t let them do 
that .. will you? If this is impractical there are various leasing companies for equipment that 
will lease you equipment .. new or old .. from soap to nuts including x-ray units. A 
combination of loan and lease will get you the numbers you need to start up. Hessco is one 
company and their webpage is: www.hessco.com or you can e-mail them at: 
hessco@aol.com. Jay Dearman has a great company and does similar things he can be 
reached at: 1-888-463-1381. There are many others. So .. if you feel comfortable starting 
on your own and have the financial discipline to make it happen then just get an office and 
stock it with used leased equipment .. be sure there is no pre-payment penalty for it.

The woman advised you to build up a credit history. If you have used credit cards in the 
past you have one. In many states banks are leery loaning to chiropractors.. we default too 
often sorry to say.  

Get your ducks in a row and go for it.

Have a Great Day

Dr. M