04/20/2026
The Day-to-Day Impact on Financing and Cash Flow
For many veterinary practices, interest rates are most visible through lines of credit, equipment loans, mortgages, and home equity lines. Over the past few years, owners with variable rate debt have seen borrowing costs rise quickly, sometimes with frequent notifications from lenders as rates adjusted upward. These increases flow directly into monthly payments and can tighten cash flow if they are not anticipated.
At the same time, higher rates have created opportunities on the cash side of the balance sheet. Money market accounts, high yield savings accounts, and short-term certificates of deposit are paying more than they have in years. Practices that keep significant cash reserves can generate meaningful interest income by placing idle cash in the right vehicles while still keeping it accessible.
The challenge is balance. Holding cash that earns little or no interest while carrying higher cost debt can quietly erode profitability. Reviewing where your cash sits, what it earns, and how your debt is structured is a worthwhile exercise in the current climate.
The Impact on Buying and Selling Practices
Interest rates play a major role in practice valuations and transaction activity. When financing is inexpensive, buyers are often more comfortable paying higher prices because the cost of borrowing is manageable. As rates rise, that math changes.
Higher financing costs have put pressure on valuations across the market. Buyers need to account for larger interest payments, which can reduce what they are willing or able to pay for a practice. Sellers, on the other hand, may still have expectations shaped by valuations seen during years of lower rates. That gap can slow deals or require more creative structures to get transactions across the finish line.
This dynamic affects not only third party sales, but also internal transitions such as one partner buying out another or an associate stepping into ownership. Financing terms, payment schedules, and interest assumptions all matter more when rates are elevated.
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