As the locum tenens industry continues to grow, startup staffing firms are under pressure to keep up with the demand. As competition intensifies, agencies will need to scale their teams to continue growing.
That can be difficult without an infusion of funding, but traditional funding from banks isn’t easy to secure for agencies like these. Banks tend to view rapid growth as a higher-risk investment, and strict regulations limit their ability to extend loans to such ventures.
Access Capital, though long a specialist with staffing agencies, is a relative newcomer to the locum tenens scene, understands that fast growth requires fast access to capital. The firm specializes in asset-based loans and helps locum tenens staffing companies meet payroll obligations, expand their workforce, and secure funds for acquisitions and capital investments.
For the past 30 years, funding staffing agencies has been one of Access Capital’s missions, with roughly a quarter of its financing portfolio dedicated to healthcare staffing and about 10% of that supporting locum tenens agencies. Although locum tenens staffing currently represents a small portion of its portfolio, CEO Terry Keating is determined to change that.
To that end, Access Capital representatives will attend the National Association of Locum Tenens’ 2024 Fall Fly-In in Austin, Texas, on September 24 and 25. They hope to meet with locum tenens entrepreneurs to explore new partnership opportunities.
According to Keating, the firm has expanded its locum tenens portfolio by leveraging its digital marketing and full-time development team to further focus on locums agencies. Unlike other healthcare staffing segments that are contracting, the locums industry has consistently enjoyed stout revenue growth for years, with seemingly no end in sight. Keating believes Access Capital can help these companies reach their full potential.
“The reason locum tenens is attractive for us is because it has performed well within the healthcare space, and it doesn’t have the same volatility as other segments, given the caliber of professionals being placed."
Filling the Gaps Left by Banks
Access Capital was founded in 1986 by the late Miles Stuchin and his wife, Marcie, in a vacant New York City apartment turned office. At the time, Miles had a simple dream of creating a place where entrepreneurs like himself could help fellow entrepreneurs achieve their business dreams.
“Miles was a lawyer and entrepreneur. He founded the business on that principle because he understood the entrepreneur’s mindset,“ Keating said. “While the business and the team have grown, entrepreneurial companies are still a core cultural dimension of the firm.“
From Day One, this principle has been deeply woven into the company’s DNA, creating an environment where businesses of all sizes can access the financial support they need.
Banks are typically more restrictive in their lending practices, “particularly when supporting new or emerging firms in an aggressive growth cycle,“ noted Senior Vice President John McGraw. Newer staffing firms sometimes lack a track record of stable revenue, which banks strongly consider when evaluating loan applications. Rapid growth makes firms riskier investments for banks as well. Without a solid credit history or sufficient collateral, companies find it difficult to secure loans.
“Firms looking to grow need a structure that enables them to do just that,“ McGraw said. Access Capital understands that to scale quickly, companies must acquire a financing source just as quickly.
“Access Capital was founded under the premise that we would support entrepreneurs’ needs as they grow throughout their business cycle. The idea is that we’re going to be with you for the life of your company,“ he said.
“Access Capital was founded under the premise that we would support entrepreneurs’ needs as they grow throughout their business cycle. The idea is that we’re going to be with you for the life of your company."
Tailored Financial Solutions for Growing Businesses
Access Capital focuses on small- to mid-sized entrepreneurial businesses that have experienced year-over-year growth, whether 10%, 25%, or something else; they tailor their credit facilities to the profile and business model. Regardless of the growth profile, these companies have a pressing need for capital and demand a level of responsiveness that Access Capital believes other lenders fail to provide.
“Our core service offering is providing working capital in the form of an asset-based line of credit,“ McGraw said, explaining that Access Capital gives staffing firms a line of credit based on their collateral, such as accounts receivable. The loan amount is flexible because it’s based on the value of their collateral—as a company grows and has more accounts receivable, they can borrow more.
“The idea here is that firms can be advanced 90% on eligible receivables, and the loan is based on their growth needs,“ he said. “We tailor the asset-based line of credit with flexible terms and a financial structure that fits their business.“
The timelines for securing a loan vary, but Keating notes it can be as quick as four to eight weeks. “When we meet with companies, the idea is to put in place a credit facility that supports their current need while also helping them meet their potential projections,“ Keating said. “There’s not a big lift for us to get to a closing.“
Access Capital’s lending strategy for staffing firms has been highly effective. According to Keating, staffing agencies comprise about 75% of the company’s portfolio, with healthcare staffing accounting for about a quarter of that segment. On average, these client relationships last about seven years, which Keating claims is rare in the asset-based lending industry, where the typical relationship is 2-3 years.
Why Locums Is an Attractive Investment
In January, Staffing Industry Analysts predicted that locum tenens revenue will increase by 7% in 2024. Additionally, SIA reported that the locum staffing segment had already grown by 21% compared to the previous year. This locum boom has created a favorable environment for investors to consider locum tenens staffing firms.
“The reason locum tenens is attractive for us is because it has performed well within the healthcare space, and it doesn’t have the same volatility as other segments, given the caliber of professionals being placed,“ said Keating.
“One of the discussions I get the joy of having so often with CEOs of these businesses is that we’re both on the same journey. That becomes a resonating conversation with them. It helps them realize that ‘Hey, you guys really do understand us; you have the same challenges that we have.’“
McGraw added that locum tenens offers higher bill rates than other healthcare segments, a key reason Access Capital plans to increase its support and invest strongly in the industry. The company has begun seeking more business partnerships and expanded its network by joining NALTO.
“NALTO has been on our radar for quite some time, and some of our clients who are active in the association encouraged us to get involved,“ recalled McGraw. “We quickly realized there’s value we can gain from the association and value we can add.“
Shared Growth Goals
Keating explained that partnering with NALTO is a fundamental part of the firm’s strategy to build connections with locum tenens organizations as the company aims to quadruple its locums portfolio over the next five years.
“We knew we wanted to expand in locum tenens, so we’ve added focus in this area to our business development efforts,” he said. Keating believes in the future of locum tenens and is committed to the industry’s growth over the next five to 10 years and beyond.
Keating further stated that, with their vast experience in staffing overall, he’s confident Access Capital has what it takes to grow alongside its agency partners, as they share the same ambitious goals. He believes this gives the company an advantage in the marketplace because it understands the challenges entrepreneurs face since they are also working to expand their business rapidly. This shared experience, he said, has helped them build stronger relationships with their locum clients.
“One of the discussions I get the joy of having so often with CEOs of these businesses is that we’re both on the same journey,“ Keating noted. “That becomes a resonating conversation with them. It helps them realize that ‘Hey, you guys really do understand us; you have the same challenges that we have.’“
