Medical practice loans and financing options are designed to offer financial assistance to medical professionals. Whether you’re a dentist, surgeon, or dermatologist, you can apply for medical practice financing.
Depending on the type of loan you’re looking for, there are different ways to use your medical practice loans, such as:
- Advertising and marketing to attract new customers,
- Open a new practice,
- Pay for operational costs,
- Purchase new and expensive equipment,
- Salaries and benefits packages for nurses and partners,
- And more.
Fortunately, it shouldn’t be that hard for physicians and specialists to qualify for medical practice loans. From a lender’s point of view, medical professionals generally have a strong earning potential, good income, and great net worth, making them a great candidate for business loans. If you already own a medical practice and you want to expand, you’re in an excellent position to apply for a medical practice loan and you’ll most likely get favorable terms.
To give you an idea of which type of loan you should get, here are the top five medical practice loans and financing options you should know about.
1. SBA Loans
The Small Business Administration (SBA) created federal government-backed loan programs to help small businesses secure bank-rate loans. SBA loans are a great long-term funding solution for those who have been denied a more traditional business loan.
SBA loans are one of the most sought-after loan programs since it offers lower monthly payments, longer repayment terms, and higher loan limits compared to other loans. The repayment terms can last up to 10 to 25 years, depending on the type of SBA loan. It’s also a great option if you need to borrow a huge sum because you can get up to $5 million.
However, applying for SBA loans isn’t as easy as you think. You need to submit a considerable amount of documents and it usually takes two to three months to receive the funding, if you qualify at all. The application process is stringent and it can be difficult to qualify for an SBA loan.
2. Business Line of Credit
A business line of credit works like a credit card and it can act as a cash cushion whenever you’re short on capital. Many entrepreneurs, including medical professionals, apply for business lines of credit because of its flexibility.
With a business line of credit, lenders assign you to a prearranged credit limit which you can withdraw funds from as needed. Unlike traditional loans, you don’t have to repay the entire credit limit. Instead, you only have to pay back the amount you’ve withdrawn plus the interest.
You can use the funds from a business line of credit for almost any type of business expense, such as equipment purchases, hiring new specialists, etc. Even if you don’t have problems with funding, having a business line of credit can help solve cash flow issues that may arise.
3. Equipment Financing
Equipment financing is a loan product used to purchase or lease business equipment. For medical practices, you can use the funds from equipment financing to purchase CAT scanners, MRI machines, computers, ambulances, and even furniture and fixtures.
This type of financing provides you with the funds you need to buy much-needed equipment. Equipment financing is self-securing, which means you don’t have to pledge collateral to secure the loan other than the equipment you’re looking to purchase.
On the other hand, an equipment lease is a costlier way to get equipment. Unlike equipment financing, equipment lease allows you to rent the equipment for some time. You don’t own the equipment, but at the end of the lease term, you can opt to purchase it, continue the lease, or terminate it. An equipment lease is a better option for borrowers that don’t have a high credit score or are new in the business.
4. Short-Term Loans
Short-term loans are best for practices that need immediate working capital to address short-term needs. However, this type of loan often has higher interest rates and shorter repayment terms compared to long-term loans.
It’s a great option for medical practice owners that need working capital ASAP. Just make sure your income can support the repayments. It’s also great for professionals who don’t want to take on a long-term loan. Make sure to assess your practice to determine whether a short-term loan is worth the cost.
5. Business Term Loans
Business term loans are what you would think if you think of business loans. Lenders will give you a lump sum which you can repay over time with interest. The amount of money you receive and the repayment terms will depend on your creditworthiness, number of years in business, profitability, and more.
It’s easier to qualify for term loans from alternative lenders rather than banks because they’re not as stringent when it comes to financial history and credit rating. While you will most likely qualify, do know that this convenience comes with higher interests to offset the added risk.
Find Out More About Medical Practice Loans and Financing
Medical practice owners need to balance taking care of patients and running a business. With medical practice loans and financing, you don’t have to worry about cash flow. You’ll have the working capital you need to pay for operational expenses, purchase equipment, and make payroll. If you want to know more about medical loans, check out SMB Compass today.