If you are a medical specialist or healthcare professional looking to secure medical practice financing to expand or grow your business, the process can be lengthy and confusing. You would rather focus your time on running your practice instead of learning all the financial lingo on APRs, term lengths, loan rates, and lending paperwork.
The good news is that for a traditional bank, your profession is a medium risk investment. Unless other industries looking for loans, a medical practice is a much safer investment in the eyes of the underwriter who will make a decision. This also correlates to the fact that most people in your profession have a healthy credit score. The national average credit score for doctors and therapists is 650+ (which is considered good in the finance world).
How to find Medical Practice Financing for Doctors and Specialists?
There are numerous alternatives for medical loans the healthcare industry. Your best fit will rely upon your particular necessities. The factors that will determine if you get the loan and what your term and interest rate will depend on several factors:
- The time frame you want to secure the working capital.
- Your personal credit score.
- If it’s a new practice or an existing practice.
- The length of time the business has been operational.
Medical Practice Financing from a Traditional Bank
A few borrowers need to go straight for the old-school way of raising money: banks that will loan capital to a medical professional. The traditional financial institutions. If you are a qualified borrower, this can be an awesome choice — a few banks even specialized loan products created specifically for doctors and the healthcare industry in general.
Getting a Short Term Loan for a Medical Practice
Short term loans are the most common way to get a small business loan. A lender will give you a fixed amount of money in exchange for a specified interest rate that you have to pay over a fixed term length.
If you were to compare SBA 7(a) or SBA Microloans, you do usually pay a slightly higher interest rate with short or medium term loans. The main benefit of term loans is that you can fund your medical practice much faster and with fewer paperwork. SBA loans are time to consume and require a lot of documentation.
Getting a Business Line of Credit for your Medical Practice
A business line of credit can be a great funding option for your medical business. They work similar to a credit card. You get approved for a line of credit maximum amount (this is like your credit card limit). But you only pay interest on money that you use (just like credit card charges).
The primary benefit of a line of credit for a practice is that you only pay interest on capital you use.
Financing Equipment for your Medical Practice
Equipment financing allows a medical company to buy or lease new or used equipment. Maybe you have aging equipment that needs to be updated to the latest medical standards. Or you’re opening a new business and need to buy all your equipment from scratch.
Medical equipment financing works similar to a term loan. The difference is that while a term loan has no collateral requirements, the equipment itself is the collateral during financing.
How to pick a medical practice financing option that is right for you?
Running and growing any business is hard. But funding or finding working capital shouldn’t be. There’s where alternative lenders like Clarify Capital come in. An alternative lender uses relationships with underwriters to compare the most optimal terms and rates for your financing. They handle all your paperwork so that you can focus on what you do best — running a medical practice.