Like any vast business undertaking, you're likely going to need some cash later. For a medical professional, that could mean expanding your practice, updating your equipment, or managing cash flow while you're getting reimbursed for a loan.
Trying to handle business loans for medical professionals can be a challenge. Luckily, medical professionals usually have a good use case for getting a loan. The amount of money lent to you may depend on the lender themselves, but doctors have high earning potential, so lenders are confident you'll pay them back.
Expanding Your Medical Practice
Maybe you've been in medical practice for at least a year, and you're looking to expand your practice. You might use loans for healthcare to move to a new building, rent a larger space, or expand your payroll to accommodate more team members.
You can use a few different loans to get the money for expansion. The loans are available at traditional banks and online lenders, though you might have better luck at traditional banks.
Term loans offer you a lump sum up front with a fixed interest rate. Short-term loans have a payoff period of about twelve months or less, while long-term loans give you five years or more. If you have a good credit score, you can get lower interest rates on those loans. However, term loans do not always allow you to borrow as much as a medical practice loan does.
Upgrading Your Equipment
For upgrading equipment, you can consider equipment financing rather than a physical loan. Specific lenders can give you 100% financing for equipment, though sometimes you may need to make a down payment. The equipment serves as collateral in these types of loans.
Equipment financing can be a long-term investment, depending on how long the equipment itself lasts. These loans offer repayment terms that fit the equipment's lifespan. So if you're buying equipment that lasts for five years, the repayment term on that loan will also last five years.
On that note, do not agree to a loan term that will outlast the equipment. Also, be careful about needing to replace equipment before the original laid gets paid. If you don't have the cash to cover the replacement, you might need to take another loan.
Managing Cash Flow with Slow Loan Reimbursement
Business loans for doctors can make a big difference in your medical practice's payroll. Sometimes, though, it takes a while for the loan to become available to you, so you can choose a business line of credit to help you out.
A lender will approve you for a credit amount, and you can use those funds right away for whatever you need. It's a great alternative because you don't have to go through a lending process to get the funds. You also only pay interest on the amount you borrow, rather than the full line of credit.
You might also consider alternative financing. However, lenders usually charge higher interest rates than traditional banks. Therefore, the sooner you repay the loan, the less interest you will pay on it.
Do Medical Practice Loans Have Restrictions?
Medical practice loans go right into the intended practice's bank account. After that, the practice can use the money as they like. If there's any oversight of how that money gets used, there's very little of it. That's usually because that money is going into a business account, so the lender assumes you're using that money for business purposes.
However, there are a few federal guidelines about how business funds get used. These guidelines mainly keep the money from being used impulsively or spent too much at once. On the whole, there are no real lender restrictions on how loans for medical professionals get spent. That said, you still want to keep records about how you spend that money for your tax records.
How to Apply for Medical Practice Loans
Applying for a medical practice loan requires similar steps and paperwork to other business loans, such as credit score, business plans, and offered collateral. You'll also have to keep a few things in mind when you decide on a lender.
Loans for Healthcare Professionals with bad credit are available by applying online. To be approved and receive funding, you’ll need to make a certain income per month.
- If you already have a medical practice, assess your practice's finances so the lender has an idea of your financial status. Gather profit and loss statements and cash flow statements.
- Decide how much money you'll need. You'll also need a written plan for how you're going to invest that money.
- Check up on your credit score. Such a score will indicate how good you are at paying back debts.
- If you want to expand your practice, look over the growth objectives in your business plan. You'll need concrete steps toward meeting those objectives to obtain a loan.
- Similarly, if you're going to start a new business, have a solid business plan in place with your startup costs and projections for profit.
- You may need to offer collateral for a medical practice loan. Consider whether you have any business equipment or personal assets you could pledge.
- You may also qualify for different types of medical practice loans. Compare and contract those loans to see which one you are best qualified for.
- Read your chosen lender's application carefully. The lender may ask for copies of your personal and business tax returns and bank statements for the underwriting process.
- Review the loan terms carefully, particularly the annual percentage rate, loan fees, and repayment terms. Your practice must be ready to handle any debt you may accrue.
About the Author, Madison Taylor
Madison Taylor is the Brand Ambassador at ROK Financial. She is responsible for raising brand awareness and business relationships with business owners across the country. Madison loves that she plays a small role in getting Business Back To Business Through Simple Business Financing and looks forward to hearing what you think about the blogs she creates! Madison has been working in the financial space for six years, and loves it! When she is not at work, you will find her at home learning a new recipe to test out on her family or going on new adventures with her friends.