Whether you’re a dentist, physician, optometrist, or veterinarian, a medical practice loan can provide funds to acquire a new practice, pay for startup costs, expand your clinic, purchase expensive equipment and cover other operational costs. We’ve evaluated the best medical practice loans based on loan terms, fees, rates, customer satisfaction, and overall quality.
If you require cash due to a cash flow shortfall or have a less than perfect credit score, American Express Business Blueprint™ could be a promising option.
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National Funding offers small businesses working capital and equipment financing loans that are suitable for a broad range of businesses, and you could receive approval and funding within 24 hours.
A medical practice loan is a business loan used by physicians, dentists, and other healthcare professionals to cover costs related to starting up or expanding your clinic.
How do medical practice loans work?
A medical practice loan works just like any other business loan. You’ll simply go through your bank or another lender, fill out an application and wait for approval. Once approved, you’ll receive funds directly into your business checking account, so you can begin buying equipment and supplies necessary for running the office.
What are the requirements for a medical practice loan?
Medical practice loans are similar to other types of business loans and all have their requirements, but some of the most common ones are:
Credit score: If you or your business has a good credit rating, it will be easier for you to secure a loan.
Time in business: If you’ve been in business for at least two years, lenders will see that you’re capable of running a successful business and can repay a loan on time. Time in business will vary by lender.
Detailed business plan: You’ll need to submit a detailed business plan explaining how you’ll use the funds from the loan and how it will help grow your practice’s revenue.
Business documents: The lender requires all legal documents — articles of incorporation and bylaws, partnership agreement, corporate resolutions and minutes, trademark assignment and licensing agreements, lease agreements, etc.
What are the types of medical practice loans?
Depending on the needs of your practice, you may want to consider one of the following types of medical practice loans:
SBA loans: The SBA loan program is usually the first stop for most medical practices, as it is the most common source of funding for small businesses. A doctor’s office qualifies for a 7(a) loan if it can demonstrate its ability to repay the debt and has not been in business for more than two years.
Equipment loans: These are loans for the purchase of medical equipment. The borrower must be a practicing physician, and the equipment must be used in the office. Equipment loans are often secured by the equipment purchased with the loan proceeds and typically have shorter repayment periods than other medical practice loans.
Business line of credit:Â A line of credit lets you borrow money from your bank on an as-needed basis without having to apply each time when you need more funds. The amount available varies between lenders. Some limit how much money can be borrowed at any given time, while others do not limit how much you can borrow.
Term loans: Term loans are provided as a lump sum for a specific time, typically between one and five years, and paid monthly with principal and interest. You may be able to refinance your loan with another lender after completing a minimum number of payments, typically 6 or 12.
What are the benefits of getting a medical practice loan?
Here are some benefits of getting a medical practice loan:
Build credit history: If you don’t have much credit history or have had trouble with past payment obligations, getting a small business loan may help build your credit, so other lenders will want to lend to you in the future.
Tax benefits:Â You can earn tax benefits from your state and federal governments. The amount of tax deduction depends on how much money is spent on interest, equipment, labor costs, and other expenses related to running your business.
Grow your business:Â You can use the loan for any expense related to growing and running your business. You can use it for buying inventory or equipment, paying staff salaries, marketing expenses, or even covering operating expenses.
How can you use a medical practice loan to grow your practice?
Here are just a few ways you can use this type of financing to grow your practice:
Buying equipment and technology: You can purchase new equipment or technology for your practice. This may be a new MRI machine or an upgraded EMR system.
Hiring more staff: You can hire more staff members. This could be another doctor, therapist, office manager, receptionist, or other employees. You might need extra staff members to handle the additional patients or schedule appointments.
Boosting your marketing: Another way you can use your medical practice loan is by boosting your marketing efforts to bring in more patients. This could mean paying for advertising on social media sites like Facebook and Twitter, flyers around town, or even hiring an advertising agency to design an ad campaign for your practice.
Renovate or expand your office space: You can renovate or expand your office space to accommodate more patients.
How to choose the best medical practice loan
If you’re considering taking out a loan to finance your medical practice, here are some factors to consider before you make your decision:
Identify the use of loan: Identify why you want to get a loan. This will help you find the type of loan that best suits your needs and requirements. Different types of loans are available for medical practices with varying interest rates and repayment schedules.
Flexible repayment schedules: Consider a lender who offers flexible repayment schedules. Keep to note that a longer term will be less stressful on your cash flow since payments are stretched, but the overall interest you pay will be higher. This is the opposite for shorter terms.
Compare interest rates: When you compare loans, some loans may have lower interest rates than others, but they may also have higher fees or other associated costs. You will need to understand what the total cost of each loan is going to be before deciding which one is best for your situation.
Application fees: Some lenders may charge an application fee for their loans or even a credit check fee. These can add up over time, so you must consider how many applications you’ll need to make before you decide on a lender.
