Medical Practice loans can help facilitate key transitional events, including acquisitions, practice start-ups, expansions, and transitions. There are a number of options available and so it can be confusing. One good thing is that lenders find doctors, dentists, and such to have strong earning potentials, high net worths, and stable incomes and feel they are a good risk. To help you make an informed decision for the right fit, we have gathered the following medical practice loan options…
Line of Credit vs. Term Loan: Which Is Best For My Business?
Business lines of credit are typically much larger than the credit limits of credit cards, and borrowers typically only need to pay interest when the line of credit is used compared to a term loan where borrowers pay interest and fees whether the financing is used or not.
- Line of Credit – Business line of credit are often compared to credit cards. You get access to a certain amount of funds which you can draw from as you need. With a business line of credit, you only pay interest on money that you use. You’ll typically have to repay the amount you draw over a set period of time, after which you can renew your credit line. given its flexibility and cost effectiveness, the business line of credit is widely considered among the best medical practice loans for doctors and specialists, particularly those who might have fluctuating expenses or periodically need to buy expensive tools without much warning.
- Term loan – Term loans come in lump sums that you repay over a fixed period of time plus interest and fees. Once you spend all the available funds, you’ll need to apply for a new loan if you need more financing. Many business loans are secured, in that they require some form of collateral – often equipment, real estate, or a lien on your assets.
SBA 7(a) Loans for Medical Practice Financing
In general SBA loans are among the best small business loans available. SBA loans are business loans guaranteed by the Small Business Administration. With their multiple SBA funding programs, this government agency provides SBA loan guarantees of up to 85% of the loan amount provided through an SBA-approved lender – typically banks. The qualifications you will need are… a strong borrowing background, high credit score, and steady finances. You also need to know that the SBA loan timeline can take weeks or even months. The SBA loan application require a lot of paperwork so there can be a bunch of back and forth before you get the loan. If you need fast access to funds this is not the loan for you.
Bank Loans for the Medical Practices
Some banks offer loan products specifically designated for medical practice financing for doctors, dentists, optometrists, and veterinarians. They take into account qualities that might adversely affect other borrowers, like student loan debt. It is not easy to qualify for a bank loan because you must have an excellent financial past. If you think you may qualify you should apply because sometimes banks loans are the least expensive loans. If you are looking for a long term financing option to purchase real estate, invest in medical equipment, or to buy into an existing practice working with a traditional bank could be an option for you.
Term Loans from Online Alternative Lenders
The core things that make this loan different from a bank loan is access and the interest rate. The emergence of alternative lending has been a direct responses to the increase difficulty for small business owners to obtain financing from traditional sources of funding. This need has opened up funding options to many more borrowers with more accessible qualification standards.
Short-term Medical Practice Loans From Alternative Lenders
Provided you have been in business long enough to predict your monthly cash flow and are confident that you can pay off a short term loan the ease of application and the speed of funding for a short term loan can make this the perfect product for your practice. The alternative lenders loans are sometimes more expensive and have higher interest rates and shorter repayment terms. If you have crunched the numbers and know that that your income will support paying off this medical practice loan on time, then the extra cost may be worth the fast financing.
If you need an equipment loan for your medical practice go directly to equipment financing. These loans are limited to purchasing specific items such as an MRI machine. The loan is easier to get because the equipment is used as collateral for the loan itself. Equipment financing for a medical practice loan has a very limited purpose, but it is easier to qualify for than bank loans.
Medical practice owners grow their business through construction, expansion, acquisition, real estate financing, and more. We hope these tips help you see all the options available to you to accomplish your individual needs and helped you determine what you intend to use the loan for before you sign on the dotted line!
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