Which Small Business Loan Is Right for My Medical Practice?
Doctors tend to have high earning potential. They also generally have a high net worth and predictable revenue. This makes it easy to qualify for medical practice loans. SBA loans offer a lower monthly payment, but alternative lenders can get you funded more quickly and with less paperwork.
If you need money now, consider using an alternative lender to get you into a variety of small business loans that could help you with revenue advances and other temporary cash flow issues.
Where to Get Loans for Your Medical Practice
You have two options when looking for funding for your practice. A traditional bank or an SBA medical practice loan are great long-term financing options. It’s easy to qualify and get approved because the medical field is a safe bet for most lenders.
They take longer to fund, and there’s a lot of paperwork, but you will find lower interest rates and monthly payments. You can also extend your term farther into the future than you can with other types of loans, which also reduces your payment.
Traditional loans are perfect if you want to buy a practice or start a brand new one. It costs more to purchase real estate, buy out a doctor’s existing practice, or acquire all of the equipment you need.
The other option available to you for medical practice loans is through an alternative lender. These are great short-term options if you run into cash flow issues. They come with higher interest rates and shorter repayment plans, but they are a good fit if you need money now, and don’t expect you will need it again soon.
If you already have a significant amount of debt, this may be your only option. For physicians wanting to start a practice right out of school, this is the way to go because you most likely won’t qualify for a traditional loan.
Both loans have their own benefits, and it depends on your goals, your credit score, and how much money you want to borrow. Alternative loans offer quick funding (often same day funding) and can look very comparable to traditional or SBA loans if you are a prime borrower.
Which Loan Is Right for You
You can use medical practice loans to start a new practice, purchase a practice, or expand your current practice. The nature of a doctor’s work requires specialized tools and equipment to serve your patients in the best way possible. That means it’s costly.
Evaluate your needs before deciding which loan you want to take on. Review the five main reasons why you’re likely to need financing and then evaluate which loan is right for each situation.
Manage Cash Flow
You may run into trouble from time to time because you have to wait for people who pay their invoices slowly, checks bounce, or billing departments at the insurance company have problems. Even if your practice is healthy and you have a steady stream of patients, things get tight.
When you run into unexpected cash flow issues, you need money now. A line of credit is the best way to help you manage your cash flow because you can get it while your finances are good, and then have it ready to go when you need it.
Typically, you are pre-approved for a certain amount, and you only pay interest on the amount of money you use. Making sure you have access to a line of credit before you need it can help ensure you’re not going to come up short because of delays in your accounts receivable.
Acquiring or Buying Another Practice
Acquiring another practice or buying out your current partner is a great way to grow your business. It means servicing new patients and potentially offering new services. Sometimes you plan these opportunities in advance, and other times, they fall into your lap based on circumstance.
In situations in which you don’t have time to plan financing, you need help right away to take advantage of something that could be very beneficial for you and all of your staff. When you need funds immediately, alternative lending is the better choice.
Not having the right equipment, or trying to work around broken equipment could cost you a lot of money. Unfortunately, equipment is expensive, and having to repair or replace it may not be in your budget.
Investing in new equipment means you have the most up to date technology and ensures you don’t limit your potential when it comes to treating patients with a wide range of health issues. Dealing with unexpected equipment malfunctions may require some additional funding.
Small business equipment loans can help you get the equipment you need. They typically use the equipment you purchase as collateral for the loan, so you don’t need to worry about offering up any collateral you already have.
You can borrow the exact amount you need and then pay it off over time. This is beneficial if you don’t necessarily need a revolving line of credit and you only plan to make a one time purchase of new equipment.
Leasing office space, just like renting an apartment, doesn’t help your assets grow in value. The only way to do that is to own what you use. Buying commercial property for your business is paramount to allowing your business to grow.
As you grow, you may need more space, and real estate isn’t cheap. When the right space comes along, you want to be ready. Don’t let a lack of funds hold you back. Short-term financing could be the lifeline you need while you wait to be approved for a commercial real estate loan.
Marketing can help grow your business, and if you find that you just need a little bit of a boost to grow your business, some quick funds for an advertising campaign can help. Quick access to only a small amount of capital to run a new campaign now and then could help you out when money is tight.
The Benefits of Alternative Loans for Doctors
Alternative loans are fast and easy. You can get funded in as little as one business day. The application process is easy, and you can apply online in five minutes. This leaves you with more time to treat patients, manage your practice and grow your business.
Alternative lenders can compete well with traditional lenders for prime borrowers, meaning you get all of the advantages of an alternative loan with all of the same benefits of the terms of an SBA loan.
Even doctors who have excellent credit scores and don’t have a problem qualifying for traditional loans may still choose alternative lending because it’s so much easier. Quick Loans Direct offers same day funding for small business loans, and the application takes minutes instead of months.