What You Need to Know
When you’re running a medical practice, you’re constantly investing in your business to stay ahead of the curve. You need to replace and upgrade your equipment regularly and attract and hire top-notch nurses and doctors to offer your patients the best possible care.
At the same time, your cash flow may be uneven as you wait for reimbursement from insurance companies or out of pocket payments from patients for procedures.
Financing for your doctor’s office can help. A line of credit or short-term loan can help you manage cash flow, purchase equipment, or expand your practice. Here are some ways that a small business loan for your medical practice can help.
When to consider a small business loan for your medical practice
Expanding your practice
To provide your patients with the best possible care, you may consider expanding your practice to include more services in-office, like taking bloodwork, or open another practice location. Whether you’re leasing more space for your existing office, acquiring another medical practice, or expanding to offer new patient services, a business loan can get you the funds you need upfront to invest in your practice.
Patient exam tables, autoclaves, and all the other equipment you use to treat patients in your practice can get expensive quickly. Additionally, you’ll need to regularly update your equipment to keep pace with technological advancements. A short-term business loan can be a good fit to shoulder the up-front costs of purchasing or upgrading medical equipment.
Managing cash flow
Most of your patients will use health insurance to cover their treatments and procedures. However, they may still need to pay for part of the procedure out of pocket. This can leave you with uneven cash flow as you wait to be reimbursed by insurance or paid by patients. A business line of credit can be a good way to meet ongoing expenses while you’re waiting to get paid.
Types of loans available for doctors
1. A Business Line of Credit: A business line of credit gives you access to flexible, revolving funds when you need them for your practice. With a line of credit, you borrow what you need, pay down the balance, and the funds are replenished so you can use the line again. Many medical practice owners will use a line of credit to bridge cash flow in between reimbursement from insurance companies.
2. A Short-Term Business Loan: Many online lenders offer short-term business loans for small businesses like medical practices. With terms that range from three months to three years, this type of financing makes it possible for a doctors office to borrow capital and repay it quickly—often making the total dollar cost lower than a longer-term loan. Getting a short-term business loan from an online lender can be much quicker than getting a traditional loan from a bank – typically, the borrower can apply in minutes and get their funds within days. Many doctors will use a short-term loan to make improvements to their office, add another line of service, or purchase new technology or equipment to better serve their patients.
3. Equipment Financing: Equipment financing is another way to finance the purchase of business equipment, besides just using a loan or line of credit. Any tangible asset used in business operations can be considered business equipment. For medical practice owners, this can include autoclaves, x-ray imaging equipment, computers, and diagnostic tools like medical scales and ECG monitors.
4. A Bank Loan: As a business owner, the financing option you’re likely most familiar with is a traditional bank loan. A bank loan typically requires collateral to secure the loan, and the application process tends to take several weeks. The length of the loan can be anywhere from 2-20 years. While the interest rates on a bank loan can be attractive, doctors may find the application and funding process too slow for their cash flow needs.
5. The SBA (Small Business Administration) Loan Guarantee Program: Although the SBA is not a lender and provides financing through participating banks and credit unions (among others), the SBA Loan Guarantee Program will sometimes qualify a borrower who might not otherwise meet the more rigid criteria required by the bank. If your medical practice is an established business, with a few years under its belt, and your personal credit score is above 680, this could be an option for your practice. Similar to a bank loan, the application process tends to take several weeks and may not move fast enough for your practice’s cash flow needs.
I applied for financing from OnDeck when I was trying to move my practice from Honolulu to Pearl City. I was stunned how quick the approval and funding happened. Where my local bank took several weeks to approve my SBA loan and then get the funds into my account, OnDeck took only a couple days.Dr. Reed Shiraki
Honor Box Chiropractic
Pearl City, HI
Resources for Medical Practice Small Businesses
Cash Flow: What Business Owners Should Know
You’re not alone if you find it to be a challenge to keep your cash flow steady as a medical practice owner – check out our tips on how to maximize your cash flow.Learn More
Unsecured v. Secured Loans
What are the pros and cons of unsecured v. secured business loans? Learn more about the use cases for each and about another option available to borrowers today.Learn More
How to Evaluate and Evolve Your Small Business Marketing Plan
As a medical practice owner, every resource you invest in your business is precious. While marketing is essential to sustain your business, how do you evaluate which initiatives are working?Learn More
What type of loan makes sense for your business?
Financing options to help you grow your business
If you’ve ever heard the adage, “It takes money to make money,” you must be a small business owner. Fortunately, there are more small business loan options available today than ever before—you just need to know where to look and what to look for. You don’t need to be a financing expert to build a successful business, but you do need to consider all the business loan options available to determine which one is best to meet your business need.
Small Business Loans and Lines of Credit
With online lenders and lines of credit, there are more options available today than a traditional term loan from the bank when you need extra capital to fuel growth or fund other business initiatives.
Loans with a Purpose
Depending upon why you’re borrowing (your loan purpose), there could be an option custom fit to meet your business need. Here are some of the financing options available with specific use cases in mind.
Non-Traditional Financing Options
Sometimes it takes a different approach to meet a business’ financing needs. There are a number of options from micro-loans to funding sources that won’t even be described as a small business loan.
Each industry has specific loan types that may be better suited for your business. Here are some of the most common industries we work with and the financing options available to them.