If you bring us a contract with a better offer, we guarantee to either beat that rate or pay you $500.

Medical Practice Loans: 5 Proven Steps to Secure

5 Proven Steps to Secure Medical Practice Loans can be the lifeline for your healthcare business, providing the critical capital needed to expand, modernize, or simply keep your operations running smoothly.

medical practice loans

As a dedicated medical professional and business owner, you understand the importance of a financial plan supporting your vision. In the intricate world of healthcare financing, navigating through the myriad of loan options can seem daunting.

This guide is crafted to simplify the process, offering you a clear pathway to obtaining the financial support your practice deserves. Let’s walk through these strategic steps together to empower your practice’s growth and stability.

 

HOW TO QUALIFY FOR MEDICAL PRACTICE LOANS

Are you a healthcare professional contemplating setting up your own medical practice? The motivation to undertake such a venture can stem from several sources, such as attaining work independence, balancing personal and professional life, and realizing potentially increased income. However, setting up your own medical practice is no walk in the park, especially in the early stages.

Whether you’re laying the foundation of your medical practice or considering a medical business expansion, medical practice loans can be instrumental in achieving your goals.

UNDERSTANDING MEDICAL PRACTICE LOANS

Medical practice loans are designed to financially support healthcare professionals seeking to establish, maintain, or grow a medical business. Lenders often offer these loans to doctors, dentists, and other medical practitioners.

They perceive such investments as lucrative, given medical businesses’ high-income potential and ability to generate robust returns.

Remarkably, acquiring medical practice loans can sometimes be easier than obtaining other forms of business loans, particularly those connected with riskier industries. This type of loans can fund the inception or expansion of a medical practice or even finance the acquisition of an existing practice.

From covering initial startup costs to managing operational expenses when your business becomes successful, medical practice loans can be used for various purposes. These include staff salaries, cash flow fluctuations, medical equipment, office renovations, and software programs.

Most current medical funding options are designed for licensed medical professionals, but in some instances, loans may be secured even during residency.

benefits of medical practice business loans

BENEFITS OF A MEDICAL PRACTICE LOAN

The benefits of securing a medical practice loan are abundant. They enable streamlined cash flow, increased purchasing power, the ability to quickly seize growth opportunities, maintain equipment, and the freedom to grow your practice as you envision it.

 

ARE THERE LIMITATIONS GOVERNING MEDICAL PRACTICE LOANS?

Medical practice loans are generally disbursed as a single payment into the practice’s specific bank account, with minimal supervision over the expenditure of these funds. Once received, these funds are intended to facilitate the medical practice’s growth as the recipient deems appropriate.

However, it is imperative to understand that, despite the lack of explicit lender restrictions on the usage of these funds, there are rigorous federal regulations governing business finances.

The IRS may closely scrutinize the utilization of business funds for personal obligations or debts, as such actions are subject to stringent legal oversight. Consequently, adherence to these regulations is essential to prevent any legal complexities.

 

NAVIGATING THE PROCESS OF GETTING MEDICAL PRACTICE LOANS

Medical practice loans function similarly to other types of business loans, albeit with some additional verification steps in certain cases. For instance, the lender may request to evaluate your medical license, the nature of your medical business, your business licenses, and personal details.

Start by identifying a lender or considering a business financing platform that enables you to compare various offers from multiple medical loan lenders. Clarify the exact requirements with your chosen lender and assemble your personal and financial information accordingly. If your business is already functional, you must furnish specific information and financial data related to your existing practice.

The approval timeline for funding varies depending on the lender. Traditional banks tend to have stricter requirements and longer processing times, while online lenders may offer more flexibility and expedite fund deposition.

HOW TO SELECT THE IDEAL MEDICAL PRACTICE LOAN

HOW TO SELECT THE IDEAL MEDICAL PRACTICE LOAN

Choosing the right loan for a medical practice requires careful consideration of several factors. Here’s a guide to assist you in making an informed decision:

Interest Rates and Fees

It’s crucial to examine the overall cost.

  • Interest Rates: Analyzing both minimum and maximum rates will help you understand the potential financial commitment.
  • Additional Fees and Charges: Transparency in all costs helps avoid unexpected financial burdens.

Loan Features

Consider the structure and offerings of the loan itself, including:

  • Loan Terms and Conditions: Understanding obligations from both parties.
  • Maximum and Minimum Loan Amounts: Aligning borrowing needs.
  • Repayment Frequency: Assessing payment schedules to fit your cash flow.

 

Qualification Process

Gauge your eligibility by understanding qualifications like credit score, annual revenue, and time in operation.

Application Process

The efficiency and requirements of the application process are vital.

  • Required Information and Documents: Knowing what’s needed can expedite the application.
  • Duration of the Process: Planning based on how long the process takes.
  • Credit Check Type: Hard or soft credit checks can influence your decision.

 

Customer Support

Evaluating the lender’s responsiveness, i.e., the availability of live support and additional tools.

Perks and Bonuses

Look for unique offerings that may set a lender apart. Consider factors like advertising transparency, payment flexibility, and advanced technology.

Online User Reviews

Consider third-party opinions.

  • Independent Reviews: Feedback on platforms like Trustpilot can reveal insights into the lender’s reputation.

Making an informed choice for your medical practice loan involves evaluating multiple aspects in an orderly fashion. By carefully considering these elements and possibly consulting with financial professionals, you can identify a lending solution that best fits your practice’s unique needs and objectives.

Equipment Acquisition: Large medical equipment purchases

WHAT ARE MEDICAL PRACTICE LOANS OFTEN USED FOR?

Medical practice loans can serve numerous purposes, such as initial setup costs for your new venture, equipment procurement, existing business acquisition, or marketing your practice. Here are some common uses:

  • Startup Expenses: Initial major expenses may include office space, medical equipment, supplies, office furniture, staff salaries, advertising costs, etc.
  • Acquiring an Existing Medical Practice: If you prefer not to start from scratch, acquiring an existing business is an option. While this might be costly, a medical practice loan can help make it more affordable.
  • Marketing: Attracting patients requires active efforts such as social media campaigns, hosting events, Google Ads, search engine optimization (SEO), etc.
  • Equipment Acquisition: Large medical equipment purchases like X-ray machines or ambulatory vehicles could require loan assistance.
  • Salaries and Benefits: A medical practice loan can help cover the costs of hiring and paying your staff.
  • Business Debt Refinancing: Refinancing past debts might help you secure a lower interest rate or more manageable payments.
  • Office Upgrades and Renovations: Medical practice loans offer the flexibility to modify your practice space, such as adding extra exam rooms or revamping certain areas.

 

POPULAR TYPES OF MEDICAL PRACTICE LOANS

There are several types of medical practice loans available:

  • SBA 7a Loan: SBA loans are considered among the best small business loan options. The Small Business Administration backs up to 85% of these loans, making the 7(a) loan a popular choice for working capital.
  • Standard Bank Loan: Traditional institutional lenders, such as your local bank or credit union, can be an excellent alternative for qualified applicants.
  • Business Term Loan: Companies like Sunwise Capital offer gold-standard loans tailored to your needs and provide flexible payment options.
  • Revolving Line of Credit: Revolving line-of-credit financing enables you to access cash as needed without committing to a lengthy agreement.
  • Merchant Cash Advance (MCAs): MCAs, offered by alternative lenders, allow businesses to secure a cash advance in exchange for a portion of daily or weekly credit and debit card sales.
  • Equipment Financing: This form of financing assists with purchasing and maintaining substantial medical equipment.

 

TRADITIONAL BANK LOANS AND THEIR POTENTIAL DRAWBACKS

Conventional financial institutions may be an option for those seeking financing within the healthcare sector. Some banks provide specialized loan products for professionals in medical practice, including optometrists, physicians, veterinarians, and dentists.

Such institutions have crafted these lending programs to cater to the unique financial landscape of the healthcare industry.

These banks provide an in-depth risk assessment that aligns with the industry’s nuances by analyzing factors distinct to medical professionals, such as student debt and potential credit inconsistencies tied to the high-income potential within the field.

While these specialized loans offer numerous advantages, including cost-effectiveness and alignment with the healthcare profession, they are not without challenges. Applicants must exhibit a robust credit profile and a flawless financial history to qualify.

The path to securing such a loan can be arduous, often requiring meticulous documentation and an extensive vetting process.

Applicants should note that approval is not guaranteed, and the process from application to funding disbursement may extend over a prolonged period. The precise terms and conditions may vary considerably across financial institutions.

 

ELIGIBILITY FOR MEDICAL PRACTICE LOANS

Medical practice loans aren’t limited to only one healthcare industry sector. A variety of healthcare professionals can take advantage of these financing options. Essentially, any licensed healthcare professional who desires to establish, expand, or improve their medical practice can qualify.

  • Eye Doctors: Whether you’re an ophthalmologist wanting to invest in advanced diagnostic tools, an optometrist wishing to enlarge your office space, or an optician looking to stock a wider range of eyewear, a medical practice loan can provide the necessary capital. It is not just limited to setting up new practices. For instance, if you want to adopt state-of-the-art technology such as optical coherence tomography or purchase a new phoropter, the right financing can ensure your practice remains cutting-edge, thereby delivering top-tier eye care to your patients.
  • Primary Care Physicians: Medical practice loans can prove to be a significant catalyst for primary care physicians who are aiming to establish their practice. The funds can help them in setting up patient-friendly and welcoming medical offices. It ensures a professional and conducive environment that meets all patient needs. Additionally, loans can facilitate hiring talented staff, thereby enhancing the level of care provided. A well-trained staff can deliver the best patient service, which is the backbone of any successful medical practice. Last but not least, acquiring cutting-edge medical equipment can improve diagnosis and treatment, resulting in better patient outcomes and increased trust in the practice.
  • Chiropractors: Chiropractic care is another area where a medical practice loan can prove to be valuable. Whether it’s acquiring chiropractic tables or investing in modern technologies like non-surgical spinal decompression machines, a loan can provide the necessary resources. Also, if you’re interested in diversifying into wellness areas, such as massage therapy or acupuncture, a loan can help finance the new equipment and additional training required.
  • Massage Therapists: The therapeutic services of massage therapists are in high demand. However, establishing a massage therapy practice involves numerous costs. A significant investment is required to secure dedicated spaces that provide a serene and tranquil environment, promoting relaxation and healing. Acquiring high-quality equipment, such as massage tables, is essential for providing effective therapy. Moreover, loans can assist in procuring necessary supplies like oils, towels, and other therapeutic materials.
  • Dermatologists: As a dermatologist, your goal is to diagnose and treat various skin conditions. Expensive equipment, like laser machines and dermoscopes, is often required. Moreover, investing in aesthetic treatments, such as laser hair removal and body contouring devices, can help expand your services and cater to a broader patient base. A medical practice loan can cover these costs, enabling you to offer comprehensive dermatological care and maintain a competitive edge in this growing field.
  • Plastic Surgeons: Medical practice loans play a critical role for plastic surgeons, allowing them to secure a well-located office that is accessible and convenient for patients. With the high cost of advanced medical supplies, loans provide the necessary financial assistance. Additionally, marketing is crucial to create awareness about their services, attract clients, and build a reputable brand. Plastic surgeons face significant insurance costs due to the potential risks involved in their procedures. Hence, loans can be a strategic tool to manage these costs effectively.
  • Psychologists and Psychiatrists: To provide effective mental health care, psychologists and psychiatrists must create a comfortable and private environment for their consultations. A medical practice loan can provide the funds to secure and furnish such spaces. A well-designed consultation space fosters a sense of safety and trust, which is crucial for effective therapy. Additionally, the administrative costs of running a practice, such as managing patient records and billing, can add up. Medical practice loans can alleviate these financial pressures, allowing mental health professionals to focus primarily on providing the best care for their patients.
  • Pediatricians: Pediatric care demands a child-friendly setup beyond just medical equipment. A warm, welcoming environment with colorful decor and a play area can help make children more comfortable. Medical practice loans can help fund these setups and also assist in acquiring advanced pediatric medical devices. Whether you’re looking to upgrade your clinic’s infrastructure or invest in specialized pediatric training for your staff, a medical practice loan can provide the means to accomplish it.
  • Dentists: Procuring specific, expensive equipment is crucial for one’s practice. Dental practice loans can be an effective solution for financing this necessary equipment. Items like comfortable dental chairs, advanced X-ray machines, sterilization equipment, and other essentials often require a substantial investment. These tools are vital for providing proper dental care and maintaining the highest safety standards. A well-equipped dental office also increases patient trust and satisfaction.
  • Nurse Practitioners: As a nurse practitioner, you might aspire to open your own practice. Many states in the US have full-practice authority for nurse practitioners, allowing them to operate independently of physicians. If you’re in one of these states, a medical practice loan can be instrumental in establishing your independent practice. The funds can be used to secure a location, hire staff, purchase necessary medical equipment, or cover operating costs until your practice becomes profitable.

 

In general, eligibility for medical practice loans depends on various factors like your credit score, current financial situation, business plan, and the proposed usage of the loan.

 

FACTORS TO CONSIDER WHEN SECURING A MEDICAL PRACTICE LOAN

  • Interest Rates: Different lenders offer varying interest rates. Researching and comparing these rates before choosing a lender is crucial.
  • Loan Terms: Loan terms typically refer to the duration for which the loan is approved. Ensure the loan term aligns with your business plan and financial abilities.
  • Required Collateral: Some lenders may require you to pledge an asset (like your medical practice itself) as collateral. Evaluate this requirement thoroughly to understand the potential risks involved.
  • Funding Speed: Depending on your needs, the speed at which the loan is funded can be vital. Lenders who offer faster funding might be a better choice if you need funds urgently.
  • Repayment Structure: Loans can be repaid in various ways, including equal installments or with a larger balloon payment at the end. Choose a structure that suits your cash flow pattern.
  • Lender’s Reputation: Check the lender’s reputation through online reviews or seek recommendations from peers to avoid potential scams or unethical practices.

 

QUALIFYING FOR A MEDICAL PRACTICE LOAN

The path to medical practice loan financing is not always linear. It’s contingent on the kind of financing being sought and the nature of the financial institution involved. Despite these variances, several fundamental steps serve as a guide to acquiring financing for your medical practice.

  • Preparation of Your Business’ Financial Documents: Such documents typically encompass your balance sheet, income statement, and bank statements, alongside tax returns for the previous two years. Depending on your lender’s specifications, you might also be required to submit a detailed business plan featuring financial forecasts, incorporation papers, necessary business permits, and existing commercial lease agreements.
  • Calculate the Loan Amount Required: After assembling the necessary documents, you must determine the exact loan amount your medical practice requires. It is important to clearly articulate why the funds are needed and utilize a loan calculator to assess what you can realistically afford to borrow based on potential monthly repayments. A sound comprehension of your borrowing needs and budget can reinforce the credibility of your application and increase your chances of approval.
  • Select a Lender and Submit Your Loan Application: Having calculated your borrowing needs, the next step involves comparing various lenders and loan offerings to pinpoint the best match for your requirements. Assess the interest rates, repayment terms, additional charges, and the speed of funding offered by different lenders. Once you’ve selected the appropriate loan type and lender, fill out the loan application form and submit it along with all the necessary supporting documentation.
  • Wait for Approval: The time taken for a lending decision can vary between lenders. While some might decide within the same day, traditional financial institutions could take longer. In the event of additional information requests from a lender, ensure a prompt response to keep your application moving. Several lenders offer digital platforms allowing you to monitor your application’s status and manage your loan once approved.

 

APPLYING FOR AN SBA 7(A) MEDICAL PRACTICE LOAN: REQUIRED DOCUMENTATION

If you are specifically considering using an SBA 7(a) loan to finance your medical practice, you must be aware of the required documents and forms. Preparing these in advance will streamline the application process and enhance your chances of approval.

Here is a list of documents and forms you need to have on hand:

SBA-Specific Forms

  • SBA Form 912: This statement of personal history is crucial for evaluating character and creditworthiness.
  • SBA Form 1919: This borrower information form is vital for detailing your personal information and business affiliations.
  • SBA Form 413: This personal financial statement provides a snapshot of your financial status.

Financial Documents

  • Income Projections: To provide insights into your business’s future financial position.
  • Balance Sheet: To demonstrate your business’s financial health.
  • Profit and Loss Statements: To reflect your business’s profitability.

Business-Related Documents

  • Comprehensive Business Plan: To understand the strategy and projected growth.
  • Documentation of Business Assets: To assess the collateral value.
  • Business Lease Agreement: If the premises are leased.
  • Three Years of Business Tax Returns: For historical financial analysis.
  • Letter of Intent to Buy the Business: If purchasing an existing business.
  • Details of Outstanding Business Debt: To understand current obligations.
  • Agreement to Purchase Business: If applicable.
  • Long-term Business Contracts: To ascertain stable future revenue.
  • Incorporation Documents or Business License: For legal verification.

 

ADDITIONAL REQUIREMENTS

The SBA typically commissions an independent business appraisal to ascertain the true value of the business. This assessment informs lenders of the viable loan amount.

Should you require assistance, such as from an attorney or translator, in completing the application, it is permissible. However, your lender must provide the SBA with detailed information about the individual who assisted you.

The application for an SBA 7(a) medical practice loan is a meticulous process that necessitates careful preparation. Compiling these documents in advance and understanding their relevance can enhance your readiness and ease the application journey. Consultation with an experienced financial advisor or SBA-approved lender is often advisable to ensure that all documents align with the specific requirements of your medical practice loan.

 

STRENGTHEN YOUR MEDICAL PRACTICE’S FUTURE WITH SUNWISE CAPITAL

Navigating the financing world can be challenging, especially for healthcare professionals managing their own practices. Whether you’re an eye doctor, a dermatologist, a pediatrician, a nurse practitioner, or a chiropractor, Sunwise Capital stands ready to help you secure the funds you need.

At Sunwise Capital, our understanding of the diverse needs of medical practices stems from years of industry experience. This knowledge enables us to offer personalized financing solutions that align with your practice’s unique financial requirements.

We’re more than just a lender. Consider us as partners in your medical practice’s growth. Our team is dedicated to providing guidance throughout the loan process, ensuring you make informed decisions that promote the financial health of your practice. With our competitive rates and flexible repayment terms, we aim to provide you with solutions that are as affordable as they are practical.

Above all, we’re committed to transparency. You can trust that with Sunwise Capital, there are no hidden fees or surprise costs. Your success is our success, and we’re here to support you every step of the way. Call us today at 888.456.9223. Let’s explore how Sunwise Capital can help secure your practice’s financial future.

Support

Mark J. Kane, Founder & CEO of Sunwise Capital, is a distinguished entrepreneur with over 16 years in business financing. Beginning as a psychologist, he quickly became a trailblazing Hospital Administrator. Mark has built multiple ventures, notably accelerating a startup to $18M within months. His transition to Sunwise Capital stems from a deep-seated desire to empower business owners with strategic financial solutions. Recognized for his expertise, Mark's leadership at Sunwise Capital reflects his commitment to fostering business growth and success. about the author.

Take Your Business Further With A Loan From Sunwise Capital