A Quick Guide to Medical Practice Loans to Finance your Medical Clinic

A Quick Guide to Medical Practice Loans to Finance your Medical Clinic

Published on 2020-01-20

Category: Business Loans, Business Growth

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Wondering how to raise the funds to start your own medical practice or clinic?One things is certain; it’s going to be a huge investment and a lot of due diligence will be required. However, you have no reason to worry when you work with an experienced lending partner like Capital Boost.

To start and run a medical clinic, the first thingyou need is a comprehensive business plan. It should outline your financing requirements in detail – office space, equipment, fit-outs, cash-flow, etc. There are dozens of medical loan options available today. Getting clear on what you need financing for can help you make the right choice.As a doctor or medical practitioner though, your first priority should always be your patients. Remember, a seamless patient experience is key to building loyalty and goodwill, driving revenue growth.

So we created this quick guide with answers to all your possible queries on how medical loans can help you grow your medical practice. Read on.

What is a medical loan or a medical practice loan?

A medical loan or a medical practice loan is offered to doctors and medical specialists by banks and other financial institutions.

You can use this to fund a new clinic, buy an existing one, buy new medical equipment, cover your operational costs, and much more.

Whether you’re setting up the practice yourself, or availing the advisory services of medical business brokers it would be unwise not to consider the option of a medical loan to fund your efforts.

Remember, a medical loan can help you reach the break-even point faster, while building your business credit. It can ease off your financial burden by meeting your initial and ongoing cash flow needs.

Who can get a medical practice loan?

Medical practice loans are given to medical and non-medical practitioners including primary care physicians, massage therapists, Reiki practitioners, plastic surgeons, psychologists, chiropractors, podiatrists (those who help their patients walk more comfortably), pediatricians, and dermatologists.

How can I benefit from a medical loan?

Starting a medical clinic will incur several known and hidden costs. You will require funds to

  • Buy or lease the clinic premises
  • Furnish and fit-out the clinic
  • Buy medical equipment, other office supplies
  • Buy ambulances and other vehicles
  • Pay insurance premiums
  • Spend on advertising and marketing, and
  • Pay your staff

If you intend to buy an existing clinic, you need to be prepared for these costs:

  • Existing debts of the establishment
  • Renovating and re-branding of the old facility
  • Replacing or repairing old equipment
  • Staff salaries, and
  • Insurance premiums

The right medical practice loan can help kickstart your cash flow and allow you to build a sustainable business.

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What are the different types of medical loans?

There are several different types of medical practice loans. But not all of them may be right for you. Your best fit will depend on your requirements and the lender’s qualification criteria.

Here’s a sneak peeks of the main types of medical loans.

1. Medical practice business loans from banks:

These are the traditional bank loans where you will need to provide collateral. Interest rates will be lower, but you’ll need to have a good credit score and the business should have a good financial performance. The application process will be lengthy and approval is not guaranteed.

2. Non-bank term loans:

These are provided by non-traditional or alternative lenders which generally have moreflexible lending requirementsthan traditional banks. In most cases, collateral is not required, however, the interest rates will be higher as these loans are inherently riskier for lenders.

3Short-term loans:

Most useful when you need cash quickly. They have higher interest rates and shorter repayment terms.

4. Business lines of credit:

This is a flexible and cost-effective option where a lender approves you for a certain amount of credit, and you pay interest only for what you actually borrow. The funds are accessible at any point of time you need it.

5. Equipment financing:

These are great if you have specific equipment needs like an MRI machine or other diagnostic equipment. You need to submit a quote to the lender along with the application. The equipment itself will be held as collateral in this case. So you don’t have to give a down payment or use any personal property as collateral.

How do I evaluate medical loans?

A quick Google search will tell you that there are thousands of lenders providing medical loansin Australia today. However, it is important that you read the terms and conditions carefully, before signing up. There may be hidden costs that may outweigh the benefits of a medical loan in the long run.It also helps to prioritise your needs so that you can zero in on the right option without much effort. To evaluate the various medical loan options in front of you, ask yourself the following questions:

  • How soon do you need the funds?
  • How fast can you repay the loan?
  • How flexible do you need the payments to be?
  • Will you be able to provide any collateral to the lender?

In general, pick a loan that is affordable for your business – one that offers a lower interest rate and a longer repayment term. Compare multiple loan providers and choose one that best fits your needs. Capital Boost’s user-friendly platform enables you to compare multiple online medical loans seamlessly and apply for one within minutes.

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How to apply for a medical loan?

When you apply for a medical loan, you will be asked to provide several aspects of personal and business information.

  • Verification of your Australian Medical Council license
  • Nature of your medical practice
  • Personal financial information
  • Financial performance of the medical practice including accounts receivable, accounts payable, outstanding loans, profit, and loss statements, and more.
  • Commercial lease agreements
  • Business licenses
  • Articles of incorporation
  • Your business plan and mission statement
  • Resumes of all the officers and partners of the business
  • Financial projections

Before applying for one, it makes sense to take account of your business, its creditworthiness, and all the documentation that will need to be submitted.

How do banks evaluate medical loan applications?

Banks evaluate medical practitioners based on their

  • Experience as a qualified general practitioner (GP) generally at least 3 years
  • Earning potential
  • A Medicare provider number (for dentists, etc.)
  • Existing debts (e.g. medical student loans)
  • Net worth, and
  • Income stability

You should have a comprehensive business plan that outlineshow much you want to borrow, why you need the money, and by when you expect to pay off the loan.

What security can I provide for a medical loan?

You can provide mortgage over the property, registered fixed or floating charges on the practice, and/or a director’s guarantee.

How to get a medical loan despite bad credit?

If you have a bad credit score, improve it bymaking repayments on time, particularly on high-interest debts. Negotiate a payment plan with your creditors so that the payments you make go to principal and not interest. If the lender agrees, make higher repayments so that you can pay off the outstanding amount sooner. Otherwise,consolidate all your loans into one account.

Also non-traditional or alternative lenders will often overlook your credit history if you have a good business performance or a strong earnings projection.

Read our sucess story on Medical centre business loan to meet the cost of updated infrastructure and equipment.

The bottom-line

Now that you’ve got a good understanding of medical practice loans, its time to evaluate your current medical business situation, and prepare to apply for the right loan.

The medical loan broker experts at Capital Boost are here to help. We will help you present a strong case with the right moneylender.

Leave the financing woes to us. So you can focus on running your medical clinic, doing what you do best.


Tagged in: Medical Loans, Loans for Medical Professionals, Doctors Loan, Medical Practice Loan, Unsecured Loan, Business Loans, Business Expansion Loans, Apply for a Medical Loan


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