Running, expanding, or starting a medical practice is expensive. Inevitably, all practitioners need financing of some kind. With a wide range of medical fields, each with varying equipment and office space requirements, it can get confusing. Listed below are the most imperative things you need to know when financing your medical practice.
If you own your own practice, you will generally qualify
Medical practices are very lucrative businesses. So for doctors, this means a higher earning potential, a strong revenue, and a large positive net worth. Therefore, doctors who own their own practices are generally given better loan rates and the lowest monthly payments.
A larger practice needs a larger lender
Practices needing over $500,000 in financing will most likely have to go through national bank brands such as Wells Fargo and Bank of America. Bigger banks can offer you lower rates but there are negative aspects as well. The application process is very slow, and there is a chance that the loan will be declined after a long waiting period, consequently, wasting your precious time.
More experience yields better lending results
Experience, or lack thereof, can determine the difficulty of starting a new practice. If you are fresh out of school, you will lack the essential elements to begin your own business from the start. Experienced doctors can take their track record of working in the medical field and strong patient base as assets to the lender. This shows readiness to set up a new and successful practice.
SBA loans are versatile and advantageous
SBA loans for medical practices can be used for a variety of needs such as starting up, building or acquiring property, refinancing, expanding, and more. These loans can be collateralized by real estate with zero down. For practices already in business, construction money is available. Additionally, seller financing can be put forth instead of a down payment.
100% financing is available
If you are looking to expand, renovate, or move your medical practice, you can acquire 100% financing. You must meet two conditions beforehand. One, you have an existing practice. Two, your historical cash flow must be enough to service all of the proposed debt on the acquisition of the new or used building. A separate %100 financing for financing and leasing equipment is available to new doctors.
Create wealth with equity
You have a successful medical practice and as a result, you want to take advantage of all the equity you have built up for various things. A medical practice equity loan can help you use the value of your practice to acquire finances for planning and investing. You can also use it to pay off other debt that has accumulated.