Many independent doctors and specialists need funds to start up their new practice.
These funds aren’t always readily available from healthcare professionals’ own bank accounts, especially if they still owe medical school debt, and instead must be sourced elsewhere. One of the ways that medical practices are funded is through financial support, whether that’s a loan or mortgage.
If you’ve been considering a career in medical care or you’re looking to start up your own practice, then here are a few things to know when it comes to medical practice loans.
Types of Medical Practice Financing Options
It’s hard to believe that 73% of smaller businesses would rather forgo growth than borrow, but it’s true. There are some great benefits that come from borrowing money, especially when running a business.
There are a number of medical practice loan options that are worth knowing about before you go choosing the first loan type you see. Having an understanding of each medical practice loan can help you make a more informed decision on which business finance is best for you.
Crowdfunding
This is typically a good approach for anyone looking to secure business financing from the generosity of the public. It’s more of a lucrative choice for acquiring funding, but it’s not always a guarantee that’s going to work.
However, if your crowdfunding profile ends up being promoted in the right places, you could see your funds rocket over the course of a few days or weeks.
Secured bank loans
On the high street, you have a wealth of banks available to provide you with medical practice loans. However, to get this business finance, you will often have criteria that you have to meet to become eligible.
Pros
- Low-interest rates.
- Reputable lenders that you can rely on.
Cons
- Collateral is required as security for this type of loan.
- You may not meet the desired criteria.
Investors
Investors are a good option when you need to get medical practice funding quickly. If you don’t mind having the investors involved with your business, then this might be the perfect solution for you when it comes to funding a private medical practice.
Pros
- Great for getting capital quickly.
- Handy for business insight from different individuals.
Cons
- Others may have involvement or overall say when it comes to your business.
- You may be required to give away shares or ownership of the business.
Business credit cards & overdrafts
Many businesses benefit from business credit cards and overdrafts. These are fairly easy to attain compared to medical practice loans, and they can be a good option for getting medical practice funding. However, there are limits to these funding options.
Pros
- Easy to get a hold of.
- You can be eligible for multiple credit cards and overdrafts all at once.
Cons
- Many incur limits.
- High-interest rates when paying the money back.
What Can I Use My Medical Practice Loan for?
There are many ways you can use these business loans for your medical practice. It’s why so many private practice owners will utilise them for their own benefits. These include:
- Purchase of business premises
- Interior changes and construction
- Medical equipment purchases or hires.
- Paying utility bills and insurances
- Salaries and wages for staff.
- Inventory for medical stock.
- Advertising and marketing for new patients.
Does My Medical Practice Qualify for Financing?
In order to qualify for medical practice loans, you’ll have to be eligible according to the lender you choose. This might differ slightly from one lender to another, as well as the financing option you pick. The basic criteria you’ll need includes:
- Registered in the UK.
- Actively trading for a minimum of six months.
- A monthly turnover of at least £5,000.
- A business owner over the age of 18.
Again there might be an odd difference here and there when it comes to the specifics of what you require from the lender.
The value of business loans remains strong, with it reaching a value of £437 billion in 2021. It pays to explore your opportunities in financing.
What You Will Need to Apply for Medical Practice Loans
There are a number of things you’ll need when you apply for business loans. The proper documentation is essential, as well as knowing the steps that you can expect along the way. When it comes to what you’ll need, this again may vary from lender to lender.
You can expect the lender to ask you questions about your business, whether that’s something that’s been running for a while now or you’re in the process of starting it.
Business finances will be expected, and if you’re starting a business, you’ll need to present a good business plan regarding your intentions for making capital and showing repayments are possible.
By being prepared with all the relevant documentation, you’re more likely to secure funding.
How to Apply for Medical Practice Financing
If you’ve never applied for business finance before, here are some helpful steps.
- Search online and offline for the lenders that are available when it comes to the financing you require. You may find it beneficial to approach a broker to get independent advice on lenders.
- Fill in the application form for whichever lenders are of interest.
- You’ll then receive a quote or offers of funding if eligible.
- An agreement is made, signed upon, and then the funds will be provided to you.
Can I Get Financing for My Medical Practice If I Have a Bad Credit Rating?
Financing is possible for anyone, even if they have a bad credit rating. The only difference is that your options become more limited. It’s a lot harder to secure funding with a bad credit rating because many won’t want to trust you with their money.
There are strict requirements for some lenders, so this may limit you to what’s available and, in some cases, leave you with very little option at all.
We would suggest that since bad credit ratings are an issue for a small business owner, it’s worth trying to improve your credit rating before applying for a loan.
Who Offers Medical Practice Loans?
Medical business loans can be super handy for those struggling with cash flow in any capacity. There are lots of lenders out there who are willing to loan to those starting medical practices or wanting to improve upon what they have already.
It’s worthwhile exploring all your options and, where necessary, use a broker to explore the market in its entirety. There may be plenty of medical practice loan providers that you’re missing out on that aren’t so mainstream in their popularity.
Which Medical Practice Financing Option Is Right for You?
The options available are vast, and what you feel is right for your business might be different from another medical practice. It’s important to weigh up your options and understand the benefits that come with the loan type that you’re looking at.
If it doesn’t feel right, then explore your other options. It’s not like you’re short of them! Awareness of alternative finance is growing, with 52% of small businesses looking at financing options like peer-to-peer lending.
Final Thoughts
Medical professionals can benefit from financing when they’re looking to go independent and fulfil their dreams of running their own business.
There are lots of options to explore, so don’t get put off by the idea of borrowing money when it’s often required to help start the businesses of tomorrow. For a medical practice that’s growing, it’s a cash injection that will do wonders for your growth and success.
FAQs
How much can I borrow with a business loan?
The amount you can borrow will vary depending on a number of factors. This might be the type of lender you go with and how much they can afford to provide. You may find that your circumstances have an influence too.
For example, if you only earn so much in your business or your business loan claims X amount would be earnt, that will dictate how much you can borrow.
Can I take out a personal loan to finance my medical practice?
Yes, you can take a personal loan when financing any type of business. However, remember this is a loan that goes against your name and assets. It means that should you fail to make repayments, your home and other assets may be at risk.
What is the difference between a secured and unsecured loan?
A secured loan is a loan given where the collateral is used as security, like property or medical equipment. An unsecured loan does not require collateral.
How soon will I receive a business loan for my medical practice?
That’s another one that depends on the loan provider you go with. Some can pay in a matter of hours, whereas others might take a day or two for it to come through.