As a doctor, you are one of the highest-paid professionals in America, and you deserve the salary due to your sheer knowledge and life-saving work. Even though physicians have top-earning salaries, the cost of running a private medical practice is expensive for anyone.
Private practices face costs for medical equipment, licensing renewal, patient management software, insurance, and more. Not to mention, it takes many doctors years to pay off college and medical school loans.
In order to run your medical practice and keep medical equipment up to date, healthcare professionals often need to utilize equipment financing. Let’s take a look at how medical equipment in your private practice can be updated with the help of alternative business loans.
Options for Financing a Medical Practice
It is vital as a medical practice owner to consider how you want your business to grow over the years. If a private practice never updates its medical equipment, software, or interior, patients are sure to seek out a provider with the most advanced services.
In order to improve your private medical practice, you can follow in the footsteps of many other healthcare professionals and utilize business financing. You may want to finance for:
- Obtaining updated equipment
- Hiring more staff
- Refurbishing your practice
- Increasing marketing
- Covering taxes
There are a few popular ways to finance private practices and medical equipment. Let’s take a look at the 3 most common options.
Banks are the most common type of traditional lenders. Traditional lenders often make the most sense for large, long-term loans. They aren’t the best option if you need to secure money quickly. The application process is often long and confusing.
Normally, traditional lenders take anywhere from weeks to several months to review your application. To secure a loan this way, you will need to have a clear business plan, a proven track record of income, and sometimes collateral, which can end up being your own personal assets.
Traditional loans can be useful if you meet all of the qualifications and are in no rush to get the money. These loans work best for medical practices that are incredibly well-established and are simply looking to expand. They are not the best option for new medical practices that need financing quickly.
Small Business Administration (SBA) Loans
Small businesses, including medical practices, are supported by the SBA government agency. While the SBA does not pay out funds themselves, one of their primary services is to help businesses secure loans. The SBA guarantees repayment of the loan, so your private practice often has a better chance of qualifying compared to a traditional lender.
SBA loans are also best suited for people looking for a long-term, sizable loan. It’s not ideal for healthcare professionals who need money quickly for smaller needs such as medical equipment.
The application process is similar in length to traditional lenders. The process to review your application, proof of several years’ income, and collateral can take several weeks to several months. Loan interest will see an extra fee paid to the SBA on top of the traditional loan interest.
Alternative business loans are the final common way to receive medical equipment financing. Alternative lenders specialize in providing smaller amounts of money for equipment financing. The amounts offered are usually between $5,000 to $500,000, which is great for purchasing medical equipment.
Unlike traditional lenders and SBA loans, the application process for alternative loans is much faster. Sometimes, loans are approved the day after you apply. The application requirements are far less strict, so these loans are ideal for medical professionals who are newer in the workforce. You may only need to provide a few months of bank statements rather than a few years of statements.
These loans cover many different investments for business growth. They can cover:
- Healthcare equipment
- Hiring staff members
- Expanding service offerings
While the interest rate on alternative loans is often higher than traditional loans, alternative lenders allow you to pay back the money as soon as you want. With SBA and traditional loans, there is often a penalty if you pay ahead of schedule because the lenders would receive less interest.
What Are Different Alternative Business Loans?
Many medical professionals opt for alternative financing because it helps them quickly obtain funds for medical equipment or other improvements. With alternative loans, medical professionals have more flexibility to only borrow for what they need.
Are you wondering how you can secure an alternative business loan for your private practice? The best types of business loans for medical practices are:
- Lines of Credit: Granted a sum of money but only charged interest on what you borrow
- Long-Term Loans: Moderately fast funding with a long repayment term
- Short-Term Loans: Fast funding with a fast repayment term
- Medical Equipment Loans: Medical equipment is used as collateral
- Merchant Cash Advance: Receive a lump sum upfront in exchange for a fixed percentage of your business’s future sales
No matter what your specific needs are, there is an alternative loan for your medical practice’s needs.
Benefits of Using Alternative Business Loans for Medical Equipment
The healthcare industry has been using alternative loans to survive for many years. Equipment financing offers many benefits for securing new medical equipment. When medical practices have up-to-date healthcare equipment, their business benefits in many ways.
A medical equipment loan will help equip your practice with the latest technology. Not only does the technology on medical equipment get better each year, but so does the software that is needed to successfully run a business.
Equipment financing ensures that your business has the smartest technology possible.
Patient Peace of Mind
When you secure new medical equipment with the help of equipment financing, your patients will feel more comfortable and confident in your abilities. A medical equipment loan helps keep your practice up-to-date so that patients don’t leave to seek more advanced care.
By using equipment financing, you can give your patients the best care possible with the use of the best medical equipment.
Securing Medical Equipment Loans With Poor Credit
If you have poor credit, it is still possible to secure a medical equipment loan with your credit score by pursuing equipment financing. Even though obtaining equipment financing is easiest with a high credit score, you can still get a medical equipment loan with a bad credit history.
What is Equipment Financing?
Equipment financing is used to specifically finance new equipment such as large machinery, medical equipment, and computers. Since the borrower uses the money to invest in equipment, it operates as collateral. Because of this, the lender’s risk is reduced, so it is more secure to lend to people with poor credit.
There are two types of medical equipment financing: equipment loans and equipment leasing.
A medical equipment loan works by lending money that you use to purchase and eventually own medical equipment. Medical equipment loans can be used to replace broken machines, buy the latest technology, or purchase enough medical equipment to fill a new private practice.
Medical equipment loans are often the most ideal choice because they allow you to fully own the equipment you’ve invested in once you’ve paid the medical equipment loan back in full.
Medical equipment leasing differs from a medical equipment loan in that the equipment itself is lent to the borrower. When leasing, you pay monthly payments based on your credit rating. Ultimately, you will not own the equipment, but if you want to frequently update to the latest technology, equipment leasing could be a good option for you.
Improve Your Medical Equipment With an Alternative Business Loan
AdvancePoint Capital is the leader in providing loan alternatives to medical businesses. You can get your private practice off the ground, renovate your existing business, or fund the purchase of the latest medical equipment with one of our flexible alternative loan options.
If you’re interested in pursuing a medical equipment loan for your practice, you can get a free quote today without affecting your credit score.