Why medical professionals take out business loans
As a medical professional you may be considering taking out a business loan to buy into an existing medical practice, or to cover the substantial costs of establishing a practice of your own.
There are a great many costs associated with setting up and running a successful medical practice. Finding and fitting out suitable premises for your clinic is a major investment – in addition to specialised diagnostic and treatment equipment you need robust IT systems to manage medical records, protect patient confidentiality and handle payments in liaison with Medicare and health insurers.
Once you’re set up you need to attract a team of skilled medical practitioners, administrative and support staff, and perhaps allied health professionals to attract more clients and generate additional business through cross-referrals. You’ll need to run a marketing campaign to let the community know what services you offer and establish your credibility, so you can attract the patients you need to make your medical practice thrive.
In addition to the ongoing costs every business has to deal with – rent or mortgage payments, tax, wages and consumables – as a medical practice your expenses will also include maintenance of your specialised equipment, substantial medical indemnity insurance premiums, and CPD training for your medical team.
A business loan could provide the back-up you need to meet your clinic’s financial obligations even if your cash flow fluctuates or your patient numbers drop temporarily.
What are the requirements for getting a business loan?
Getting a business loan can be easier than you think.
You can still expect to be rejected by the big banks unless you have a long and solid trading history, a top-rate credit rating and collateral to offer.
But there are plenty of alternative lenders out there willing to offer business loans to doctors.
Each lender will have their own criteria when it comes to things like credit rating, how long you’ve been in business, and how high your turnover is.
If you’re higher risk (e.g. if your credit score is low) you may still be able to get a business loan, although you can expect to pay a higher rate of interest to compensate for that risk.
The most important factor ALL lenders will look at is your capacity.
Lenders need to know that you will have enough cash – after all your expenses – to cover your loan repayments.
How to apply for a business loan
If you are applying to an alternative lender for a business loan, the process is usually quick and easy:
1Create a business case to check how much you can afford to borrow.
2Prepare your supporting documents – expect to be asked for:
3Choose your lender and loan product – be sure to shop around, because costs, terms and conditions vary. Be sure to find out about hidden fees and compare all the costs of each product, not just the interest or factor rate.
4Complete a simple online application form and upload your supporting documents. Most lenders will respond within days or even hours. Some will even give an on-the-spot decision.
Grow your medical practiceSee if you qualify
What options are available to doctors and other medical practitioners?
There are several types of small business loans you could consider, to support or grow your medical business.
Unsecured small business loan
A short-term option, unsecured business loans are usually for between 3 months and 2 years.
You can use the funds for any purpose. Many lenders will let you set a repayment schedule to suit your trading patterns.
A specific-purpose business loan secured on the equipment you are buying, such as a new medical equipment.
The term will often be tied to the lifespan of the equipment. You will not be able to sell or upgrade the equipment until you have repaid the equipment finance.
Business line of credit
A business line of credit is similar to an overdraft facility, giving you access to cash up to an agreed limit, often with the right to draw, repay and redraw funds as you need them.
You only pay interest on what you borrow, but there are often set up and admin fees.
Business credit card
Business credit cards are great for covering day-to-day expenses and making purchases, but unless you clear the balance each month the cost can be extremely high.
Before entering in to any business loan agreement, be sure to seek professional advice. It’s also important to ensure you understand all of the costs (including all fees). You can get a head start by using our business loan calculator.