Medical Practice Funding

What is medical practice funding?

Medical practice funding is a type of financing specifically designed to allow medical professionals to cover the expenses needed to keep their business growing.

Although some loans are difficult to obtain, lenders generally see doctors as low risk due to their stable income, high net worth, and elevated earning potential.

If you already have an established medical business, you are likely to find that you will be eligible for the best loan options, terms, and rates.

If you have recently completed medical school and are looking to open a medical practice, it may be more difficult to qualify for a loan, but there are options out there.

Where to find medical practice loans

Fundbox

✔ Funding: Borrow $2,500 - $150,000
✔ Minimum Credit Score: 600
✔ Loan term: 12-24 months
✔ Funding turnaround: as fast as next business day

Fundbox requires minimal documentation and access to a revolving line of credit without origination or maintenance fees. Borrowers are not required to have collateral (with exception of larger credit lines which are subject to a personal guarantee).

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Funding Circle

✔ Funding: Borrow $25,000 to $200,000
✔ Minimum Credit Score: 700
✔ Loan term: 6-12 months
✔ Funding turnaround: 24-48 hours

Funding Circle offers affordable business loans with interest rates lower than alternative lenders with monthly repayment schedules for borrowers with good to excellent credit scores.

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SBA 7(a) loan

✔ Funding: Borrow up to $5,000,000
✔ Minimum Credit Score: 650
✔ Best For: SBA loans
✔ Funding turnaround: Varies.

The SBA 7(a) program features lenders such as Wells Fargo in their network and provides capped interest rates and long repayment term flexibility. Term loans and lines of credit access available. Typically, collateral will be required with a personal guarantee. Funding times vary and may be longer than most other lenders.

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Kabbage

✔ Funding: Borrow $1,500 - $150,000
✔ Minimum Credit Score: 640
✔ Loan term: 6, 12 or 18 months
✔ Funding turnaround: As soon as 1-3 business days

Kabbage offers borrowers a credit line up to $150,000 with monthly repayment options and no prepayment penalties. Approval as fast as same business day.

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How does a medical practice business loan work?

How a medical practice business loan works depends on the loan type and the lender you choose to work with. In most cases, however, you receive a lump sum from a lender which you pay back, plus interest, monthly over a term of years.

How can you use a medical practice loan?

There are many ways in which you can use a medical practice loan, such as:

• PPE expenses
• COVID related expenses
• Operating expenses
• Cash flow
• Acquisition of a practice
• Facility upgrades
• Purchase of medical equipment
• Hiring new employees
• Refinancing debt
• Payroll
• Marketing and advertising
• Purchasing or renting real estate for a new practice

What are the most common types of medical practices?

The types of medical practices that can benefit from a medical practice business loan include, but are not limited to:

• Private medical practices
• Group practices
• Large HMOs
• Hospital employment companies
• Locum Tenens

Who can benefit from medical practice loans?

Medical practice loans are not limited to MDs, they can also generally be used by:

• Doctors/physicians
• Physical therapists
• Dentists
• Veterinarians
• Private practitioners
• Chiropractors
• Hospices
• Medical professionals
• Nursing homes
• Home health care providers

Types of medical practice funding options

If you are looking for medical practice financing, there are several different options available to choose from:

Medical Practice Business Loans

Medical practice business loans are offered by traditional banks, such as Wells Fargo and the Bank of America, and alternative online lenders.

These specialized loans are designed to reflect the specific needs of medical professionals and their financial situation, whether that be current or future potential. Since you are likely to have an above-average income while working, these lenders may still approve you for financing even with medical school debt.

A medical practice business loan is going to be your best option if you meet all the qualification requirements due to the high loan amounts, long repayment terms, and lower interest rates.

SBA 7(a) Loan

An SBA loan is another loan type sought after by many small business owners. For this type of financing, the Small Business Administration works with independent lenders to guarantee 75% to 85% of the loan.

In other words, if you are unable to make repayments the government essentially pays them for you. Because of this guarantee, there is much less risk to the lender and so they are more likely to give out a loan.

The downside to SBA loans is that they are particularly difficult to qualify for due to the strict eligibility requirements and heavy competition.

With the 7(a) loan program, you can receive a loan amount of up to $5 million with interest rates ranging from 2.25% to 4.75% with terms offered from 5 to 25 years. You could receive financing in just two weeks and you can use the funds for any medical practice need.

Equipment Financing

If you are simply looking to purchase or upgrade equipment for your medical practice, you may find that equipment financing is right for you.

The loan amount you receive will depend on the cost of the equipment, but you can receive up to 100% of the cost, and loan terms will be based on the estimated lifespan of the purchased equipment. Interest rates range from about 4% up to 30% so be sure that you will be able to afford the repayments before going ahead with this financing.

Some lenders will require a down payment of around 10%, but since the equipment itself acts as collateral it is much easier to gain approval for this type of financing.

If you are unable to make repayments, the equipment will simply be seized and liquidized so that the equipment financing company can retrieve its funds.

Business Line of Credit

If you are unsure about exactly what costs you will need to cover and when you may want to consider a business line of credit.

This is a revolving line with a fixed limit that you can draw from as and when you need it. You will only be required to pay interest on what you actually use and, as long as you don’t exceed the limit, you can use the funds over and over after making repayments until the line of credit is closed.

You can qualify for a business line of credit up to $250,000 with terms of up to 18 months, but you should be aware that interest rates will be much higher than a traditional loan.

Business Term Loans

If you are unable to qualify for a bank loan, you should think about a business term loan. Like a traditional loan, you will receive a lump sum that you can use for virtually any medical practice expense which you will then have to pay back over an agreed term with added interest.

If you are a medical professional with a good to excellent credit score, you are likely to qualify for the lowest rates and most desirable repayment schedule.

Loan amounts range from $5,000 to $500,000, with interest rates of 4.99% up to 22.99%, and loan terms anywhere between 6 months and 5 years.

Short-Term Loans

If you need a smaller amount of funding quickly, a short-term loan may be the right option for you.

Short-term loan amounts start at $5,000 with a loan term of only 1- to 4-years. This loan type can end up being very expensive due to the high-interest rates, often in the region of 8% to 30%, so you need to be very sure that you will be able to make the repayments quickly and in full to prevent unmanageable costs.

Medical Practice Loan Calculator