A Comprehensive Guide to Medical Practice Loans

Running a medical practice is not an easy thing. Whether you are just getting started or thinking of expansion, sufficient financing is important for the success of your practice. The healthcare industry is unique and expensive, as are the financial needs. For this reason, Medical practice loans exist – to help healthcare providers like you manage and grow your practice.

So, let’s discuss the types of medical practice loans, how to qualify for them, the pros and cons, the steps to apply for those loans, and how they can help your practice grow strong by the end.

What are Medical Practice Loans?

A medical practice loan provides funding for new and existing medical service businesses. Medical practice loan qualifications typically center around the health of the medical practice of the medical professionals involved in the practice.

How Can I Use a Medical Practice Loan?

Medical practice loans are available to use in building your medical business. Although golf games with potential business partners technically qualify as an activity to help build your practice, doctors do not recommend using borrowed medical loan money for course fees! There are, however, many great reasons to use your medical practice loans. Here are some common ways medical professionals utilize medical practice funds to become even more successful.

1. Start a new practice
2. Advertise to attract new customers
3. Funding for merging and acquiring a larger or additional practice
4. New diagnostic equipment purchases
5. Salary and benefits packages funding for new hires and new partners
6. New ambulatory vehicle
7. Update administrative equipment purchases
8. Fund a community outreach event

Are There Any Regulations on Medical Practice Loans?

Medical practice loans are disbursed in lump sums. Money goes into the practice’s specific bank account when loans are funded. There is relatively little overview of how that money is subsequently used once it enters the possession of the practice. You can use funds to grow your business once funds are in your account.

First, because the money should probably go into a business account, the IRS is unlikely to be pleased with you using business funds to pay off personal bills or other debts. There are formal Federal guidelines on just how business funds can be used. So, even though there are no technical lender restrictions on the use of medical practice loan funds, some rigorous government business regulations will likely keep your more lavish impulses in check.

1. Advertising to get new customers
2. Get a new practice to expand and grow your business fast.
3. Purchasing new equipment that’s necessary for serving your customers better
4. This involves acquiring new commercial property as part of business expansion efforts.

How do Medical Practice Loans Work?

Commercial lenders fund medical practice loans. When you seek a medical practice loan as a provider, you will be asked to verify your employment status and the nature of the medical business practice that you are engaged in. The loan application will also contain the applicant’s personal financial information. However, most of the application will relate to the practice itself. All the financial information related to the practice will need to be produced, including, without limitation, accounts receivable, accounts payable outstanding existing loans, pro forma P & L statements, cash flow projections, and so forth.

Once a lender accepts your loan, money can be in your practice’s business checking account within a week or two. (This contrasts sharply with most other loans, where applicants must wait months before hearing anything. One can only imagine waiting months for word regarding accepting the diagnostic machine, which is much needed, only to receive a letter stating that they are declining.)

Once the money is deposited into your practice’s account, you can immediately use the funds to expand your practice.

Who Uses Medical Practice Loans?

A huge number of healthcare providers have utilized medical practice loans. If you are an alternative doctor, you will be surprised that you qualify for business loans for medical professionals. If you have a business related to medicine, you can be eligible for approval to finance a medical practice.

Here are some common examples of how healthcare providers use medical equipment loans, business loans for healthcare professionals, and many more:

1. Primary care physicians probably dream of becoming the go-to doctors in their towns, providing the best care. With this dream, more than the building, design, and furnishing of welcoming medical offices is needed; they also need enough talented staff to purchase the latest medical equipment and machinery to deliver high-quality care.
2. Massage Therapists want to make their clients feel comfortable. Clients have ailments and injuries that can only be resolved by the touch of a massage therapist. Depending on whether the therapist takes incalls or outcalls, several costs are involved in running such a practice. You either have to find a dedicated space and decorate it or have a reliable vehicle you can rely on to get from one appointment to the next. You must purchase equipment such as a massage table and other supplies, including massage oils.
3. Psychologists help their clients overcome psychological and emotional issues by proposing behavioral and thought changes. They must ensure that the atmosphere in a quiet, dedicated space is comfortable, as they are providing the best service they can. They also have operating costs and licensing fees and need to market their business to attract new clients.
4. Psychiatric Professionals are medical doctors trained to solve problems as complex as those encountered by psychologists. They are only different from psychologists in that they can prescribe drugs, while psychologists cannot. Psychiatric professionals utilize medical business loans to cover startup business costs and, over time, expand into new facilities as their practice grows.
5. Dermatologists treat diseases and conditions of the skin. They also identify potentially precancerous growths and remove them before they become serious issues. Some dermatologists are even members of the hair transplant trade. Many dermatologists rely on small business loans for medical practices to procure all the equipment and supplies necessary to open a practice properly—in addition to all those recurring operating expenses.

Who Are the Medical Practice Lenders?

Like most business loans, physicians have a broad-based pool from which to draw lending institutions, including banks, investment firms, and private investors. Your money may ultimately come from an investment club, a traditional bank, an investment firm, or a group of independently wealthy individuals.

How to Apply for an SBA Medical Practice Loans?

It is difficult to qualify for the SBA medical practice business loans. First, you must be in business for at least a year to qualify for an SBA loan. To qualify, the SBA says you are subject to SBA personal credit screenings, and your business practice must meet credit score requirements. While the business is taking on the loan, the SBA wants to know if you can handle debt if your company doesn’t take off as you imagine it will.

Assuming you’ve got strong credit scores, here’s what you’ll need to do next:

Collect A Collection of Financial Statements and Documents

Depending on the lender, the precise items may be different, but these are some common requirements:

1. Personal and business tax returns for two years
2. Balance sheet
3. Income statement
4. Bank statements
5. Current commercial lease agreements
6. All applicable business licenses
7. Articles of incorporation
8. Your business plan and mission statement
9. Resumes for all of the officers and partners in the business
10. Financial projections

Determine How Much Loan You Require

You will also need to figure out the amount you need to borrow after you have sent all your paperwork. You also have to indicate how you would like to invest the money.

Present Your Application

After collecting all the relevant information and determining how much money you will need and how you plan on investing it, it is time to present the application. 

Play the Waiting Game

After you apply, the SBA can take up to three months to respond. Businesses can only afford to wait that long with cash in the tank.

Final Thoughts

At Purple Tree Funding, we understand healthcare providers’ challenges in running and expanding their practices. We empower the medical profession to accomplish more – efficiently and effectively with our medical practice loans. We help you grow with tailored Business Capital Funding solutions, whether you want to expand your practice, purchase new equipment, or improve patient care. Let your aspirations become the driving force in working with Purple Tree Funding.