Best Types of Business Loans for Medical/Dental Practices & Doctors
Canada Small Business Financing Program (CSBFP) Loans
All medical and dental practices can benefit from the better rates offered with CSBFP loans. The CSBFP works with certain Canadian lenders, sharing the risk and allowing the lenders to offer lower interest rates.
Term Loans
Term loans are the simplest medical or dental practice loans. A normal business loan can effectively finance most business expenses that come up in the medical and dental industries.
Business Line of Credit
A business line of credit can cover medical and dental practice expenses over a longer period. You have more freedom regarding how you pull and spend funds with a line of credit. The APRs of lines of credit are typically higher than the rates on term loans. However, when used properly, lines of credit can cover larger expenses. They are also better at covering consistent, smaller expenses over longer periods.
Merchant Cash Advance (MCA)
MCAs are a business financing option that comes with high rates, but more speed than most business loans. An MCA is an advance that you pay back through a factored rate on future credit card sales.
Equipment Loans
Medical and dental equipment is very expensive. Fortunately, there are specific loans for covering them available. Equipment loans are a lot like term loans, but they use the purchased equipment as collateral.
Medical/Dental Practices Loan Purposes
Covering Startup costs or Acquiring an existing medical practice
The first reason to get a medical or dental practice loan is so you can open your business in the first place! Startup expenses are the first major financial hurdle, so they are a common use for business loans.
Buying equipment/Equipment Repair
Equipment loans can be used to cover the costs of any new equipment. Any simple loan can be used for repairs, though you may find simple term loans particularly useful.
Purchasing supplies
Supplies are a regular expense at any medical or dental business. A line of credit or an inventory loan could help solve this concern.
Hiring staff
Hiring new staff members is a common reason to take out a business loan. You can use almost any type of business loan to cover hiring expenses.
Office remodelling
Remodelling can cost a lot if you want a good remodelling job done. You can take a loan out so you don’t need to put your cash flow at risk.
Opening a new office location
When a business starts getting too busy, the only thing left to do is expand. The problem is expansions can be costly. This is where business loans can prove the most useful.
Refinancing /consolidating debt
When you have multiple debts, it often makes sense to take a consolidation loan. This allows you to bundle all your debts into one, often with a lower interest rate.
Advertising and marketing for your practice
Advertising and marketing expenses will bring a high return on investment if spent properly. Many businesses take out a loan for that purpose.
How Do You Apply for a Medical/Dental Practices Loan?
First, you will need to decide on the kind of loan you need and find a lender that offers it. Be sure to look around and compare loans for the best rates.
When you’ve chosen your lender, you will have to send them an application. Your application will typically need to include some information on your business’s finances. The lender will go over your accounting and pull your credit score to decide on the terms they want to offer you. If your practice is consistently profitable and your credit score is high, you will have access to more lenders and better rates.
If or when the lender gets back to you with an offer, it’s then time to review it. If you like the terms, you can send a full application and receive the funding shortly thereafter. Then, the terms of the loan are active.
FAQs
How long does it take to get funds?
It can take anywhere from one day to several months for you to receive your funds. It all depends on the lender you go to. The typical bank will take about 2 weeks to send you your business loan, while an online lender may do so in just a few days.
Can I get a business loan for a medical practice with bad credit?
Yes, many bad credit lenders will loan money to you. You can’t expect them to offer great rates, but they will seldom turn an applicant down.
How big a business loan can I get?
Business loans for medical and dental practices come with a wide range. You can receive hundreds of thousands of dollars in funding in a matter of days in some cases.
The more attractive you appear to a lender, the more money they will trust you with. If your credit score is high and your practice is profitable, you could receive over $250,000 in business funding with the right lender.
Can you use the loan to purchase/acquire an existing medical or dental practice?
If you want to purchase an existing medical or dental practice, you can. You just need to make sure that the loan will cover the entire cost of the purchase.
Bankers and other lenders typically see doctors and dentists as relatively low-risk. If you don’t have bad credit, a history of bankruptcies, or a history of running an unprofitable business, you shouldn’t have serious problems financing a purchase of an existing practice.
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