The Best Medical Practice Funding Options for Doctors, Dentists, and Medical Professionals

Whether you’re looking to open your own private practice, expand your current office, or simply supplement your cash flow, medical practices of all sizes and in all areas of specialty can benefit from small business loans and working capital funding, including:

• General and family physicians

• All medical specialties

• Specialist doctors like dermatologists, pediatricians, psychiatrists, chiropractors

• Optometrists, ophthalmologists, and opticians

• Dental professionals including dentists, oral surgeons, periodontists, endodontists, orthodontists

Quick Links

1. 6 Loan Options for Medical Practices
   1. BDC Loans
   2. Bank loans
   3. Alternative funding
   4. Business line of credit
   5. Practice acquisition loans
   6. Equipment financing
2. What’s the Best Physician Business Loan?
3. How To Use Medical Practice Funding

6 Loan Options for Medical Practices

Doctors and medical practices are typically considered to be ideal candidates for funding because of their high earning potential, high net worth, and stable income.

There are a number of loan and funding options available to medical practices in Canada, including long- and short-term funding, as well as secure and unsecured business loans for doctors. Here are 6 of the most popular:

1. BDC Loans

The Business Development Bank of Canada (BDC) offers a number of different types of loans for different purposes, including:

• Small business loans up to $100,000

• Start-up financing

• Real estate financing

• Equipment financing

• Business purchase financing

• Technology financing

• Working capital financing

Different loan options are available for businesses in operation for less than 12 months, 12-24 months, or 24+ months. Terms and loan requirements depend on the specific type of financing you’re seeking.

BDC loans offer some of the most competitive rates and terms, but they can be one of the most difficult forms of funding to acquire. Approval can be made in as little as 48 hours, but typically only businesses with exceptionally strong credit are approved.

2. Bank loans

Many commercial banks offer business loans specifically designed for doctors, and may factor in unique criteria like student loans or loan cash reserves when assessing eligibility.

To receive funding from a bank or credit union, you’ll need to complete an extensive application that requires a significant amount of detailed business and personal financial information. It can take weeks or months to approve your application, and approval is never guaranteed. Typically, only businesses with exceptional credit and strong financial histories are approved. Loan rates and terms will typically depend on the size of the loan and your credit history.

While approval requirements at commercial banks are strict, they may not be as strict as the BDC. However, like the BDC, banks typically prefer to grant loans for larger amounts or to larger businesses, which can make it difficult for smaller practices or those looking for smaller amounts of funding to get approved. For established, larger medical practices looking for long-term financing, bank loans might be the best source of funding.

3. Alternative funding

Alternative funding is available from direct online lenders like Greenbox Capital®. Multiple types of alternative funding are available, including:

• Merchant cash advances—a non-loan form of financing known as a “purchase of future receivables”, in which you receive a cash advance up front that is repaid from a portion of your daily or weekly credit card transactions.

• Business lines of credit

• Online invoice factoring—another non-loan form of financing in which you sell your practice’s unpaid invoices to a factoring firm in exchange for 80-90% of their value. The remainder is paid to you (minus fees) when payment from the client is received.

• Real estate collateral loans

Alternative funding is typically easier to acquire than BDC or bank funding. While historical factors like credit score and financial history will be considered, approval is based primarily on the overall health and potential of your practice. This means that alternative lenders are able to approve more applications that may be rejected by other lenders, especially for smaller loan amounts, newer businesses, or practices with lower credit scores.

Because it’s easier to acquire, funding from an alternative lender typically has higher rates than other forms of funding. However, approval can be made in as little as 24 hours, making alternative lenders an ideal option for practices looking for fast funding in order to take advantage of short-lived opportunities to grow or cover unexpected complications like equipment repairs.

Unlike other lenders, alternative lenders also typically don’t require collateral or a personal guarantee, and there are no restrictions on how funds can be used.

4. Business line of credit

Available from both traditional and alternative lenders, business lines of credit are generally designed for longer term lengths, and they also typically have higher limits and better terms than business credit cards.

Because you can draw and repay from the line whenever needed, lines of credit offer the most flexibility, making them ideal for responding to unexpected emergencies, purchasing inventory, or repairing equipment. You only ever pay interest on the funds you borrow.

5. Practice acquisition loans

Specialized practice acquisition loans are designed specifically to fund the purchase of a practice, whether you’re looking to purchase an entire practice, a share of a practice, or a partnership stake.

Multiple types of funding can be used to acquire another practice, including BDC and bank loans as well as alternative funding. These loans are typically for larger amounts, which means approval requirements will be stricter. You may need to provide detailed financial information, especially if you’re applying for a loan from the BDC or a bank. Be prepared to provide the following at a minimum when seeking a practice acquisition loan:

• Purchase agreement

• Current balance sheet

• Year-to-date profit and loss statements

• Federal tax returns

• Schedule of inventory, equipment fixtures, and other assets

6. Equipment financing

Equipment financing is designed specifically to finance the purchase of medical equipment, such as:

• Imaging machines

• Diagnostic equipment

• Lab equipment

• Exam tables

• Computers

• Wheelchairs, and more.

Equipment financing can only be used to purchase the specific equipment the loan is being sought for. The equipment acts as collateral, and terms will typically match the lifespan of the equipment. A down payment may also be required.

What’s the Best Physician Business Loan?

The best physician business loan for your medical practice depends on your goals and how you intend to use your funding. Your medical practice loan should serve a purpose that aligns with your business goals, such as attracting more patients, offering new services, expanding your office, or purchasing new equipment.

For short-term funding, merchant cash advances or online invoice factoring can provide a fast infusion of working capital that can help you bridge the gap between insurance payments, invest in marketing, or kickstart your practice’s growth.

For long-term funding, BDC loans offer the best rates and terms, but are the hardest to acquire. Bank loans are a good alternative, especially if you work with a lender who offers funding options designed specifically for doctors. Some alternative lenders also offer long-term funding options if bank or BDC loans aren’t an option for your practice.

For fast funding, your best option is always an alternative lender. These lenders can approve and deposit funds in as little as 24 hours, while the BDC and banks can take weeks or months to approve your loan application with no guarantee of approval.

How To Use Medical Practice Funding

A small business loan or alternative working capital funding can help you overcome challenges unique to the medical field that may impact your cash flow, such as:

• Office space: Creating a pleasant environment can be costly, especially if you’re starting a new practice or expanding to a new location.

• Equipment: Medical equipment and diagnostic tools can be very costly to purchase and maintain.

• Billing models: Denied or delayed insurance claims can significantly impact a practice’s cash flow, and even stable practices with robust patient rosters can experience delays and cash flow issues. These challenges can make it tough to manage operating expenses and may impact your eligibility for medical practice funding.

• Technology: Digitizing medical records can significantly boost efficiency by improving billing, streamlining patient communications, and making it easier to share information with other physicians, but implementing this technology requires an investment in new software, as well as time to convert files.

• Insurance: Medical practices have unique insurance needs, such as malpractice insurance and worker’s compensation due to increased risk of illness. This can make insurance especially expensive for medical practices.

• Specialized needs: Medical businesses have more rules and regulations, with specialized needs and different revenue streams than businesses like retail shops. As a result, operating costs are typically higher and profit margins may be thinner.

• Inventory: Medical supplies can also be very costly, especially with increased costs for personal protective equipment.

• Technology: Digitizing medical records can significantly boost efficiency by improving billing, streamlining patient communications, and making it easier to share information with other physicians, but implementing this technology requires an investment in new software, as well as time to convert files.

Medical practice funding can also help you invest in growth and take advantage of opportunities to expand your business, such as:

• Purchasing real estate: Lower your monthly expenses and expand your assets by purchasing your current office space or growing to another location.

• Hiring staff: Hiring additional practitioners and support staff will enable you to take on more patients without compromising quality of care.

• Acquiring a practice: Purchasing an existing practice (and their client roster) is a good alternative to starting your own. It’s also an effective way to expand your business without requiring a significant investment in marketing or development.

• Improving patient services: Offer the most up-to-date or sought after services to keep your practice competitive, such as online booking, digital paperwork, real-time wait times, free wifi, or extended hours.

• Boosting marketing: Advertise your practice, create or update your website, or use direct marketing to attract new patients to your clinic.

Get the medical practice funding you need

Multiple types of funding exist for medical practices, regardless of the size of your practice or your area of specialty. The right funding option ultimately depends on your goals and your practice’s creditworthiness.

Alternative lenders have flexible approval requirements and a variety of innovative funding options that are ideal for younger practices, practices seeking small loan amounts, practices with lower credit scores, or practices looking for fast funding. Funding from as low as $3,000 up to $500,000 is available, and funds can be deposited in as little as 24 hours.