Medical Practice Loans for Physicians

Despite the assumptions many people have about the financial stability of being a doctor, the fact of the matter is that even physicians – from surgeons to pediatricians – have financial needs they sometimes cannot meet. A common expense that physicians face is the price of establishing or expanding their practice, which can involve many expenses such as renting or buying a building, purchasing equipment, and hiring personnel.

It’s common to need alternative funding in order to afford this frequently extreme cost, but there are many options to consider, and it can be confusing to decide which option is better for you. The good news is that having plenty of options means there is something for everyone, including newly graduated doctors, established doctors, and doctors with bad credit.

Why Should I Get a Medical Practice Loan?

Loans for your medical practice are extremely useful in cases where you simply don’t have the funds on hand to make the purchases you need to establish or improve your practice. Facilities, equipment, and miscellaneous costs can add up quickly and may not be within the reach of a new doctor or a doctor with a smaller practice.

By getting a loan, you can make sure you have the money you need to make the changes you want. You then pay off the loan over time as you make more money from your practice. With insurance payments sometimes taking time to come through, a loan can be handy to hold you over until you are making enough money.

What Kinds of Loans Can I Get as a Physician?

Term Loans (Long and Short)

Term loans are the type of loan that most people think of when they are considering a loan. They borrow a sum of money and then pay that money off over a period of time, usually with interest. Term loans can come from a bank or from an alternative funding lender like an online funder. Some types of term loans, especially those from alternative lenders, are tailored to the medical field and can work with you on payment plans and usage because they understand your field.

Long term loans from alternative lenders may often be easier to obtain than a bank loan because the requirements are less strict. You can often qualify for a long term loan even if you’re a doctor with bad credit. Short term loans are more difficult to get because the time you have to pay off the loan is much shorter, and the interest is usually higher. However, if you know that your income will allow you to pay it off, they are a good option to quickly obtain the money you need.

Bank Loans

Bank loans are a common kind of loan that most people know about. With a bank loan, the bank will lend you money after a period of assessment if you are approved. There are some drawbacks to bank loans, such as the amount of time it takes to get approved and the high standards of approval. Banks may deny a loan if a doctor has bad credit or a large amount of student loan debt.

On the other hand, banks are good options if you are looking for a less expensive option that can also be tailored to your needs. Banks have a wide variety of loan types that cater to business owners and medical professionals, which can help with the process of obtaining and using the loan.

Business Lines of Credit

Business lines of credit are a great option if you are planning on spending a large amount of money over a period of time. A business line of credit functions almost like a credit card – you are approved for a certain (usually high) amount of credit to use and can spend it as you need to. This means that, if you don’t need to spend the money immediately, you are only paying interest on the amount of money that you’ve spent so far.

However, these lines of credit come with heavy fees and high interest rates, which can build up especially if you are using a large amount of money and are not paying it off. If you are planning on spending most of your money at one time, for example to purchase a building or make a bulk purchase of medical equipment, a traditional loan from a bank or other institution might be a better form of funding.

SBA 7(a) Loans

SBA 7(a) loans are a type of loan that comes from the Small Business Association that are perfect for doctors or other businesses. They are specifically designed to help a business grow and offer longer payment terms and lower interest rates than most medical practice loans or general loans. They are also good for borrowing large sums of money if you need to make an expensive purchase or investment.

These loans are incredibly competitive and difficult to obtain. A doctor with bad credit, for example, or one who is just starting a practice, most likely will not get an SBA 7(a) loan. Established businesses are more likely to qualify, and the process is very long as well as strict in its requirements. If you need a large amount of money quickly, this type of loan is not going to meet your needs.

Medical Equipment Loans

A medical equipment loan, or equipment financing, is a very specific type of loan that is used for buying a piece or pieces of equipment. Medical equipment loans can be much easier to obtain because you may not have to pay a down payment or need to put up property as collateral. You can have the equipment become the collateral for the loan, and you are able to have full ownership of the equipment when you obtain it.

This type of loan is very specific and may not meet everyone’s needs. If you are purchasing more than just equipment, you won’t be able to use equipment financing. It also may be more difficult or expensive to obtain equipment that is specialized or that may soon become outdated.

How Do I Pick the Right Type of Loan?

Before you pick a loan, you should sit down and plan out what you need from that loan and the pros and cons of each kind, as well as how much each of those factors matter to you. You should consider how much money you need, what you need it for, and how long you think you will need to pay off the loan. You should also consider interest rates, ease of approval, and up front costs. If you are a doctor with bad credit, your options are more limited and you will need to make an informed choice about what you may qualify for.

What Do I Do if I’m a Doctor with Bad Credit?

If you have bad credit, a large amount of student debt, or are just starting your practice, you still have options. Alternative funding is available to physicians who are recovering from bad credit or debt and need to get back on their feet. Many third party lenders are more willing to give you a chance when you have bad credit, as long as you are careful in paying off your loan moving forward.

Doctors with bad credit need to consider many more factors than those who may have good credit and an established, reputable practice already. How fast you need the money, perhaps to recover from another loan or line of credit, may be a significant factor. Interest rates may also play in if you are already struggling to pay off existing loans or debt. Alternative funding is frequently the best option in this kind of situation because it gives you more options and flexibility.

What Do I Need to Do to Get a Loan?

Once you have decided which loan is right for you, you can explore options online or locally to meet your needs. Many sources of alternative funding will work with you and help you understand how to follow the process. You should have information like your income, existing debt or loans, and your plans for the loan to help during the discussion. It may be wise to also have an idea of your credit score to understand what options are best for you and whether you will qualify for certain loans or lines of credit.

Many third party lenders will provide you with a quote, advice, or sometimes even a financial advisor to help you make the right decision about your loan. Applying for a third party loan can be easy and quick, and you can often have your money in days rather than weeks or more. Most importantly, if you need a loan, make sure to investigate all the options you have and make the decision that is best for you. Don’t settle for something that will not meet your needs just because you are afraid it is all you can get – there are always more alternatives.