Medical Practice Loans: Financing For Doctors & Physician Offices

Loans For Doctors Offices

In the United States there are roughly 915,000 physicians and surgeons who currently have active licenses to practice medicine, and that number seems to be growing at about 2% per year. Even with this growth in the health industry over recent years, and considering the fact the U.S. is dealing with an aging population, the majority of America’s physicians work in small practices (56.8%) of U.S medical physicians work in small practices. While the share of physicians who were directly employed by hospitals or large health care facilities has increased slightly to 7%, a much larger percentage of physicians and dentists (51%) actually own their practice.

Group medical practice is a $313 billion industry within the United States, and have seen 5.6% annual growth between 2010-2015. Medical group doctor practices are also a vital part of the economy, being that the 240,000 practices employ over 1,800,000 Americans, with employment growth among doctors expect to steadily grow in the years and decades to come (especially over the next decade as health care reform takes hold and as the U.S. population ages).

Types of Medical Practice Specialties

Comparing Medical Practice Loans

Bank	6-10%	3-25 years	30-60 days
SBA	6.5-10%	5-25 years	10-60 days
Line of Credit	5-15%	1 – 3 years	7-30 days
Alternative	6-25%	1-5 years	5-7 days
Cash Advance	1.16-1.55	3-24 months	1-3 days

Bank Loans for Medical Practices

Traditional banks (including big, small, community and credit unions) provide medical professionals and dentists who own their own practices with the best rates and terms of all financing products in the lending industry. But because they offer the best rates and terms, they also are very picky in the medical companies they’re looking to fund. Banks offer both term loans and lines of credit to medical professionals for use in the business’s operations, but also to buy the real estate their practice is located in. Documents needed for approval include

• Business tax returns
• Business financial statements
• A/R & A/P aging schedules
• Schedule of liabilities
• Personal tax returns
• Personal financial statements
• Appraisal (if commercial real estate is being financed)

SBA Loans for Medical Practices

Loans provided through the Small Business Administration’s financing programs are a great way for medical professional to obtain bank rate medical practice financing for company’s without enough of a credit history or lacking the cash-flow that a bank would require. The SBA doesn’t provide the small business loan to the medical practice, but instead agrees to cover a percentage of the traditional lender’s losses should the borrower default. Documentation needed to get a medical practice SBA loans include

• Business tax returns
• Business financial statements
• A/R & A/P aging schedules
• Schedule of liabilities
• Personal tax returns
• Personal financial statements
• List of collateral
• Personal guarantee

Alternative Medical Practice Lending

Mid Prime alternative small business lending is a form of medical practice funding that is the middle ground between bank-rate financing, and high-interest merchant cash advance lending. Mid prime alternative offer affordable short and medium-term financing to small businesses without nearly the credit and documentation requirements that bank lenders require, and funding can be completed within 1-2 weeks. Documentation required to get a business funded with a mid prime loan include:

• Credit Application
• 6 months bank statements
• 2 years business tax returns
• 1 year profit & loss statement
• Debt schedule
• 1 year Personal tax returns
• Personal financial statements

Medical Practice Equipment Leasing

For medical practices and health care professionals looking to purchase or replace their medical equipment without having to pay the full price of the machinery or equipment upfront, medical equipment financing may be an option. When the doctor, dentist or surgeon decides which piece of equipment they’d like to lease, they will provide the leasing company with a purchase order, and the leasing company will buy the equipment, and lease it to the company over the course of 1-5 years. At the end of the leasing term, the medical practice will then be provided the option of buying the equipment outright for a small price. Documents needed for equipment leasing include:

• Application
• Purchase order

Medical Practice Cash Funding

Merchant cash advance company’s provide immediate medical practice funding with an easy application and lending process. In return for an upfront amount of cash, medical practice lenders will purchase a percentage of a medical practice’s merchant account or business bank accounts at discount. Repayment is usually made through the use of daily remittances through daily ACH (only during business days). To apply for funding, the documents needed are:

• Application
• 6 months bank statements