Do you own your own practice? Are you needing to increase your working capital? Then you are in the right place. In this article, we will review the best types of loans for healthcare professionals and explain the perks of each. Without further ado, let’s get down to business.
1. Traditional Bank Loans
This is often the first place business owners seek financing.
Banks offer both term loans and lines of credit to medical professionals. Several national banks have programs designed specifically for health care businesses. Depending on the purpose for the loan, you may be able to borrow as much as $5 million.
Traditional banks that have physician programs are usually the best option if you’re purchasing or buying into an existing practice that has documented cash flow.
Advantages of traditional bank loans. A traditional bank will offer competitive interest rates and terms. Larger banks may also provide consultants and other resources to help business owners improve their chances of success.
Disadvantages of traditional bank loans. Traditional financial institutions are the most discerning. There’s a significant amount of paperwork involved, and there’s no guarantee that after going through the arduous application process that you will be accepted for financing. Unless a bank offers a physician loan program with 100 percent financing, you will need to provide a significant down payment to obtain financing.
2. SBA loans
The Small Business Administration (SBA) has several federal government-backed programs, such as the 7(a) loan program, designed specifically to help small businesses. This is an option for long-term financing, especially if you’re denied by a traditional lender. If you’re starting a practice from the ground up, an SBA lender may be your best option.
Advantages of SBA loans. This type of financing will typically offer the lowest monthly payment. Repayment terms of up to 10 years are available and SBA loans typically charge among the lowest interest rates. You can also obtain funding if you have limited collateral. SBA loans are also the best option if you need significant financing, as you may be able to get up to $5 million.
Disadvantages of SBA loans. There is a considerable amount of paperwork and bureaucracy when applying for SBA financing, and it often takes two to three months to get funding. There is also more extensive underwriting requirements.
3. Alternative loans
Depending on the lender, you can obtain financing between $5,000 to $100,000. This is typically a viable option for short-term needs when you are in a pinch. Examples include: cash flow management, equipment replacement, or funding a new campaign.
Advantages of alternative loans. The major advantage of alternative financing is that funds are distributed within a day or two. Also, if you have bad or limited credit history then this is a great option for you. It is ideal for unforeseen expenses or other short-term financing needs.
Disadvantages of alternative loans. Due to the higher risk involved, alternative loans mean higher interest rates and shorter repayment terms. In short: higher monthly payments. means higher interest rates and shorter repayment terms, which mean higher monthly payments. Alternative financing does not offer the same size of loans that can be acquired at a traditional bank.
If you are in need of working capital for your practice, discover your funding options today. Keep your interest rates low and your standards high!
The Oasis Team
Keep your interest rates low, keep your standards high.