Medical practice loan. Definition of medical practice loan.
What is a medical practice loan and what types are there?
A medical practice loan is any type of financing a medical practice obtains to either establish or grow the practice. Get a niche medical practice loan based on equity in business assets such as equipment assets or on the sales of the practice.
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A significant tax savings will can be realized in this medical practice loan against equipment, by being arranged in part as a lease. This allows for a significant tax savings over a traditional loan. The borrower obtains working capital for their business via the equity in their equipment as opposed to having full ownership in their equipment.
Processing time is one to three days. After approval, time for funding is approximately one to three days. If more funding is needed, additional funding can be arranged with additional funding “parts” or “segments”. Total funding that can be obtained is typically in the $150,000 to $250,000 range.
Due to constant advances in the medical field, medical equipment equipment depreciates quickly. Many types of medical equipment becomes totally obsolete in a short amount of time. However, Small Business Loans Depot can utilize medical equipment that has undergone full depreciation and is several years old.
The practice may have additional financing and working capital needs after the equipment refinance product is completed.
Gross sales cash flow loan – This financing product may be very desirable for medical practices as it is based on the gross sales and cash flow of the practice. Medical practices often have significant cash flow, so this product can provide significant working capital to the practice.
This medical practice loan product is used, in effect as a line of credit. The practice provides the most recent 3 months business checking account statements and a one page application. The average daily collected balance, the amount and number of deposits per month, beginning balances, and ending balances are reviewed in order to determine the approved amount.
The customer sends in the 3 months business checking account statements and one page application. Upon approval, the customer is e-mailed documents. The customer completes the documents and faxes them back in. A final landlord check and verbal verification is completed. Funds are wired into the customer’s account within 1-3 business days.
Repayment terms on this medical practice loan range from 3 to 18 months. Once the customer satisfactorily repays the line, the line size is increased. The customer is not obligated to use the available line. They can reuse the line immediately or leave it idle for any amount of time.
Sample medical practice loan transaction:
Primary care physician PCP, Dr. Smith, in Lexington, Kentucky, 6 Years in business, 650 credit score with a Dun & Bradstreet Paydex Score = 65. Dr. Smith provides one page application and his equipment list.
Upon approval in 2-3 days, documents are e-mailed to Dr. Smith. Dr. Smith completes and overnights original docs back. A final verbal confirmation takes place within a day. In most cases there is no site inspection. Funding occurs in 2-3 business days.
In most cases, financials and bank statements are not required. However, if the customer’s financials or bank Statements are strong, the customer can opt to provide to strengthen their application. If the customer has a strong credit bureau score of over 700 or over 725, financials may not be requested.
Although there is a certain dollar amount above which financials are requested for this form of financing, there is often some discretion used by the lender. If the customer has a credit score of 750, then the lender may consider an extra $10K or $20K without requesting financials for a medical practice loan compared to a customer with a 675 credit score.
The lender has guidelines that they follow but they do have the authority to stray from the guidelines to a degree if they can justify it.
The following video provides an overview of the medical practice loan program as well, including features and benefits.
Frequently asked questions:
“Get me a medical practice loan” or “I need a medical practice loan”.
Question: What is the maximum we should apply for?
Answer: That depends on a few factors, but in general, a good rule is to
apply for not much more than the minimum amount that you need. If your
business needs between $50,000 and $100,000, then do not apply for
$100,000 to $150,000. Some applicants think that they should apply for the maximum amount, or “go for the moon”. They believe that the more they ask for, the more they
This is not true. With many lenders, the more you apply for, the more difficult it is
to get approved. If you apply for too much, they will simply decline
the request rather than approving your business for a lower amount. When your business only needs $50,000 in working capital but applies for $150,000, then it may be turned down completely and not receive any funding. The business should apply for as close to $50,000 as they feel they can.