If you’re in the healthcare industry, you more than likely use some sort of medical equipment, whether that’s an x-ray machine, ventilator, or even needles for blood withdrawal.
Usually, medical equipment doesn’t come cheap, and when you find yourself in need, you may not have the cash flow to cover a large expense.
That’s where medical equipment loans can be helpful: they provide the working capital you need to get the equipment your business relies on.
How Medical Equipment Loans Can Help Your Practice
Small business loans can empower you to purchase medical equipment when cash flow is unstable. Your medical practice needs to have the equipment necessary to help patients, and a medical equipment loan can ensure you don’t miss a beat if a piece of equipment breaks down and you need to replace it yesterday.
It can also ensure you have the newest equipment so that you can best serve your patients. If you’re using outdated equipment because you don’t have the working capital to upgrade, a loan can help you do just that.
What You Need to Know About Medical Equipment Financing
Your healthcare business needs are unlike those of any other. That’s why it’s important to explore all medical equipment financing options. Your specific business needs, as well as your credit history, will impact what types of financing you qualify for.
How Does Medical Equipment Financing Work?
Business owners who need working capital for their medical equipment needs have several options (which we’ll cover in the next section) when it comes to financing.
While each may have slightly different requirements, generally, once you receive the lump sum, you will need to start making monthly payments on the loan, credit card balance, or line of credit. Once this is paid back, you may be able to borrow money again.
What Types of Medical Equipment Can Be Financed?
You can finance a variety of types of medical devices and equipment, including things like x-ray machines, MRIs, and ventilators.
Some lenders will allow you to finance both used and new equipment, though check the fine print before assuming you can use the funds you borrow on used equipment.
You may also be able to leverage medical equipment leasing as a way to finance medical devices. With a medical equipment lease, you pay a lower monthly payment to a leasing company than you would a finance company if you were buying the equipment outright. At the end of the lease, you would return the equipment. There are benefits to both.
Can You Finance Used Medical Equipment?
Some equipment financing companies may be open to you using medical equipment finance to purchase used equipment. Some types of financing, such as small business loans or credit cards, have no stipulations about what you can purchase with the funds as long as it relates to your business.
If you work with a healthcare equipment financing company, make sure to find out if you are able to purchase used equipment before applying.
Types of Medical Equipment Loans
There are several types of medical equipment loans as well as lenders offering different financing rates. Explore each to see which is the best fit.
You may be able to secure a term loan with a bank or credit union and get good rates if you qualify. Though the bank you already do business with is a good place to start, shop around with other lenders because you might find a better rate elsewhere.
Another popular option is the Small Business Administration’s 7(a) loan program: it offers low rates and long repayment periods.
Line of Credit
If you would prefer to have access to cash when you need it rather than a lump sum of cash all at once, a business line of credit could be a good solution. After being approved for a set amount of money, you can borrow up to that amount, repay it, and borrow it again.
Equipment loans are specifically to be used to purchase equipment. And the equipment you’re buying serves as your collateral, so you can often find good rates on these loans.
If you need smaller types of medical equipment, such as needles or plastic gloves, you may be better off using business credit cards. Just remember: most have high interest rates, so you’ll want to pay your balance in full each month so you don’t incur extra charges.
If your business can’t qualify for any of the above options, perhaps because you have bad credit, consider short-term loans. There are short-term lenders who consider other factors besides credit scores, which may make them easier for you to qualify for. Be aware that these loans do have high interest.
Medical Equipment Financing Interest Rates
Finance companies that cater to the healthcare industry, as well as small businesses in general, may offer a wide range of interest rates for lending products. There are many factors that go into how a lender determines your rate, and this “secret formula” will vary from one lender to another.
Just be assured that, even if you have bad credit, there is a loan out there for you, even if you will have to pay higher interest rates to get it. If you have time to do so, learn how to establish small business credit and increase your credit scores before applying to maximize the terms you are offered.
How to Qualify for Medical Equipment Loans
Healthcare professionals looking to apply for medical equipment financing should be aware of a few of the criteria that lenders look at.
The first is you and your business’ credit history. If your business hasn’t established its own credit history, your personal credit will be assessed. The higher your credit scores, the better the rates you may qualify for.
Lenders also care how long you have been in business. The longer, the more stable your business will seem to be, and the better the rates you may qualify for.
How to Apply for Medical Equipment Loans
While the application process may vary slightly from one lender to another, here’s generally what you can expect.
You’ll be asked questions about your business including address, industry, and time in business. You may also be asked questions about you as the owner (and any partners, if you have them) including your contact information and Social Security number.
You’ll be asked how much you want to borrow as well, and may be required to give your bank account number so your funds can be deposited into your account upon credit approval.
Once approved, you will be presented with your financing options, including the interest rate and how many monthly payments you’ll need to make. Your repayments begin within a few weeks of receiving funds.
Nav’s Verdict: Medical Equipment Financing
Financing solutions like the ones we’ve discussed here can help you get the medical equipment you need without clearing out your bank account.