Medical professionals who own their own practice have to navigate two worlds: Being a healthcare professional and a small business owner. The good news is that medical practice financing can help you run and grow your business. And doctors, physicians, medical specialists, dentists, and others in the medical field are typically strong lending applicants because of their high potential for earning and stable income.
In this article, we cover the types of doctor office loans that medical professionals may be able to access and how doctor’s offices can use the funding to better their practice.
The Top Medical Practice Loans
Healthcare professionals who own their own medical practice can use business financing to increase cash flow or working capital to:
- Acquire a new practice
- Open a new location for an existing practice
- Expand a current medical practice
- Buy new or upgrade current medical equipment
- Consolidate business debt
- Pay for operating expenses
The best medical practice loan has a low interest rate, reasonable terms, and an easy application process. You’ll pay interest as a borrower but you want to make sure the fee is manageable.
As a small business owner, the loan offers you may be able to get depend on factors like your time in business, your annual revenue, and your credit history (possibly both business and personal credit, depending on the lender). See our guide from Nav’s experts on how to establish business credit.
Start your medical financing search with Nav: After you create an account and securely add your business details, you’ll see the small business loans and business credit cards you’re most likely to qualify for — instantly.
Here are several loan options available to business owners who run medical offices.
SBA 7(a) Loans for Medical Practices
The U.S. Small Business Administration (SBA) manages a loan program that partners with lenders to offer qualifying small businesses, including doctors’ offices, affordable funding. The most popular is called a 7(a) loan and can be used for real estate purchases, working capital, refinancing business debt, and specific business purchases. SBA loans tend to offer high loan amounts but have very strict requirements in terms of credit score, annual revenue, time in business, and more.
Medical Practice Business Loans from Banks
Some medical professionals feel more comfortable getting a doctor office loan through a bank. Traditional banks may even offer financing options like loans that target medical practices. Bank loans from traditional lenders tend to offer low interest rates and fees, as well as favorable terms. They may be able to provide funding as quickly as one week but it typically takes longer. However, these loans tend to have more stringent requirements for borrowers.
Non-Bank Term Loans for Medical Practices
A term loan is a lump sum that you pay back (typically monthly) over a certain period, or term. Medical professionals looking to secure funding may also consider alternative lenders, especially if they need funding quickly and easily. Online lenders usually offer a fully digital loan application that takes only a few minutes to fill out. These lenders also tend to have lower requirements for borrowers, but it may cost more to use an online lender. Medical businesses should make sure they understand all the associated fees and costs before accepting a loan.
Short-Term Loans for Medical Practices
A short-term loan must be repaid more quickly than a medium- or long-term loan. Shorter repayment terms and potentially higher interest rates may mean a higher monthly payment, so make sure you can afford the entire payment each month before borrowing. This funding option is often available from alternative lenders that may be easier to qualify for and quicker to get funding than traditional lenders. However, they’re usually not specifically made for healthcare professionals.
Medical Practice Business Lines of Credit
A business line of credit is one of the best business loan options for medical professionals — especially if your revenue varies or you need to pay for pricey medical equipment unexpectedly. A line of credit is a pool of money you can borrow from as needed and you only pay interest on what you use. It’s also a quick funding source once you’re approved but you may have to pay additional fees.
Medical Practice Loans for Equipment Financing
Equipment loans can help healthcare professionals buy new medical equipment. This option can fulfill your financing needs if you only need to purchase equipment since you have to send in an invoice for the equipment before you receive the funds. The equipment acts as collateral on the loan so you typically won’t need a down payment. Equipment financing can be easier to qualify for than term loans, as well, but the interest rates may be high.