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Best Medical Practice Loans and Financing

Medicine is a lucrative industry and medical practices are viable businesses. However many medical practices used small business funding to get their practice started. In this guide, we’ll show you how medical practice loans can help you establish a successful medical practice business.

Financially Reviewed by Gordon Scott

At a glance There are many small business loans floating around the market, which makes it challenging to find one that best suits your business plan. Every lender makes promises, but how can you tell whether they’ll be the best fit for you? You’ll need to assess each one carefully, checking the terms and conditions to see if there are any tricky clauses. To get you started, our experts have created a guide that covers the best medical practice loans and the lenders we recommend.

Introduction

Many businesses make the mistake of taking just any small business loans thrown their way. They don’t assess or compare the payment terms to see if they can find a more suitable and financially solid loan option. 

Industry-specific loans have lower interest rates and more extended terms and are tailored to niche businesses, making it easier for you to find a loan that specifically tailors to the needs of your medical practice. What’s more, certain industry-specific loan lenders have experience and knowledge in the medical practice industry and can guide you on which loan types will best suit your operations.

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Best Medical Practice Loans - Quick Overview

To acquire the funding you need for your business, you can use any of the medical practice loans indicated in the table below. We’ve also recommended some of the top lenders in the industry so that you don’t have to spend time hunting them down.

Financing Need

Best Loan Type

Loan Features 

Recommended Lender

Working capital

SBA loan

  • Amount: Up to $5 mil
  • Term: Up to 25 years
  • Interest: From 6% and up
  • Time to get the loan: Up to 2 weeks

Fundera

Startup investment

Term loan

Standard Short-Term Loan Features:

  • Amount: Up to $250,000
  • Term: Up to 18 months
  • Interest: From 14%
  • Time to get the loan: Up to 24 hours

Standard Medium-Term Loan Features:

  • Amount: Up to $500,000
  • Term: 2 to 5 years
  • Interest: From 7% to 30%
  • Time to get the loan: Between 2 to 3 weeks

BlueVine

Equipment

Equipment financing

  • Amount: 100% value of equipment
  • Term: Up to 6 years
  • Interest: Between 4% and 40%
  • Time to get the loan: Up to 48 hours 

SmartBiz

Operating expenses

Business line of credit

  • Amount: Up to $500,000
  • Term: Up to 18 months
  • Interest: Between 7% and 25%
  • Time to get the loan: Up to 24 hours

OnDeck

Financial recovery

Invoice factoring

  • Up to 90% of invoice
  • 2% factor rate
  • Require: 6 months of financial history

Lendio

Hire qualified staff, upgrade existing equipment, invest in the latest medical technology

Merchant Cash Advance

  • Amount: Between $50,000 and $500,000
  • Term: Terms are not set
  • Interest: One-time factor rate
  • Time to get the loan: Up to 24 hours

Fora Financial

Medical Practice Loans Explained

In this section, we’ll guide you on how to choose the right funding for your situation.

1. Fundera - Best for SBA Loan

Small Business Administration (SBA) is the optimal solution for when you need working capital to build offices or install new equipment. One of the most appealing features is that you can pay the loan off gradually over a long period, with low rates. This primarily because the government backs the financing through approved lenders.

Whether you want to buy a new property or lease one, you’ll want to fit it out with medical rooms, offices, and facilities. You might also wish to install quality fittings for improved comfort and so that sickness is not passed from one patient to another. For example, you may want quality central air conditioning. An SBA loan is an excellent way to get this sort of funding with acceptable terms.

Fundera works with new companies to finance startup ventures through SBA loans. You don’t need a track record or previous financial records to be approved, as long as you have an excellent business plan.

2. BlueVine - Best for Term Loans

Short- to medium-term loans provide a good alternative to SBA loans. These are the standard loans that small businesses use as startup investments to cover their initial capital and operating expenses. The loan you choose will vary according to how long you want to be committed to the contract and the funding amount you require.

You can use the term loan in the same way as the SBA loan, but you’ll receive fewer funds with a higher interest rate and less time to pay it. However, a term loan may be your best way to receive working capital. A term loan may, for example, let you expand your business or build more offices if you’ve been in operation for a few years.

BlueVine has received praise for its short-term loans and how quickly it approves funding. You can apply online for its services, or you can meet the agents at their offices or over the phone. BlueVine has flexible options and will guide you through the loan application process.

3. SmartBiz - Best for Equipment Financing

Equipment financing provides the funds for the purchase of machinery and tools. With equipment financing, the lender will evaluate how much you need for all of your listed equipment and will provide you with funding for up to 100% of the value of the equipment.

All medical practices require specialized equipment. While SBA and term loans can also help you acquire these items, an equipment financing loan may offer the perfect solution - if the equipment is all you need. 

SmartBiz works with SBA and construction loans and can use both these loan types when helping your medical practice with equipment financing. Its rates for this funding option are competitive. SmartBiz will also let you know if they believe you should apply for a different funding solution. 

4. OnDeck - Best for Business Line of Credit

A business line of credit isn’t a lump sum, but rather an amount you can draw when you need it. Furthermore, you only owe the lender the amount you use rather than the entire credit amount.

If there’s one cost that can cripple medical practices, it’s the random emergencies or repairs that demand the input of extra cash. A business line of credit is available as and when you need it, so you don’t have to wait for approval. However, you will need to make sure your payments are up-to-date.

OnDeck is one of the best providers of a business line of credit, having dished out millions in loans over the last few years. 

5. Lendio - Best for Invoice Factoring

Invoice factoring is helpful when you have clients that owe you payments. You’ll receive an amount equal to the total invoice value. The lender effectively buys the invoices from you while adding a factor fee. It reclaims the payment once your clients repay their debts.

Despite most people having medical aid, there are occasions where you’ll need to issue an invoice. If your patients are struggling to pay due to personal issues, you don’t want to be held hostage to unpaid bills. Invoice factoring can save the day so you can continue with your business operations as usual.

Lendio is a loan marketplace. They offer loan amounts of up to 90% of receivables and a factor rate that can reach as low as 2%. To get a better chance of being eligible for funding you should have 6 months of financial history; $50,000 per month in revenue, and a 550 or higher credit score. 

6. Fora Financial - Best for Merchant Cash Advance

Merchant cash advances from Fora Financial allow medical practices to access anything between $5,000 and $500,000 in approximately 72 hours. Applications for this form of financial assistance are approved in just 24 hours.

Fora Financial doesn’t restrict how businesses use their merchant funding after the approval. Whether they wish to buy the latest medical equipment or gear, do renovations or construction work, or pay salaries, what lenders do with their money is up to them.

With a one-time factor rate, paying off the loan is convenient and easier than other loan types. And if a company manages to pay off their debt sooner, they are rewarded with a discount. Also, no collateral is necessary to qualify for a merchant cash advance from Fora. They will simply examine the business’s credit and debit card sales.

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How Much Does it Cost to Open a Medical Practice?

There are many different types of medical practices. Examples include chiropractic, occupational health, physical therapy, sports therapy, and general diagnosis. The type of medical practice you choose to open will largely determine how much money you will need to spend. 

You will also have to decide if you wish to open up a practice by yourself or if you want to have partners or group practice. You may also wish to open a specialty service inside a hospital, health center, or academy. 

You may need to account for property acquisition or rent, but some options leave the door open for free accommodation in exchange for services. In any event, you may need to borrow between $100,000 and $500,00 to get things started.

Here’s a quick look at what you’ll need to cover with your medical practice loans:

  • Specialist fees
  • Employee wages
  • Legal fees
  • Business registration
  • Equipment and inventory
  • Medical stock
  • Marketing campaigns
  • Renovations
  • Repairs and maintenance
  • Utilities
  • Specialized machinery
  • Vendors
  • Insurance

How to Choose the Best Medical Practice Loans

Finding the best medical practice loans is only the first step in the right direction. There are many other factors to consider. Firstly, you shouldn’t necessarily accept the initial offer you receive. Read through the loan terms carefully to make sure you want to spend the stipulated amount of years paying back the loan amount. Also check to see if there are any contract clauses that lock you into specific brands. Finally, see whether the loan caters to emergency funds and daily operations.

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See Our Additional Guides on Industry-Specific Loans

Bottom Line

It’s both exciting and scary opening a new medical practice. However, if you take the right approach to medical practice loans, you can soon be on your way to healthy, financial success.  This guide has provided you with initial insights into the top medical practice loans currently available on the market. Now you need to consider your options and tread carefully when deciding which loan is best for your medical business.