Healthcare Business Loans up to $600,000
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It’s uncommon for small businesses to have enough money to expand and grow on their own. Therefore, it’s common for a small business owner to apply for healthcare business loans to receive extra capital and support to experience growth.
It can feel overwhelming to navigate healthcare loans and funding. So, here’s a breakdown of how these healthcare business loans work and the types of available business financing options for medical professionals.
What Are Healthcare Business Loans?
Healthcare business loans or medical business financing are a set amount of money that many healthcare professionals can borrow from a lender to fund their business. The healthcare professional and lender find an agreement on the amount that the lender will loan and the terms and conditions attached to it, such as the interest rate and amount of time the borrower has to pay off everything.
Healthcare business owners can use medical practice loans as a capital investment to grow their practices by purchasing necessary equipment and hiring personnel. In theory, the healthcare business should grow substantially and acquire more clients and patients to make paying off the loan and its interest easier as its income revenue expands.
What Can You Use Healthcare Business Loans For?
Most borrowers use healthcare business loans to purchase updated equipment, hire new employees and specialists, and open new office locations. However, healthcare business owners can use loans to finance just about anything involved in their business.
For example, they can spend the borrowed money on marketing and advertising by purchasing ad space or developing a website.
Types of Funding for Healthcare Businesses
There are several types of funding sources for healthcare businesses:
- Equipment Loans
- Small Business Loans
- Merchant Cash Advances
- Business Lines of Credit
- SBA Loans
Equipment loans are common and often necessary in the healthcare business world. New equipment can help patients feel more at ease, and it also keeps your practice at the forefront of cutting-edge technology.
However, equipment can be costly, causing many healthcare business owners to turn to equipment loans, or equipment financing, to help pay them off. Business owners can receive a loan for most equipment, but common items that get purchased with loans are hospital beds, EKG/EGG machines, and medical imaging equipment. Equipment loans can often be approved with credit scores as low as 550 because the equipment being financed is used as collateral.
Small business loans also help business owners invest more in existing healthcare businesses. Banks typically issue small business loans for healthcare professionals, and they often require collateral or a personal guarantee. In addition, some banks have loans designed specifically for doctors and put factors, such as student debt, into consideration. Each lender has its own credit requirements, but credit scores of at least 620-640 are often preferred.
MCAs, or merchant cash advance, differ from traditional small business loans. Rather than paying off a loan, an MCA agreement gives you money upfront and then receives repayment from future sales that a business makes.
The money gets paid off by either credit card sales or fixed daily withdrawals from the business’ monthly revenue. MCAs work great for many medical practices because patients will pay off bills with their credit cards.
A business line of credit differs from a traditional small business loan because it works more like a credit card. Instead of receiving a lump sum, businesses have access to a certain amount of credit that they can use, then pay off, and then use again.
Business lines of credit work well with healthcare businesses that need quick cash for short-term needs. For example, they’re a good option for paying off urgent repairs on medical equipment, restocking inventory, and funding marketing campaigns.
Lastly, SBA loans are loans offered by the US Small Business Administration. They appeal to doctors because they often have the lowest rates with the longest terms. The loan amounts are rather large as well, and qualifying practices can loan up to $5 million.
While SBA loans are often favorable, they have an extensive application process and requires a lot of paperwork and documentation. So, they’re usually fitting for well-established practices.
Tips for Qualifying for a Healthcare Business Loan
Lenders look for healthcare businesses with strong credibility. They often look at the potential borrower’s income, business revenue, cash flow, and current debt. Professional credentials and collateral will also help boost the likelihood of receiving a loan.
Presentation is vital when applying for a healthcare business loan, especially if you’re a start-up and in the beginning phases of establishing your business. Keep in mind that most traditional lenders favor medical businesses that have been around for at least two years.
It’s not impossible to find a lender interested in younger businesses, but it means that you have to step your game up in presenting your business to them.
With these factors in mind, borrowers need to procure a detailed business plan with clear, realistic growth objectives and projections of business profits. If you already have an established practice, run key reports that show the stability of your business and list any collateral you can provide.
Also, be prepared to provide all kinds of financial documents, including bank statements, your personal and business tax returns, and annual business revenue reports.
Lastly, research which types of lenders will be most willing to accept your application. For example, SBA lenders will favor well-established medical practices. Therefore, if you need quick cash for short-term needs, you’ll most likely succeed with securing a medical cash advance or business line of credit.
How to Apply for the Best Healthcare Business Financing
To be approved by MCashAdvance, you must meet the following requirements:
- U.S. citizen or legal resident
- 18 years of age or older
- Your business must be at least six months old
- You must have a credit score of 500 or higher
Funding amounts vary based on your business’s financial health and history, but its possible to receive up to $600K.
The amount of business you conduct in conjunction with the amount of funding you receive decides your repayment period.
Tips for Qualifying for a Healthcare What Are the Advantages and Disadvantages of a Healthcare Loan?
Healthcare loans have advantages and disadvantages, so not every healthcare business will benefit from them. Here are some factors to consider before applying for a loan.
Healthcare Loan Pros
Healthcare loans often have loan options to fit your healthcare business’s needs. For example, some loans help cover medical equipment and inventory costs, while others help pay staff income. Other options, such as MCAs, can better fit businesses with low credit scores.
Healthcare loans are also helpful when you need access to large amounts of capital. Some lenders can offer between $500,000 to $5 million. Amongst many requirements for large loans, healthcare businesses usually need an annual revenue of at least $350,000 to prove to lenders that they can repay the loan.
Healthcare business loans tend to have lower interest rates than personal loans because you often need collateral to be eligible. An SBA loan also tends to have lower interest rates and longer repayment loan terms than traditional loans.
Healthcare Loan Cons
One of the disadvantages of healthcare loans is the long list of prerequisites to qualify. As we’ve mentioned earlier, lenders often request extensive business documentation to ensure that you can repay your loan.
Also, many healthcare loan rates are dependent on credit history. So you’ll often need a healthy personal credit score and prove that your healthcare business has a secure and steady cash flow.
It’s also relatively difficult for new healthcare businesses to receive loans because lenders prefer established businesses over a new practice. Lenders want to invest in healthy companies with a proven track record of success.
Healthcare businesses have a higher survival rate than businesses in other industries when it comes to start-up loans. However, a review of healthcare business loans and survey from the SBA shows that about half of small businesses close within the first five years of starting.
So, if you apply for a healthcare loan, be prepared for putting up collateral. It’s quite rare to find a lender that will offer small business loans for healthcare businesses with bad credit or no collateral because of the risks.
Frequently Asked Questions About Healthcare Business Loans
How Can Healthcare Loans Be Used?
You can use business loans for medical professionals for just about anything that goes into your business. Some loans can cover long-term expenses and medical equipment. Others can cover payroll and urgent costs, such as restocking essential medical supplies.
How Fast Can I Get Funded for a Healthcare Loan?
The speed that funds get approved depends on several factors, such as the type of loan, the business’ credentials, and the loan amount. Some lenders can approve loans in a day, while others may take weeks. For example, SBA loans can take up to 90 days to process.
If you’re looking for fast funding, MCAs and business lines of credit are often the quickest options.
Are There Restrictions on Healthcare Loans?
Healthcare small business loans are meant to grow your business, So borrowers should use them for the sole purpose of expanding their healthcare businesses.
However, once most loan applications get approved, the funds transfer to the business bank account. After that, there’s little to no monitoring of how the funds get used.
If the loan money goes into a business account, the IRS can see if you use business funds for personal use. Using business loans to pay off personal loans can land you in legal trouble, so it’s best to separate healthcare loans and personal finances.
Can I Get a Healthcare Loan Without Collateral?
Yes, there are some instances where you don’t need collateral for a loan. For example, the SBA 7(a) program can provide loans without collateral for up to $25,000. You can also obtain funding from MCAs and business lines of credit without collateral.
Who Uses Healthcare Practice Loans?
Physicians and healthcare specialists mostly use healthcare practice loans. However, you can also find home healthcare business loans.
These loans can help expand a business, acquire another practice, or start a business. They can also help pay for daily operations, medical equipment, and paying personnel.
Funding Your Business Is Our Business
Healthcare Business Loans May Help Grow Your Business
Healthcare business loans are often necessary to help your business grow. The best way to benefit from these loans is to determine which one is the most applicable to your situation. Applying for the correct type of funding can provide the support that your business needs to thrive.
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to Hold your Business Back
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