- December 12, 2021
- Posted by: Robert Brown
- Category: Investing
Doctor practicing financing for medical practice loans is the goal of most new and established medical practices looking for working capital. There are many aspects to medical practice financing that you need to know before you can expect to get funding for your healthcare practice! You want to ensure that your healthcare medical practice gets all the funds it needs in a single practice financing loan to have a successful running practice!
Seeking medical practice financing for your healthcare practice needs is one of the most important steps in securing healthcare working capital funds to support your practice. Getting the right financing to help with buying expensive equipment or improving the setup of your office and / or improving your medical practice daily cash flow requirements.
Operating a healthcare practice is more difficult than you would have imaged! You need to have a good grasp of and control over the business end of the daily cash flow needs of your medical practice! Finding the right lender to get doctor financing approved for your practice is critical in getting the funds you need for your healthcare practice!
The good news is that healthcare lenders generally finds medical doctors as a good investment depending on personal credit scores! Even in our current strict lending business economic climate, banks are restricting credit and loans are being continually declined. Finding the right healthcare lender in the healthcare practice industry has been a challenge for the medical professional.
Healthcare specialty lenders are still in the business of making profitable loans for their portfolio so finding solid reliable medical practices to fund is doable with the right lender! As a rule, doctors are viewed favorable in the banking world for financing in their practices for medical working capital and medical term loans.
Medical doctors are considered good credit risks because on a percentage basis, healthcare practice professional’s account for very few defaults. In medical practice financing, dentists, medical doctors and all healthcare professionals usually have better personal credit scores, which makes them good candidates for medical practice term loans and financing.
However, instances where doctors have had poor personal credit history, it is recommended that the healthcare professional contact a credit repair company to improve their FICO personal credit score before trying to apply for doctor practice financing. Doctor financing loans can top out around the $5 million range, so you want to be in good financial condition with regards to your credit history so that you will be eligible for the most attractive loan rates and term.
Another exception to this rule is in the case of new medical practices start-ups. Like so many other things in our current difficult economy, lenders are cutting back on medical practice startup financing, making it extremely hard to get financing. Medical doctor practice financing is being viewed with less certainty by lenders today because these services are presently more risky in today’s lending world for start-ups! This doesn’t mean that you won’t get financing for your startup medical practice, you just might not be able find 100% of the capital you are seeking.
After you have been in the healthcare practice industry for a number of years, you might want to consider expanding into multiple offices for doctor practice growth. Using additional medical term loans practice financing can help you expand your medical practice to new heights and grow into a larger space, invest in new technologies and make your medical practice more efficient which allows you to offer additional services for your healthcare medical practice.
In order to grow a healthcare doctor practice the doctor needs to consider the time value of money. So if the doctor can receive funds they need to consider how much additional revenue those funds will bring in. If the practice revenue is less than the cost of the funds and they are positive than the doctor should proceed with the financing. The concept of time value of money comes into play that the doctor does not have to wait for the funds to be collected from insurance providers with their current sales but instead they come in by receiving funds sooner than they would have had the money to get the medical practice cash flowing.
So even though this may cost more in the long run the Doctor will get the benefit of creating revenue sooner and it will have a lasting effect on revenue and his daily cash flow. The cost of the funds will end and then the complete profit is the Doctors with cash flow funding.
Doctor Medical Practice Financing and Healthcare Practice Working Capital
Healthcare medical practice working capital financing is ideal for healthcare professionals who want to expand their practice, procure new equipment, or improve their practice. Healthcare practice working capital loans and financing from healthcare lenders come with fast working capital funding, quick and easy terms.
Healthcare practice working capital funding can be used to provide a healthcare physician existing practice the funds needed to purchase a medical building or they may use these working capital funds for the down payment of the building. Usually the monthly payment of a mortgage can be the same payment or in many cases less than what the doctor or physician healthcare practice is paying for the leased office space. So if the doctor and or physician healthcare practice does not have cash available to buy the medical building they can just get a practice working capital funding to get the funding required to acquire a building for their existing physician healthcare practice. Practice bank statements and a one page application is all that is usually needed to apply to see if the doctor physician healthcare practice qualifies for working capital funding. This can fulfill the dreams of the doctor to now have an investment property which the doctor now owns.
When a doctor or physician practice is looking to purchase equipment the doctor may not have the down payment needed to put down for the equipment lease purchase. Working capital financing is a good way to get the doctor the up-front medical working capital funds needed to lease the equipment. Usually having certain up to date equipment is a good way to attract patients away from competing doctors.
Say the doctor’s practice is looking to own an asset, like a piece of equipment quickly but does not have the working capital funds. Getting the doctor into a practice working capital financing will enable the doctor to buy the equipment and pay off the practice working capital financing in 6 months. At that time the equipment is owned free and clear and no loans or leases are on the books only the asset of the equipment. When you calculate the cost of financing the equipment this way it cost the same as getting a long term loan but this is paid off quickly and the Doctor now has an asset which the doctor can always sell for cash.
Whatever the physician’s practice may need to purchase, even if it is for personal items- like a home, a practice working capital financing based on the doctor’s existing practice is a good way to provide the funds needed to make that purchase. Purchasing a good software system will also save the doctor / physician money because it should free up time of an employee’s time. Working capital financing will pay for this asset which is another good way to improve the practice and how it runs.
Consolidating debt is another way to get all the doctor’s debt organized so the doctor spends less time fumbling with the various payments for all the different payments needed to be made. Hiring a marketing company to increase revenue is another good way to use a practice working capital advance. The down payment required for this marketing company is where the practice working capital advance can be used.
Also peace of mind to be able to pay bills timely is another reason to receive a working capital financing. If a doctor practice needs 100% doctor financing for their practice and has impaired personal credit score, than it is a good idea to work on trying to clean up the doctor’s FICO credit report. Any medical practice professional needs their personal credit score to be in good standing.
It is easier to receive practice working capital financing when a personal FICO score is above a 660. One way to increase a doctor’s personal score is to make sure any existing credit balance is not more than 50% of the available credit limit. If the debt is more than 50% of the card limit than it is a good idea to transfer the debt to another card.
This will spread the debt but keep the debt to income ratio lower. Another good thing to do is to open new cards up and not use the card. The more cards you have and have no balances than that will increase your personal credit limit. You do have to use the card at least once a year so the credit card company does not close, closing cards will lower your personal FICO score because it will lower your personal credit limit!