As a medical professional, you’re likely driven by a passion for helping people. And one of the best ways to make an impact is by being able to serve more patients. Whether you’re a dentist looking to double the size of your existing office or a physician looking to acquire another practice in the next town, several loan options can help you turn that vision into reality. Here are three loans to explore and factors to consider, for your medical practice.
Medical practice loans
Medical practice loans are designed with healthcare professionals in mind. A practice loan is a commercial loan offering up to $500,000 with some lenders. To qualify, many lenders will consider both personal and business credit history and income. If approved, lenders may be able to extend funding in a matter of days, helping you move more quickly on business opportunities as they arise.
Small Business Administration (SBA) loans
An SBA loan is a government-backed loan that can support certain qualifying U.S. businesses with up to $5 million in funding for reasons including acquiring or improving existing real estate. Several lenders offer SBA loans, and since the government guarantees a percentage of the loan amount, lenders may be able to offer more favorable interest rates and extended payment terms, in some cases up to 25 years.
Bank loans
A local bank or credit union may be able to issue you a loan that helps further your practice expansion goals. Some banks may ask you to provide collateral to back the loan, such as real estate or medical equipment. And since brick-and-mortar banks tend to move slowly, keep in mind that the approval process may take weeks or months before you receive funding. Before you sign on for a bank loan, be sure you’re confident in the expansion and understand the risks of signing over collateral.
Factors to consider as you compare loans
While many loan options exist, you can generally narrow down to the most applicable loans for your needs by comparing:
- Interest rates: Interest rates will vary based on the lender and your financial history. Having a high credit score, an established business with verifiable income, and a low debt-to-income (DTI) ratio may help you secure the most favorable rates.
- Eligibility criteria: Approval criteria vary by lender; however, most will consider your personal and business credit history and score, income, and professional experience.
- Loan amounts: The loan size you need is determined by its purpose. For example, renovating an existing space to add another exam room might cost $150,000, while buying a new property in your area is closer to $400,000. Ensure you know exactly how much you’ll need and find a lender willing to extend that amount. It may make sense to prequalify for a loan on multiple lender websites since that process may notify you of the loan amount you’ll qualify for without harming your credit score.
- Repayment terms: Depending on how long you plan to be in business, you may require a longer or shorter payment term. For example, if you’re ten years out from retirement, you likely want to sign up for a loan term that enables you to pay off what you owe by that time. However, if you’re in your 30s and plan to practice in your area for decades, you might search for the longest available loan term that affords the lowest monthly payments. Consider these factors, and then find a lender that meets your needs.
- Lender reputation: Finding the right lender will likely result in an easier application process and a better experience over the life of your loan. If you know other medical professionals who have taken out loans, ask about their experience and which companies they used. You can also consult reviews online, but be wary of overly positive reviews that are vague on details.
The bottom line
It’s critical for medical professionals to continue serving their communities, and there are plenty of loan options to support business expansion that allow just that. Before taking out a loan, ensure the loan terms meet your needs. Then, be sure to find a lender you feel comfortable working with for as long as it takes to pay off the loan.
