Borrowing money is both a necessity and an opportunity for medical professionals. No matter how successful you are, sometimes you need more cash than you have on hand. Like when you want to open a second medical office. Here are nine tips for getting small business loans that will help.
- Are you sure you want to open a second office?
Just because you can doesn’t mean you should. If your practice is thriving, opening another office may be the logical next step. I know you want to grow – that’s what every small business owner wants. And I’m sure you’ve thought about external factors such as competition and demographics.
But you need to consider internal factors, too. Especially staffing. Do you have enough medical professionals and support staff to serve the new location? Or will you need to bring on more people? Is there a chance any key people will leave just as it’s time to transition? Is everyone in favor of the change?
Have you considered all the ramifications for yourself? You became a doc to help others. But you also want a lifestyle that allows you to kick back. And spend time with your family. Will adding a second location support that? Or will it pull you farther away from your personal life?
- Clearly define your goals
Maybe your vision is a satellite office – in a smaller town you can serve just a few days a week. That area is growing and you want to gain a presence. Or maybe your vision is a new clinic or surgi-center that can house more docs and offer more specialized procedures. You could:
- Purchase land and build from scratch
- Buy an existing building
- Buy out another practice
- Lease space
There are lots of different types of medical practice loans. But they aren’t all the same. Some are more appropriate for very large purchases, such as real estate. Others are more appropriate when you need working capital for smaller investments. Or ongoing operations. That’s one reason it’s so important to be clear on what you want to accomplish. And to make a detailed list of everything you’ll need to succeed.
You have to carefully project costs and revenue to know how much you need to borrow. And know you can repay your small business loan.
- Don’t forget you’ll need equipment
Opening a second medical office requires more than physical space. You’ll have to fill that new space with things and people. You’ll certainly need medical equipment. Should you get a small business loan or should you lease? There are distinct advantages to leasing. And there are physician loans you can use later if you decide to purchase the equipment at lease-end.
- And additional staff
I talked about staff earlier. If your crew is clicking now, that great morale will help your new office succeed, too. But you may need more people. Like adding equipment, staffing up requires working capital. Accounts receivable loans, merchant cash advance and your business line of credit can all help with that.
- And marketing.
Before you apply for new loan, be sure you have a marketing plan for that second office. You want to be sure it’s a rousing success right from the start. That way, it will contribute to your cash flow and bottom line. Start your marketing before you even open. Hold an open house and show your face in the community once you arrive. And keep marketing. In order to attract new patients, you have to establish trust and rapport.
- Consider bank loans.
Physician business loans are among the few small business loans banks like to make. Especially if your practice is well-established, doing well and has good credit. Banks are confident you’ll be able to repay. Some of the largest institutions – Bank of America and Wells Fargo, for instance – actively court medical professionals. They see you as lucrative customers. But don’t assume your business bank is the best choice for your new office loan.
- An SBA-backed loan could tip the scales in your favor.
With the SBA behind you, you may be eligible for 100% financing. You’ll still have to go through a bank or similar institution, but an SBA guarantee boosts their confidence in you. Remember that, SBA or not, getting a bank loan is a slow process. It can take two or three months, or even longer. If you need more than $500,000, and you’re planning well in advance, that might be OK.
Instead, you might be eligible for a small business loan through our SBA Marketplace program. If you need $350,000 or less and have good credit, let’s talk about this alternative. It’s much faster and simpler.
- Learn about choices for physician loans.
As I already mentioned, you shouldn’t assume your bank is the best source for a small business loan. There are many types of financing out there, and even more lenders. Our UCS team can help you explore all your options. You may be able to get you a better deal elsewhere, with a lender that’s a better match for your practice.
It is critical to look at the big picture, financially speaking. To open a second location, you need money for multiple purposes. But too many loans is too big a burden. The key to good cash flow management is efficiency. For instance, you can use an SBA 7(a)loan for real estate, equipment, inventory and operations. That said, you may be better served with separate loans for real estate and working capital. Our team of experts can help you make the right decisions for your practice.
- Get your credit in order.
Opening a second location is a major investment. It takes a lot of money. If you want to apply for a small business loan that large, you’ll need good credit. After all, if your first office isn’t credit-worthy and profitable, you’ll look too risky to lenders.