Doctors are the last people you’d expect to need extra cash. While annual salaries for medical professionals may be quite rewarding, the same cannot be said about the payment structure for a medical business. Between insurance reimbursements and patient co-pays, it can take several months for doctors to receive the full payment for their services. This can make it challenging to cover recurring expenses like payroll and inventory. And when the busy season arrives, doctors need plenty of help and can quickly go through supplies.
United Capital Source has access to small business loans for medical practices to bridge these gaps in cash flow so health care professionals can serve as many patients as possible.
Medical practice loans are business loans geared towards the small business cycles and expenses of a medical practice. Besides covering short-term and long-term costs, a medical practice loan allows medical business owners to stabilize their cash flow cycle and maintain operations during slow periods.
Medical practice loans can come in the form of:
The central purpose of medical practice loans is to give medical professionals several products to choose from to best suit their small business needs.
For example, one of the biggest challenges of medical practices is the amount of time it takes to receive full compensation or only small amounts of cash coming in at a time. This can be especially troublesome when business slows down, or essential medical equipment becomes outdated.
These dilemmas can be solved by several products, like business lines of credit, medical equipment financing, business term loans, or accounts receivable factoring. Equipment financing might be the most sensible option if the medical equipment is costly and used for at least three years. On the other hand, a business line of credit is designed to cover short-term expenses, like monthly bills or inventory.
If you’re waiting on sizable insurance reimbursements, however, you could also consider accounts receivable factoring. You would sell the unpaid receivables for a discount price. Instead of waiting weeks (or even months) for compensation, you’d get cash in just a few business days. It is now the responsibility of the factoring company to collect the payment from the insurance carrier. When the payment is received, you get paid the remainder from the first sale, minus fees.
If you have subpar credit or rocky cash flow, you might consider a merchant cash advance instead. This highly accessible option allows you to borrow against the strength of your debit and credit card sales. For many doctors, this is the preferred payment method for their patients. You could theoretically access plenty of cash to get through a slow season without making substantial payments until business picks back up.
|LOAN TYPES||MAX AMOUNTS||RATES||SPEED|
|Merchant Cash Advances||$7.5k – $1m||Starting at 1.09%||1-2 business days|
|SBA Loan||$50k-$10m||Starting at 5%||3-5 weeks|
|Business Term Loan||$10k to $5m||Starting at 5%||1-3 business days|
|Business Line of Credit||$1k to $250k||Starting at 8%||1-3 business days|
|Receivables/Invoice Financing||$10k-$10m||Starting at 5.8%||1-2 weeks|
|Equipment Financing||Up to $5m per piece||Starting at 5%||3-10 business days|
|Revenue Based Business Loans||$10K – $5m||Starting at 9%||1-3 business days|
Medical practice loans give medical professionals the resources to maximize their service capacity. You can continue taking appointments without having to worry about not having enough medical equipment, supplies, or staff to meet demand. This makes busy periods much less overwhelming.
Medical technology also becomes more advanced very quickly. Thanks to medical practice loans, health care professionals can acquire these tools immediately, even during slow periods. At United Capital Source, your current cash flow doesn’t have to be perfect to access the loan amount and repayment terms that make the most sense for your medical practice.
Another significant advantage is the ability to stay current on bills while waiting for insurance reimbursements or patient co-pays to come in. Establishing a solid payment record with vendors or suppliers can give you access to discounts, lower rates, or longer repayment terms in the future.
Lastly, it’s important to remember that even though most medical professionals started their careers to help people, they must stay competitive like any other small business owner. This might involve ramping up their advertising or renovating their waiting area. The medical payment structure doesn’t make it easy to put money away for growth, hence the necessity for a medical practice loan.
With so many potential expenses and cash flow gaps lying ahead, some small business owners might find it challenging to choose the right business loan program for their financing needs. Choosing the wrong loan terms can pressure your cash flow and ultimately take your attention away from your number one concern, which is helping your patients. The likelihood of this scenario decreases when you research each option before seeking funding. However, many doctors would likely admit that they are far too busy to research business loan products while running their businesses.
The myriad of financial dilemmas medical practices face also makes it hard to figure out how much to borrow. Asking for too little could leave certain expenses unaccounted for. On the other hand, asking for too much could give you more debt than you can afford to pay back. Doctors are more likely to commit the latter mistake since it often seems like their recurring expenses are getting larger by the minute.
The amount of paperwork required for the application depends on your chosen product. For most loans and lines of credit, funds can be approved and distributed in up to three business days. Here’s how to apply:
The first step is choosing the most sensible loan terms for the problem at hand. This should require a decent amount of research, as each loan program is designed for different types of expenses and cash flow cycles. Are you looking to cover a short-term or long-term cost? Is demand expected to increase or decrease in the coming months?
Considering the funds’ purpose will also help determine the best loan amount and terms for your needs.
Here are the documents and information required for medical practice loans:
SBA 7 (a) Loans and other types of SBA loans require additional documents and information like business tax returns, for example. To learn what’s needed for the SBA 7 (a) Loan application, visit our SBA Loan page.
You can begin the application process by calling us or filling out our one-page online application. Either way, you’ll be asked to enter the information from the previous section along with your desired funding amount.
Once you apply, a representative will reach out to you to explain the repayment structure, rates, and terms of your available options. This way, you won’t have to worry about any surprises or hidden fees during repayment.
If and when you’re approved, funds for Business Term Loans, Business Lines of Credit, Working Capital Loans, Equipment Financing, Merchant Cash Advance, Revenue-Based Business Loans, and Accounts Receivable Factoring should then appear in your bank account in anywhere from 24 hours to one week. For SBA Loans, it usually takes 3-5 weeks to receive funding.
Your business loan isn’t just a way to get financing for your business. It’s also an excellent opportunity to start building (or improving) your credit.
Regardless of the type of business loan you get, make all of your required payments on time and in full. If you get a business line of credit or another form of revolving credit, keep your balance below the credit limit.
Consistently making your business financing payments on time and in full will positively impact your business credit depending on the loan program. And that means preferred rates and terms when you next need financing.
If your application is declined, it might be because you applied for the wrong product for your cash flow. In this case, we would likely recommend a different product with less hazardous repayment terms.
Your application might also be declined after determining that you cannot afford to take on more debt at this time. Instead, your needs and financial circumstances might be better suited for another financing tool, like a business credit card or even a personal loan. Both options can be accessed through UCS and are usually much easier to qualify for than small business loans from traditional banks.
If your personal credit score prevents you from accessing financing, you should consider these credit repair services. We can help you identify the issues that keep your score down and develop practical solutions for eliminating them.
This depends on where you apply and the type of product you have in mind. Some SBA loan programs and banks typically require collateral like commercial real estate for all loans. Companies like United Capital Source, on the other hand, have access to programs that may only require collateral for equipment financing. If you have an existing practice with excellent credit and strong cash flow, you don’t need commercial real estate to access high borrowing amounts, low interest rates, and long terms. However, if you have subpar credit or rocky cash flow, you may still be able to access these advantages by providing collateral.
If you’re looking for the best loans on the market, you’ll need excellent personal & business credit, collateral, plenty of money in the bank, high annual revenue, and at least two years in business.
The products United Capital Source has access to are much easier to qualify for. Your ability to meet the aforementioned requirements will determine your loan amount, interest rates, and terms. But falling short in any (or more than one) of these areas won’t stop your medical practice from qualifying for multiple loan products. With some products, your credit score and tax returns are practically irrelevant. For example, a merchant cash advance eligibility is based on your monthly debit and credit card sales volume. With accounts receivable factoring, eligibility is more dependent on your customer’s creditworthiness, not your own.
Physicians’ business loans can be used for a myriad of purposes. They include:
According to the Medical Group Management Association, U.S. medical practices fail to collect an average of 25% of the money they’re owed for treating patients. This is mostly attributed to the fact that doctors/dentists don’t have the time to chase down insurance carriers for reimbursement. If they forget about the payment, the carrier forgets about them. This is when accounts receivable factoring comes into play.
When you factor unpaid receivables, the factoring company takes over the responsibility of collecting from the carrier. Also, getting paid immediately after servicing patients allows you to plug money back into your business and improve profitability quickly. Continuing to wait several months to get paid has the opposite effect. If your business loses profitability, you might have to cut back on crucial expenses like staff, inventory, equipment, etc.
Many doctors are mainly dependent on reimbursements from Medicare and Medicaid. From a legal standpoint, Medicare and Medicaid can only send reimbursements to doctors, not factoring companies. However, you can solve this dilemma if your factoring company offers “Lockbox” accounts.
Here’s how this works:
The factoring company sets up an exclusive bank account for receiving factoring payments. When the federal agency sends the reimbursement, it goes straight to the lockbox account instead of the factoring company. Once the payment is received, the bank immediately transfers the money into the factoring company’s regular bank account.
Yes, most medical practice loans are accessible for borrowers with bad credit. Your interest rate may be higher, and your terms may be shorter because poor credit makes you more likely to default. However, if you have strong financials or can provide collateral, your bad credit may have less impact on your interest rate and terms.
The only two products that are not accessible with bad credit are business term loans and SBA loans. These products carry high borrowing limits, a lower interest rate, and long terms. The other six types of medical practice loans usually carry shorter terms and are much easier to repay. We can also customize your terms and payment frequency to ensure that you can make daily, weekly or monthly payments while staying current on other bills.