People Also Ask:
Is Collateral Required For Medical Practice Business Loans?
This depends on where you apply and the type of product you have in mind. Banks typically require collateral 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 excellent credit and strong cash flow, you don’t need collateral to access high borrowing amounts, low 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.
How Do You Qualify For Medical Practice Business Loans?
If you’re looking for the most advantageous loans on the market, you’ll need excellent credit, perfect cash flow, collateral, plenty of money in the bank, high annual revenue, and at least two years in business.
Products from companies like United Capital Source are much more accessible. Your ability to meet the aforementioned requirements will determine your borrowing amount, rates, and terms. But falling short in any (or more than one) of these areas won’t stop you from qualifying from multiple products. With some products, your credit score is practically irrelevant. For example, eligibility for a Merchant Cash Advance 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.
How Would You Use Business Loans For Doctors & Medical Practices?
Physicians’ Business Loans can be used for a myriad of purposes. They include:
- Purchase medical or office equipment
- Remodel your medical or surgical facility
- Market your practice
- Bring on another physician
- Cover regular expenses/paying bills while waiting for insurance payments
- Cover regular expenses during slow periods
- Purchasing inventory/supplies
- Hire more staff
- Buy out another practice or add a second location
Why Should Doctors & Medical Practices Use Accounts Receivable Factoring?
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 simply 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 your 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.
Can You Factor Accounts With Government Agencies?
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, as opposed to the factoring company. Once the payment is received, the bank immediately transfers the money into the factoring company’s regular bank account.
Can I Get a Medical Practice Business Loan With Bad Credit?
Yes, most Medical Practice Business Loans are accessible for borrowers with bad credit. Your rates may be higher, and your terms may be shorter because poor credit makes you more likely to default. However, if you have strong cash flow or can provide collateral, your bad credit may have less of an impact on your rates 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, low rates, and long terms. The other six types of Medical Practice Business 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 payments while staying current on other bills.