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Small Business Funding

Which Medical Practice Loan is Right For You?

Choosing the right medical practice loan can be intimidating. Between traditional lending options like the SBA and banks and newer alternative lenders like Greenbox Capital®, it can be difficult to understand the differences between each type of funding, and even harder to determine what kind of medical practice loan best suits your needs.

Every medical practice has a different financial history and faces a unique set of challenges and goals. These factors can impact what funding you qualify for, as well as what kind of funding is the most ideal for your purposes. Keep reading for our advice on what kind of medical practice funding suits you best, including:

  • If you need fast funding
  • If you need a large loan amount over $500,000
  • If you have a strong financial history and great credit
  • If you have low credit or no collateral
  • If you are a newer practice
  • If you need working capital
  • If you are investing in real estate or purchasing an existing practice
  • If you are purchasing equipment

Let’s jump in.

If you need fast funding

Available from:

  • Alternative lenders

Greenbox Capital, offer a streamlined online application with fewer paperwork requirements than traditional lenders like the SBA or banks. Traditional lenders can take weeks or months to process your application, while alternative lenders can approve and deposit your funding in as little as one business day. Alternative lenders offer multiple forms of fast funding, including:

  • Merchant cash advances: A lump sum of cash is advanced to you in exchange for a percentage of your daily or weekly debit and credit card sales. Merchant cash advances are ideal for medical practices that process a lot of debit or credit card transactions.
  • Invoice factoring: A lender, called a “factor”, advances you up to 90% of the value of your outstanding invoices. You’ll receive the remaining portion (minus any fees) when the factoring company receives payment from your clients. Invoice factoring is ideal for medical practices with long accounts receivable periods.

Alternative small business loans, business lines of credit, and collateral business loans are also available from alternative lenders, typically for lower amounts than traditional lenders, but with faster turnaround times.

If you need a large loan amount over $500,000

Available from:

  • Small Business Administration
  • Banks and other traditional lenders

Alternative lenders offer funding up to $500,000. If you need a larger loan amount, the SBA offers funding up to $5M through the 7(a) Guaranteed Loans program. Banks also offer larger loan amounts, and typically prefer to approve larger loan amounts because they’ll make more money over the lifespan of the loan.

If you have a strong financial history and great credit

Available from:

  • Small Business Administration
  • Banks and other traditional lenders
  • Alternative lenders

The SBA and traditional banks generally offer the best rates and longest terms, but are the hardest to acquire. Applicants must have very strong business and personal financial histories, as well as great credit in order to qualify. Collateral or a personal guarantee is also often required.

If you have a strong financial history and great credit, you are still a great candidate for alternative funding if you need funding quickly or don’t have collateral to offer.

If you have low credit or no collateral

Available from:

  • Alternative lenders

Alternative lenders have the most flexible approval requirements and will factor in more than just your credit score and financial history. These lenders also consider factors like cash flow, vendor payment history, and other indicators of the overall health of your business, and typically do not require collateral or a personal guarantee to secure a loan.

Learn more about alternative business loans for low credit scores.

If you are a newer practice

Available from:

  • Alternative lenders

Banks and the SBA offer some loan options for start-ups, but often require businesses to be in operation for a minimum of 2 years—with detailed documentation to back it up—in order to qualify for funding. Alternative lenders will consider businesses who’ve been in operation for a minimum of 6 months.

If you need working capital

Available from:

  • Alternative lenders
  • Banks and other traditional lenders

Traditional and alternative lenders offer funding options that can be used for working capital, such as lines of credit. However, some traditional lenders restrict how funds can be used.

Alternative lenders typically offer more small business working capital loan options, including merchant cash advances and invoice factoring. These lenders don’t place any restrictions on how funds can be used, so they can be used as working capital to supplement cash flow as needed.

If you are investing in real estate or purchasing an existing practice

Available from:

  • Alternative lenders
  • Small Business Administration
  • Banks and other traditional lenders

Whether you are buying a practice from a retiring physician, investing in a partnership stake in an existing practice, or are expanding to a new location, practice acquisition loans are available from traditional lenders and alternative lenders.

If you have strong credit, collateral, and time to navigate the longer application process of the SBA and banks, traditional lenders will likely offer the best terms. Alternative lenders also offer collateral business loans, typically with higher rates than traditional lenders, but with less restrictive approval requirements and faster turnaround times.

If you are purchasing equipment

Available from:

  • Alternative lenders
  • Banks and other traditional lenders

Some traditional lenders offer equipment financing designed specifically to fund the purchase or repair of expensive medical equipment, such as imaging machines, diagnostic equipment, lab equipment, exam tables, computers, wheelchairs, and more. The terms of the loan are typically linked to the lifespan of the equipment, and the equipment serves as collateral to secure the loan.

Alternative lenders may not offer funding specifically for equipment financing, but they do offer flexible forms of funding that can be used to purchase or repair equipment, such as merchant cash advances or online invoice factoring.

10 Ways to Use Medical Practice Loans

Medical practices can use additional funding for a number of purposes, including:

  1. Purchasing inventory: Medical supplies are expensive but essential, and maintaining inventory can be tough if cash flow is limited because of slow insurance payments or difficulty collecting payments from clients. Working capital funding like a merchant cash advance, invoice factoring, or a business line of credit can provide the capital you need to purchase medical inventory.
  2. Purchasing or repairing equipment: Medical equipment can be prohibitively expensive to purchase and repair, and medical practices may need funding to help support these purchases or cover unexpected expenses. Equipment financing from traditional lenders or other alternative funding products like merchant cash advances are ideal for purchasing or repairing equipment.
  3. Upgrading technology: Digitizing medical records can boost efficiency by improving billing, streamlining patient communication, and making it easier to share information with other physicians. However, upgrading technology requires an upfront investment in new software that can strain your practice’s cash flow. Working capital funding can supply the funding you need to keep providing top-notch care while your team adjusts to the new technology.
  4. Collections: Slow-paying insurance companies, delays in getting Medicare and Medicaid reimbursements, or non-paying clients can all create cash flow concerns for medical practices. Invoice factoring and other forms of working capital funding can help bridge the gap between payments.
  5. Insurance: Medical practices have unique insurance needs, such as malpractice insurance and worker’s compensation for illness. This can make insurance especially expensive for medical businesses.
  6. Investing in real estate: Purchasing your office space can lower your monthly expenses and expand your assets. You may also want to invest in real estate to grow your practice to a new location or renovate your existing office to create a more comfortable environment for patients. Traditional and alternative lenders offer funding options that will enable you to invest in real estate.
  7. Acquiring another practice: Purchasing an existing practice from a retiring physician is a good alternative to starting your own. It may also be an easier way to expand your practice by enabling you to serve new territories, offer new services, or acquire new patients without other investment in marketing. Traditional lenders offer practice acquisition loans designed specifically for this purpose. Alternative lenders also offer funding options that can help you acquire another practice.
  8. Hiring staff: Adding additional doctors, nurses, and support staff will enable you to take on more patients without compromising quality of care. However, finding talented clinical staff can be difficult for smaller practices who may not have the budget to compete with the pay and benefits for larger organizations. Alternative funding like a merchant cash advance or a business line of credit can supply the funding you need when you need it to support your team’s growth.
  9. Marketing: Advertising your practice, creating or updating a website, or using direct mail to reach can help you reach new patients, whether you’re opening a new practice, expanding to a new one, are concentrating on growing your patient roster, or have hired new staff and can take on new patients or are offering new or expanded services. Merchant cash advances and other alternative funding products are ideal for boosting marketing and growing your medical practice.
  10. Patient services: Offer the most up to date and sought-after patient services to keep your practice competitive, such as online booking, online paperwork, real-time wait times, quick responses to inquiries, free wifi, or extended hours. Traditional and alternative lenders offer funding options that can help you improve your patient services and continue to grow your medical practice.

Get the Medical Practice Funding That’s Right For You

Traditional lenders like the SBA and banks offer the lowest rates and longest terms, but they have the most restrictive approval requirements and most applicants are rejected. Alternative lenders, on the other hand, can approve more medical practice loans than traditional lenders. They can also approve medical practice loans faster, with funds deposited in as little as 24 hours. Multiple types of physician funding are available from alternative lenders, including merchant cash advances, online invoice factoring, alternative business credit, collateral business loans, and term loans, with funding from as low $3,000 up to $500,000.

Greenbox Capital® funds all medical specialties. Our expert Funding Advisors will work closely with you to determine which funding option will help you achieve your goals without compromising your practice’s cash flow.

Learn more about medical practice funding

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