Most physicians do need financial assistance to get a new practice up and running. How long it takes to get the money in your hands depends on the type of loan you apply for.
On average, expect it to take around 3 months to get financing for your practice. Working with a medical practice startup consultant can shorten your timeline, since they can quickly identify the best types of loans for you and make sure the process goes smoothly.
Here are six of the most common loans physicians use to start their own medical practices.
How to Get a Loan for Your Medical Practice Startup
1. SBA 7(a) Loans
This type of loan is designed specifically for small businesses, including medical practice startups. Certain types of SBA loans can even be used to fund facility construction or an office purchase!
SBA 7(a) loans from traditional banks can take up to several months to be approved, though medical practices are almost certain to receive funding after the approval process is complete.
2. Medical Practice Business Loans
Traditional banks do offer business loans for medical practices. Like SBA loans, medical practice business loans can take several months to be approved. However, non-SBA loans may be more difficult to acquire if you haven’t been in business for at least two years.
3. Term Loans
Term loans for medical practices can be approved more quickly, but tend to be more expensive in the long run. You can get a term loan from a traditional bank or an alternative lender.
4. Short-term Loans
Short-term loans are great if you need money for your practice quickly and anticipate repaying it quickly (e.g. for emergencies). You can get the money in just a few days, but you might want to steer clear of this option if you’re not confident about your monthly cash flow.
5. Business Lines of Credit
Business lines of credit are best used as a safety net for ongoing clinic expenses (e.g. payroll). Lines of credit are approved relatively quickly and are very flexible for medical practices.
6. Equipment Financing
You can get medical equipment financing in the form of leases or loans. If you want to own the equipment at the end of your term, you’ll want to take out a loan rather than a lease.
This type of financing is relatively quick to acquire if you JUST want to finance medical equipment - it cannot be used for non-equipment expenses.
Choosing the Best Financing Options for Your Medical Practice Startup
Taking out a loan for your new medical practice is not something to rush into. It’s a major investment with big strings attached.
If you’re not experienced with different types of financing or applying for loans, you will want to work with a practice startup consultant to prevent overlooking any possible issues (and facing a huge amount of financial trouble after you sign for the loan).
Read about some of our financial services options here.
Also check out this Medical Practice Startup Checklist to help cover all your bases!