Physician practice loans are built to help doctors start, build or grow their practices. When preparing for practice ownership, understanding the ins and outs of financing your purchase can help you begin the process with a clear plan. Here’s what you should know about funding your medical practice or surgery center.
What Is A Physician Practice Loan?
Physician practice loans are a type of financing that medical professionals can use to cover the costs of opening, operating or improving a medical practice or surgery center.
Types Of Physician Practice Loans
Two of the most commonly used types of physician practice loans are SBA loans and conventional loans.
SBA Loans
An SBA loan is guaranteed by the U.S. Small Business Administration offers flexible loan amounts. Their rates follow the market and are often higher than other options. Paperwork, processing and approval can take time, so this isn’t a good option if you are in need of a loan quickly.
Conventional Loans
Physician practice loans from banks are another option for doctors. These loans offer flexible repayment terms, lower rates and may have less restrictive requirements than SBA loans.
Physicians can find these loans at traditional or digital banks. Digital banks, like Panacea, can be more convenient, have fewer fees, have better online services, and provide other benefits.
Physician Practice Loans For Any Need
Physician practice loans can provide funds for many different practice-related needs. Here are some of the most common:
Acquisition
A practice acquisition loan provides funds for a new practice owner to buy an existing practice. It can provide the scale and growth you need to accelerate your business goals with the existing patient base, location, equipment and staff.
Partner Buy-In
A partner buy-in loan provides an associate physician the funds to be able to become a partner in an existing medical practice or surgery center.
See Also: 5 Things Physicians Need To Know About Buying Into a Medical Practice or Surgery Center
Startup Financing
Startup physician practice loans are built for physicians who are ready to become practice owners and want to build their own practice from scratch.
Refinance / Consolidation
Refinancing or consolidating an existing physician practice loan can improve your practice’s cash flow taking advantage of the current low interest rates.
Expansion / Relocation
Expansion or relocation loans help practice owners who have outgrown their current location, need to remodel or upgrade their existing facility, or are ready to expand their practice with a satellite location.
Working Capital
A working capital loan can be the quick cash injection a medical practice needs to help it grow.
New Equipment Loan
Equipment loans can help a medical practice update old machines or invest in new technology.
See Also: 4 Ways to Pay for Your Next Equipment Purchase
Line Of Credit
A line of credit can help bridge the gap of operating expenses, inventory purchases, or capital needs.
Commercial Real Estate Financing
A commercial real estate loan can help physicians ready to purchase or refinance the building for their medical practice or surgery center. When starting or purchasing a practice, real estate purchases typically require a separate loan than an acquisition or startup loan.
How To Get A Physician Practice Loan
Securing a physician practice loan for your medical practice or surgery center can take time, but being prepared can make the process a little easier. Here is an overview to finding and securing a loan:
1. Assess Your Financial Situation:
- Review your personal and business (if applicable) credit scores.
- Evaluate your current financial standing, including cash flow, assets, and liabilities.
- Prepare financial statements, including income statements and balance sheets.
2. Create a Detailed Business Plan:
- Outline your medical practice’s mission, vision, and goals.
- Provide details about your experience and qualifications.
- Include a market analysis, competition overview, and growth projections.
- Specify how you plan to use the loan and how it will benefit your practice.
3. Determine Loan Amount and Type:
- Calculate the amount of funding you need.
- Explore different types of loans.
4. Research Lenders:
- Identify lenders that specialize in medical practice loans and reach out to them.
- Compare interest rates, terms, and fees. (Is there a prepayment penalty or is prepayment even not allowed at all?)
- Compare your experience in initial conversations and ask yourself who you want to work with in the long-term.
- Consider traditional banks, credit unions, online lenders, and Small Business Administration (SBA) lenders.
- If your future plans include opening additional locations, ask potential lenders if they can fund that or if there is a max lending limit.
5. Gather Necessary Documentation:
- Prepare your personal and business financial documents, including tax returns, bank statements, and financial statements.
- Include your business plan and any relevant legal documents.
6. Improve Your Creditworthiness:
- Address any issues on your credit report.
- Pay outstanding debts and bills on time.
- Demonstrate your ability to manage finances responsibly.
7. Collateral and Personal Guarantee:
- Determine if you have or need collateral to secure the loan.
- Be prepared to provide a personal guarantee, especially if your practice is a new venture or has limited financial history.
8. Apply for the Loan:
- Complete the loan application with all required documentation.
- Be prepared to explain how the funds will be used and provide any additional information requested by the lender.
9. Approval
- Review approval letter in detail with your banker and advisor.
- Make sure all terms are satisfactory.
- Most lenders will ask you to sign the letter for commitment before moving the file to closing.
10. Closing the Deal:
- Once you’ve agreed on terms, review the loan agreement carefully.
- Ensure you understand all terms and conditions before signing.
11. Post-Loan Management:
- Use the funds responsibly and as outlined in your loan agreement.
- Keep accurate records of how the funds are utilized.
- Maintain communication with the lender and update them on your practice’s performance.
Physician Practice Loans From Panacea Financial
If you’re ready to begin the practice ownership process, we can help you start, buy or grow your medical practice or surgery center. Start your application today!
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