Loans for Medical Professionals

Owning a medical practice could entail multiple challenges. Declining reimbursement margins and the potential of hospital buyouts may make it harder for many physicians to grow their practices according to their plans.

As a way to secure funding for the future of their practices, doctors, dentists, and other physicians will sometimes use loans for medical professionals to provide a boost in their growth.

What are loans for medical professionals?

Loans for medical professionals are small business loans designed for doctors, dentists, chiropractors, therapists, and other medical professionals who own their own practices.

These loans provide working capital for physicians to cover operating expenses or other needs, such as payroll, upgrading equipment, or expanding the practice. Even in a reliable, recession-proof business, like healthcare, it's very common to experience gaps in cash flow while waiting for insurance reimbursements or other payments. Loans for medical professionals or physicians may help keep a healthcare practice running smoothly and on track for growth despite the financial ups and downs of business ownership.

What are the pros of loans for medical professionals?

There are a number of advantages to taking out a loan to help finance a medical or healthcare practice. Because medical professionals usually have the potential for high income, lenders may offer attractive interest rates, interest-only payment options, fee discounts, or other perks.

Medical professionals could use a loan to benefit their practices and their careers in several different ways, including:

• Expanding a practice: Opening an additional location or acquiring another professional's practice may take a great deal of cash, which medical professionals may prefer to keep on hand. Instead, a medical business loan could allow them to complete their plans for expansion without liquidating cash.
• Upgrading equipment and software: The latest medical equipment and software is important for running and managing a thriving medical practice. A loan could make it possible for medical professionals to maintain their equipment and software and upgrade, when necessary, without worrying about building up cash reserves.
• Covering gaps in cash flow: Slow insurance reimbursement is common in healthcare and may lead to gaps in cash flow. Rather than struggling through the lean times, medical professionals could rely on a practice loan or line of credit to maintain working capital.
• Covering payroll needs: A qualified and dedicated staff is a key component to keeping a healthcare practice running, and consistent, reliable payroll is vital to keeping this staff. Loans for medical professionals could help the practice cover payroll needs, regardless of the other demands on finances.
• Renting an office space: Medical professionals who are just getting started often need extra funds to secure an appropriate office space. A medical professional loan could provide the funds to rent an office space and start serving the community.

What are the drawbacks of physician loans?

Before applying for a medical business loan, it's important to consider any potential downsides. For example, some medical professionals encounter the following drawbacks when seeking a business loan:

• Time-consuming application process: When trying to launch or run a business and care for patients, medical professionals may not have the time to complete detailed application documents and track down any requested documentation.
• Difficult approval standards: Some lenders have high standards for approving loans, such as a certain amount of time in business or a high personal net worth.
• Long repayment timeline: A medical professional loan might come with a long timeline for repayment, which may pose a drawback for medical professionals who hope to become debt-free soon.

Types of business loans for medical professionals

There are several different types of business loans that are available specifically for medical professionals. The best medical professional loan option will depend on the needs of the individual business and the anticipated ability to repay the loan.

Business line of credit for medical professionals

A business line of credit may offer greater advantages for a medical practice than a traditional loan. With a business line of credit, a medical professional is approved to borrow up to a certain amount of money and can draw funds as needed. When a medical professional repays any borrowed amounts, the funds may remain available for future withdrawals. And the borrowers are only required to make interest payments on the amount withdrawn.

SBA 7(a) loans

U.S. Small Business Administration loans, also known as SBA loans, are government-sponsored financing options for small business owners. These loans are offered by financial institutions approved by the SBA, and they tend to have appealing interest rates and long repayment terms. These loans may work well for medical professionals looking to start, refinance, purchase, or expand a healthcare practice.

Medical practice bank loans

Small business loans are another common type of financing for medical professional practices. These loans are often available from traditional lenders, such as banks. A traditional small business loan may work best for a medical professional with at least two years in practice and a good credit rating.

Online lenders

Online lenders are any non-bank lenders that offer financing through a website or app. Online lenders may have less stringent qualifications for borrowers than traditional banks and might offer better terms to small businesses or those without a strong credit history. An online lender could provide reliable and often affordable working capital to a medical professional practice, but because online borrowing carries some risk, it's important to carefully vet the lender. For example, read reviews from other professional business owners who have used the lender, verify the company's real-world address, and look for verification from third parties such as the Better Business Bureau.

How to get a loan for medical professionals

If you're ready to apply for a loan for your healthcare practice, conduct some research and determine which type of loan might work best for your needs. The financing and requirements available to a medical professional will vary depending on the lender.

To apply for the loan, you'll likely need to gather documentation about your personal and business finances and complete an application, which may include:

• Business plan
• Business financials
• Personal financial report
• Personal identification

When you want to start, grow, expand, or maintain your healthcare practice, a loan or line of credit for medical professionals may offer what you need — and let you focus on taking care of patients and your community.

American Express offers the American Express® Business Line of Credit, and you can click here to learn more. Note that the American Express Business Line of Credit may have different eligibility criteria, terms and features from the lending products that are discussed above in this article.