Let’s say you’re a newly licensed physician who is looking to start up your solo medical practice. You’re all set to begin your own journey in the field of medicine, highly motivated and everything, but the problem is that you don’t have the necessary amount of capital required to establish your own private practice. If you’re kind of limited financially, this one will definitely be a problem. But just like every other problem in the world, there’s a perfect solution for this one.
According to Physician Practice Specialists, the average costs to start up a private practice ranges from $20,000 – $30,000 initially, with approximately $6,000 on monthly expenses. And the estimated cost for initial equipment purchases alone sits at $10,000 – $15,000, and $2000 – $2500 per month for commercial space rentals.
While the costs of starting a new medical practice depend on the specialization and location of the owner, that doesn’t change the fact that it will require a sizeable amount of money to actualize. If your initial budget is limited and you cannot afford to pay the full price for the equipment, commercial space, and other much-needed expenses, a medical practice business loan will do wonders for you.
A medical practice business loan is, just like any other regular loan, requires a percentage-based down payment and a monthly payment plan. The total amount you’ll have to pay monthly for the rest of the loan has an interest rate added to it, which varies greatly depending on the type of loan you’re getting.
Getting a medical practice business loan costs more than if you just paid for everything up front, but that’s not a disadvantage at all since the reason why you’re considering getting a loan is the first place is you can’t afford to make an upfront payment for all the necessary expenditures. These expenditures include equipment, office space, vendors, insurance, and payroll.
There are many different types of loans for medical practices, but SBA 7(a) loans – or small-business loans – are considered the best because they are the most accessible option that offers the best set of advantages for medical practitioners who are looking to start or buy a private practice.
SBA 7(a) loans are long-term financing that covers purchases of real estate and large equipment, as well as buying a competitor’s practice. Typically, SBA 7(a) loans feature higher capital amounts, lower interest rates, and longer repayment terms, all of which are reasons why it’s the preferred option of doctors.
But since nothing in this world is perfect, there are a few downsides to SBA 7(a) loans, including a longer application process and an equally longer timeline to capital access. Other than that, SBA 7(a) loans don’t offer specialized products for medical professionals and are more paperwork intensive. But despite its downsides, the pros of SBA 7(a) loans far outweigh its cons.
While SBA 7(a) loans may seem like the best option, there are some lending institutions that offer loan programs with more enticing interest rates, quicker pre-approvals, easier requirements, and faster releasing of funds. Typically, the pros you’ll be getting depends on the lender.
Before you apply for a medical practice business loan, choose the one that best suits your current needs and desires. Because no matter how great a particular loan may be, getting it can be unproductive if it will just make it harder for you in the end.