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Medical Practice Financing – What loan options are available?

Medical Practice Financing – What loan options are available?

New physicians just starting their practice have a lot to think about upon completing their fellowship.  Such as where to start their practice, should they start their own practice and if so how will they get financing?  The financial aspect of starting a new practice or expanding an existing practice is both important and somewhat daunting.

What are some of the things a physician should consider prior to getting a loan?

1.)   Does the lender specialize in medical practice lending? Do they have connections within the medical community?  The banks that specialize in medical loans have loans that are tailored to meet the specific needs of physicians. For instance, some banks offer graduated payments which allow you to begin generating revenue before you have a large payment.

2.)   Can they help with all of your banking needs such as merchant services, payroll, lines of credit and working capital?  You want the bank to have the ability to handle this for you. However, some banks require you to have your payroll, personal accounts, business accounts etc. with their bank as part of the loan.  You are looking for options not requirements.

3.)   Do they offer 100% financing?  If you are a brand new physician with no income and more than likely no savings, this is an important feature of your loan.

4.)   Can you make principal contributions without penalty?  As your practice grows, you may want to pay off your loan early.  Read the fine print to make sure this is an option.

5.)   Is there an option to extended repayment terms?  Sometimes things don’t exactly go according to plan and it is nice to know you can extend your terms if you need to. 6.)    Do they provide you with a dedicated project manager to get things done on time, and demographic site analysis to select the ideal location and patient base? If this is not something your bank offers, look for a bank that does. This is a valuable service that only a few large banks provide free of charge.

Your loan is just the beginning of your relationship with your bank and the manager who is handling your loan.  The managers that specialize in medical loans can be a valuable resource for your business. Not only do they understand the business of medicine, they can connect you to other medical professionals and key referral sources within the community that will be important when you start your practice.

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