Pros explained
- Designed for healthcare professionals: Medical business loans are often tailored to the unique needs of healthcare professionals.
- Low interest rates: Interest rates might be lower for medical business loans than for other business loans.
- Long repayment terms: Repayment terms can be extended, giving healthcare professionals more time to pay.
Cons explained
- Lengthy application process: Applications can be complex and time-consuming, making them difficult to complete.
- Risk of excess borrowing: Because medical business loans can have low interest rates and long repayment terms, you might be tempted to rely on them too heavily.
- Might require collateral: Medical practice loans sometimes require collateral or personal guarantees, increasing borrower risk.
Types of business loans for doctors
Many funding options are available to physicians or owners of medical practices.
- Business term loans: Consider a business term loan if you want a lump sum repaid on a fixed schedule.
- Business lines of credit: Practices with regular expenses can get business lines of credit, which are revolving accounts you can borrow from as needed.
- SBA loans: Partner lenders offer SBA-backed loans with competitive rates and repayment terms.
- Equipment financing: Practices that need new or upgraded equipment can finance it, often with fixed monthly payments.
- Working capital loans: Consider a working capital loan to cover routine expenses, such as payroll and inventory.
- Invoice financing and factoring: Invoice financing and factoring let you use unpaid invoices to access cash.
- Practice acquisition loans: A medical practice loan can help you cover acquisition costs.
- Commercial real estate loans: New practices or those planning additional locations can finance their facilities with commercial real estate loans.
6 steps to getting a medical business loan
These steps can help you get financing for your business.
1. Determine how much you need and can afford
Funding needs vary significantly for startup costs, operating expenses and practice acquisitions. Consider the funds’ intended purpose and estimated cost to determine your desired amount.
Think about the monthly payment you can afford as well. A default can result in the loss of business assets used as collateral, personal credit score impacts if you signed a personal guarantee or practice closure.
2. Make sure you meet requirements
Lenders often require a minimum time in business, a minimum monthly or annual revenue and a minimum personal or business credit score.
3. Compile necessary documents
Prepare your documents, which might include tax returns, bank statements and a business plan. Requirements vary, but this information shows lenders you can manage a loan responsibly.
4. Research and compare lenders
Compare lenders that offer the products you need. Seek those with low rates and favorable terms.
5. Submit your application
Complete and submit your application with the required information and documentation. You can often apply online, but traditional lenders might require in-person applications.
6. Accept your offer and begin repayment
If your application is approved, review the loan offer and confirm the details are as expected. Sign the agreement and begin making payments on your new loan.
Alternatives to medical business loans
You can also consider alternatives to medical business loans.
- Grants: You might be eligible for grants, such as those for healthcare professionals or residents of specific states. Grants don’t require repayment.
- Personal loans: If you can’t qualify for a business loan, some lenders might let you use a personal loan for your practice.
- Business credit cards: If you want perks, such as cash back or travel rewards, a business credit card might be ideal.
- Home equity loans or home equity lines of credit: Using the equity in your home to secure a loan or line of credit might help you get a lower rate. However, the lender can foreclose on your house if you default
- Equity investors: People who want to share your company’s profits might consider investing in it.
- Crowdfunding: Online platforms and social media let you accept contributions from individuals, often for specific projects or business initiatives.
How Buy Side chooses the best small-business loans
We evaluated 28 small-business lenders, focusing on key areas such as affordability, loan options, underwriting requirements, transparency and customer experience. Advertisers and partners don’t influence our methodology or ratings, as our research and editorial team maintains independence in using data-driven processes. We assessed each lender based on characteristics business owners might find appealing, such as offering traditional business loan products, discounts, application guidance, bad-credit options and solutions for short-term funding needs. We focused on lenders with at least $1 billion funded that have been in business for five years or more. We also verified that the traditional and online lenders offer loans in most states. Learn more about how Buy Side rates the best small-business loans using data-driven methodologies.
We weighted five factors to come up with our ratings:
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