In today’s fast-paced and competitive healthcare world, medical practice acquisition loans have only become more important. Healthcare businesses commonly rely on them to expand their organization, serve more patients, and grow their footprint.
In this article, you’re going to be given an overview of the loan options you have at your disposal as a healthcare professional. You’ll be exposed to funding avenues you may not have considered before, and you’ll be provided with steps you can take to get the funding you need.
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What Are Medical Practice Acquisition Loans?
Medical practice acquisition loans are a type of funding that’s specifically designed to aid healthcare professionals in buying, merging with, or investing in an existing medical practice. These loans can help cover associated costs like acquiring real estate, medical equipment, or inventory. This source of funding can be instrumental in helping a healthcare business expand, innovate, and deliver high-quality care to more patients.
Understanding Different Types of Financing for Medical Practice Acquisition Loans
Commercial Banks: Banks are a common go-to for medical practice acquisition loans. They offer an assortment of loan types, including term loans and lines of credit. They can be a reliable option and offer competitive interest rates. That said, they can also have stringent lending requirements and a longer approval process.
Credit Unions: Credit unions are financial institutions that are member-owned. They can offer competitive rates and personalized customer service. Their loans can be used for medical practice acquisition, but their availability can be limited, and you must meet their membership requirements to receive any funding.
Small Business Administration (SBA) Loans: SBA loans are partially backed by the U.S. government, and can offer preferred terms and conditions to borrowers. These loans may be used for acquiring a medical practice, but they can entail extensive paperwork and lengthy approval processes.
Alternative Lenders: Alternative lenders can provide medical practice acquisition loans with a great deal of flexibility. They typically have faster approval processes, less stringent requirements, and a greater ability to work with those with lower credit scores. They can also provide unsecured personal loans that can also be used for a variety of purposes including acquiring a medical practice. However, may charge higher interest rates than those offered by other institutions like commercial banks.
Private Equity Groups: Private equity groups can invest in medical practices via acquisition by providing the capital needed for growth and expansion. They may also be able to bring additional expertise and resources to help the practice’s performance. That said, working with a private equity group can come at the cost of personal control. They often seek sizable ownership stakes and some degree of decision-making power when investing in a business.
Physician Partnerships: Forming a partnership with other medical professionals can be a suitable way to pool money for the acquisition of a practice. A partnership can help spread the financial risk and bring multiple professional perspectives to the table. However, like with private equity groups, it typically involves a split in ownership and decision-making authority. If you go this route, it’s imperative that there are clear agreements, responsibilities, and goals in place.
Key Factors to Consider when Choosing a Lender
When deciding on a provider for your medical practice acquisition loan, consider the following key factors:
Interest Rates and Fees: Interest rates and fees can vary greatly amongst different providers. It’s important that you compare costs to find the one that best suits your particular financial situation.
Loan Terms and Conditions: Check the loan terms of your provider and make sure they align with your business’s goals and limitations. The terms will give you information on things such as the repayment period, collateral requirements, and penalties for late or early payments.
Application Process: It can take much longer to receive funding depending on the lender you choose. If time is of the essence, you may want to consider lenders with less stringent requirements and streamlined online approval processes.
Customer Service and Support: Responsive and knowledgeable support from your provider can be vital during your application process and the life of your loan. Search for lenders that can provide personalized support, are easy to reach, and can address your questions and concerns quickly.
Why Alternative Lending May Be The Best Fit
Alternative lenders can provide many advantages when it comes to providing medical practice acquisition loans to healthcare professionals. Below, are some major advantages they can provide you in pursuit of growing your business:
Faster Approval Process: Unlike other funding sources like commercial banks, alternative lenders often have a faster approval process which helps you quickly acquire the funding your healthcare business needs.
Flexible Terms and Conditions: Alternative lenders are well-known for their more flexible loan terms and conditions. You’ll usually have more options to choose from in terms of things like your repayment schedule.
Personal Service: Given their typically smaller size, alternative lenders can provide more personalized customer support to their clients.
Lower Credit Score Requirements: As a medical professional, you don’t have to worry about your credit score being perfect. Many alternative lenders will still offer medical practice acquisition loans even if your credit score doesn’t meet the requirements of other lending institutions.
No Collateral: Alternative lenders can provide unsecured medical practice acquisition loans. This means you won’t have to put up personal or business assets as collateral. With these assets not at risk, you can acquire the funding you need more easily and with far less stress.
How Jumpstart Finance Can Help
At Jumpstart Finance, we love helping our healthcare clients serve more patients. As a physician-owned business, we aim to provide the best loans for healthcare professionals. Our unsecured funds come with quick pre-approvals, competitive rates, and a simple application process.
Our Medical Practice Loans are able to help a variety of medical professionals. Whether you’re a doctor looking for the best physician business loans, a dentist buying a dental practice right out of school, or another healthcare provider looking to expand your business, we’ve got you covered.
If you have further questions or are interested in applying for a medical practice acquisition loan, let’s talk! You can reach out to us at 866-475-4254 or apply now online.