Running a medical practice has the same headaches as any other business. Setting up a medical practice can be extremely expensive. While most doctors are deemed to be less risky to loan to, banks will still require collateral for extending capital. This can be in the form of real estate or equipment.
If there are loan options in which a medical professional did not have to provide collateral those may make the most sense sometimes. Unsecured medical practice financing will be difficult to come by in the traditional banking environment. Usually, turning to alternative financing is the only answer although it will be more expensive. Weighing one’s options between the security of knowing that your house won’t be lost should your medical practice fold or paying more for unsecured capital can be simple.
Unsecured Medical Practice Financing Options
As far as options for unsecured medical practice financing there is one primary product. It is referred to as unsecured revenue based financing or revenue based working capital financing. The loan amounts are based on monthly revenues and will often range between 30% to 150% of your deposits. The process is very fast. The document requests are very lite. A one page application and 6 months of business bank statements is all that is needed. With that information at hand the lender can issue a lending decision within 24 hours. If approved you can have your unsecured capital in a week. What comes with this type of loan is a high cost. There is not an APR but rather a flat fee or “cost of money.” This should be looked at as a last resort type of loan. If your bank will not approve you for a traditional unsecured loan, which we know is difficult, this is viable. The repayment terms on a larger unsecured revenue based loan such as this will be between 6 and 24 months. They way these are repaid is via an ACH debit from your bank account on a daily basis Monday through Friday. The repayment frequency is such because of the inherent risk associated with an unsecured loan. There is no personal guarantee either so if there is a default there really is no recourse….again adding to the risk and explaining why these are expensive forms of capital. Rates will be between 15% and 30% and are determined by one’s credit, cashflows, and overall business performance.
