Loans in the Medical Field
July 8, 2019
What are the funding requirements for medical experts in general?
The private healthcare sector consists of various medical experts — from dermatologists, dentists and pediatricians, to alternative medicine such as homeopathic doctors and reiki therapists. From time to time, these practitioners may require third party financing to fund various business needs, including:
Manage gaps in cash flows
Delays from the billing department in insurance companies, damage to equipment and late payment of invoices are some reasons to tighten cash flow in the medical business. Fast and flexible financing options — such as credit lines — can serve as a useful tool to help cover your short-term expenses.
Fund marketing activities
Medical practitioners usually rely on a combination of online and offline marketing strategies to deliver news about their business. Marketing campaigns on social media, email, content, SEO optimization, and encouraging patients to review Google Places listings and your social media profiles are strategies that can help you build a presence in a strong online world.
Depending on your type of practice and your target audience, this can be useful for implementing tactics in offline — such as being involved in, or sponsoring local health exhibition events and community events.
Growth and expansion
Getting third party financing can help fund your expansion strategy costs — whether it is establishing a new branch, buying partner shares, holding additional practitioners or acquiring or combining existing practices.
Investment in technology
Investing in the latest equipment and equipment can be something that is cost-intensive – but this is an important step that can produce greater efficiency and value for your practice.
In addition to medical technologies such as wearable technology for health, telemedicine equipment and electronic medical records, health care experts also need to test the tools that can create good experiences for patients — such as practice management systems and online payment platforms or non-cash.
Equipment purchase and maintenance
The reach of a medical practitioner in terms of equipment requirements can be very broad — from getting new diagnostic equipment, to replacing non-functioning equipment and updating administrative equipment.
You may have to utilize a mix of financing options to meet your business needs. Asset rental or leasing agreements are very suitable for larger purchases, while a flexible solution — such as a line of credit — provides a good choice for funding unexpected expenses such as replacement or repair of equipment.
What are the types of medical business loans in general?
Loan with guarantee
With collateral loans, borrowers are required to place assets as collateral. If the borrower is negligent in his obligation to repay the loan, the lender can sell the assets to pay off the amount of debt he has. Guaranteed loans that are usually obtained by medical practitioners include financing for the procurement of medical equipment and credit lines.
Credit lines, also known as revolving loans that give borrowers access loans to a number of previously approved funds. Think of it like a credit card; a facility that you can use when and when needed, and interest is only charged to the amount used.
Thanks to its flexibility and versatility, the credit line provides the right choice to cover unexpected costs — such as replacing equipment that doesn’t work or managing seasonal fluctuations.
Waiting for a long time — which usually lasts between 30 and 120 days — to get a medical claim payment is a common challenge faced by health practitioners. This time lag can cause cash flow problems, especially for new businesses and businesses that experience rapid growth.
Medical factoring, which includes selling bills to a third party company (agent) is a financing option that you can use to use cash that is still related to unpaid claims and other receivables. The agent will increase the percentage first — up to 80-90 percent — of his claim. Once the insurance company makes a payment, the agent will pay the remaining balance after deducting the factoring fee.
Leasing assets and buying leases
A lease refers to the arrangement between the lessor (owner) and the lessee (user of the asset), in which the lessor buys an asset for the use of the lessee, in return for lease payments. In a lease purchase agreement, the tenant (asset user) pays to the vendor for the use of the asset.
One of the main differences between the two arrangements is that at the end of the lease, the asset is returned to the lessor (owner), while in the lease agreement, the tenant (user of the asset) is given the option to obtain ownership of the asset. These two arrangements also differ in terms of upfront payments, depreciation claims, debt levels, and the types of assets involved.
Short and long term loans
Simply put, short-term loans refer to financing options that will be repaid within six months, while long-term loans often require years of payment, along with a more stringent application process.
You must consider the advantages and disadvantages of these two types of loans, and assess your business needs to determine the best solution for your business. For example, short-term loans can be the right choice in situations where you need to access funds quickly, because of their ease and fast funding process. But these loans usually have higher interest rates and shorter payment periods too – so you also have to be sure that your income will be enough to make payments on time.
Tips to help you prepare a medical business loan application
Create a solid business plan
To increase the chances that your loan will be approved, you must design a clear plan of action for your business — a picture that gives lenders a clear idea of how your business will progress in the next six months or one year. Here are some steps that can guide you in your planning process:
Adjust your planning to your target audience: The criteria for a loan from a bank will be very different from an alternative lender, so you must have a clear idea of the type of lender you want to approach, and develop a plan that is in line with their needs. key – you have to find out about who they are, what their processes are, and the type of business they invest in or the business they want to invest in.
Loading industry research and statistics: This is very relevant for new businesses seeking funding, because potential lenders want to assess your projections on supporting data and industry steps. And if you get funds for certain expansion equipment or projects, by including market research that shows consumer demand for the products, services, and activities you want to offer, this can be useful.
Describe your payment strategy
Your lender wants to know that you will make consistent and timely payments during the term of your loan — and one way to show your ability to do so is to map out a detailed payment strategy.
In addition to your income forecast and cash flow projections, you need to include some alternative planning. This will serve as a backup option, if the potential lender shows doubts about the feasibility of the initial payment strategy that you have submitted.
Where can I get a loan for a medical practice business?
While the loan criteria vary across various financial institutions, having a three-year operational history, annual income of at least IDR 2,000,000,000 and an average daily balance of IDR 100,000,000 available in your bank account are examples of requirements that are usually required by the lender traditional.
These requirements, coupled with a long orientation process can make third party financing a challenge for small medical businesses or independent health care practitioners – even if they have sound and well-managed practices.
With an online loan platform like Astro, the loan application process is easy, efficient and fast — submitting a request only takes a few minutes, and you will be sent a notification about your loan approval status in just 24 hours.