Medical Business Loans and Dental Business Loans: A Short Guide

For an existing medical or dental practice, a short-term cash flow shortage could arise for a number of reasons. In this situation, a short-term loan can provide a solution. Examples of loans for overcoming short-term cash flow needs include a business overdraft, business line of credit or an unsecured business loan. The funds borrowed can be used for a range of purposes, such as paying staff, recruitment and training, and covering day-to-day overheads. Learn more about working capital and why it’s essential to small business success. 

Besides the skill and experience of medical and dental professionals, having the right equipment makes it possible to deliver optimal results. Dental and medical business loans make it possible to get state-of-the-art equipment. Examples of loans for purchasing dental and medical equipment include equipment finance, hire-purchase and bank term loans. With some types of equipment loans, the equipment itself is the collateral for the loan, so lenders don’t require property as security.  Find out more about equipment finance. 

Time and normal wear and tear make it necessary to renovate waiting areas and medical practice rooms. Also, a growing practice will need to expand as its patient list grows. Medical and dental business loans can make renovation and expansion possible. The types of loans available to achieve these outcomes include unsecured loans, bank term loans and commercial loans.  

Purchasing an existing practice or premises are common reasons to take out dental and medical business loans. For example, a dentist might want to purchase an existing dental practice to expand her business. In another example, a doctor might want to purchase a property so he can own instead of lease his clinic premises. In these situations, a commercial loan will be one way to get the funding needed for larger financial needs.

Medical and dental practices seeking new patients will want to run marketing campaigns. Again, a business loan can provide the funds needed for this type of project. Examples of types of loans for funding marketing campaigns including bank term loans and unsecured loans. Learn more about getting business loans for marketing purposes.

A business overdraft facility is one way to meet the finance needs of medical and dental practices. With a business overdraft, you can run a negative balance on a regular bank transaction account up to a predetermined amount. You only pay interest on the money that is overdrawn. For example, if you are only using $10,000 of a $25,000 business overdraft facility, you only pay interest on the $10,000. In addition, there is an establishment fee and ongoing accounting fee.

With a higher interest rate, a business overdraft is more suitable for short-term needs, such as covering cash flow shortages. As revenue increases, the account balance increase and the overdraft can be reduced. This makes it a flexible way to overcome short-term cash flow issues. Learn about how a business overdraft works.

Like a business overdraft, a business line of credit gives access to a pool of funds up to a certain limit. Funds can be taken from the line of credit when needed and paid back when cash flow improves.  However, it’s not automatically attached to a transaction account. Usually, a business line of credit has a higher minimum amount and a lower interest rate. This makes it a more suitable option for long-term finance needs. Get full details on how a business line of credit works.

Equipment finance is a suitable option when purchasing specific equipment with the funds borrowed. With some types of equipment finance, the item purchased acts as collateral for the loan. If the loan can’t be repaid, the lender can take the equipment and sell it to get the funds owed. Learn more about equipment finance.

This is what comes to mind when most people think about a bank loan. Typically, a bank term loan is for three to five years. Being secured by a property, the interest is competitive. With a bank term loan, you make regular repayments, such as monthly, over the term of the loan. The main shortcomings with a bank term loan are the amount of paperwork required and the time it can take to get an answer, which can be up to two months. For a medical or dental practice loan, a bank will usually require collateral in the form of residential or commercial property.

This is a long-term loan that is usually used for large purchases, such as equipment, real estate or a competing practice. Commercial loans are secured by residential or commercial property. With reduced risk to the lender, the interest rate can be very competitive. Learn more about commercial loans.

This one of the simplest medical or dental business loans to get. Online lenders make the process quick and easy. With Moula, for example, the application can be completed in under 10 minutes. Moula leverages state-of-the-art online technology to analyse finances using  bank or accounting data and make a lending decision.

Once approved, the funds are transferred immediately to your bank account within 24 hours. Unsecured loans are short-term, so are usually used to boost working capital and solve cash flow challenges. The ease and speed of getting an unsecured business loan make it a popular loan option for dental and medical professionals.

Find out more about unsecured business loans from Moula and use our business loan calculator to get and estimate of principal and interest repayments. 

For a detailed overview of small business finance, see our Complete Guide to Business Loans.