Having your own independent practice is a perfect step for medical practitioners. Freedom of self-employment and offering top-notch personal services to your patients are a core impetus.
Before placing your bet on independent practice, plan for equipment acquisition, administrative roles, network contracts, private practice and operational costs. Fortunately, medical equipment finance helps you overcome one of the costliest challenges. How?
What Is Medical Equipment Finance?
Medical equipment finance is a strategy of buying equipment in installments. It’s a smart and convenient way for medical practitioners to get operating equipment without breaking the bank. As a result, the business continues to generate revenue, maintaining cash flow and building capital.
Though banks would be the ideal place to get equipment finance with good terms and interest rates, their stringent credit standards mean that most business won’t qualify.
Fortunately, small business lenders have stepped in. These lenders provide friendlier alternatives to companies that need equipment even though their personal and business finances aren’t in perfect shape.
How to Get Medical Equipment Finance
Most businesses can qualify for medical equipment finance with less paperwork. Most lenders will ask for:
- Your ID (driver’s license or passport)
- Voided business check
- Bank statements
- Credit score
- Business tax returns
- Equipment quote
For startups yet to establish business credit and file tax statements, lenders may rely on your personal creditworthiness. Be prepared to provide personal bank statements and tax returns. Once all documents are with the lender, approval and then funding become quick.
Medical Equipment Finance and Business Financing Options
Lease Instead of Financing
Equipment leasing is like financing. Instead of taking out a loan to buy equipment, you rent or lease it. However, this implies that you’ll be making monthly payments like loans, but must return the equipment when you stop.
Get a Bank Loan
Although banks have become strict, other banks have earmarked additional funds to lend small businesses. So, why not try?
Apply for an SBA loan
As banks are reluctant to take chances in the wake of the credit crisis, Small Business Administration loans have become hot. Although SBA-backed loans are open to many small businesses, you must meet qualification thresholds, including:
- SBA doesn’t guarantee loans that a business can raise on its own.
- Businesses must meet government’s definition of a small business in the medical industry.
- Businesses must meet the layout criteria depending on the loan type.
- You must apply for a commercial loan from a lending institution that processes SBA loans.
Use Your Credit Card
Funding your business with a credit card is risky. If you fall behind on payments, your credit score can get whacked. When used appropriately, a credit card can help you. But can you get enough for equipment?
Attract an Angel Investor
To get an angel investor, you must understand that old rules still apply. Have a clear strategy, avoid jargon and be succinct. Although previous economic turmoil has made this strategy difficult, the following tips may be helpful.
- Add your experience
- Avoid being a fad follower
- Know the medical field inside-out
- Keep in touch
- Apply for a microloan
Your inability to secure a bank loan or collateral and lack of credit history don’t imply no one will lend to you. Instead of a bank, go to a micro-lender. Micro-lenders often give small loans and need less documentation compared to banks.
Apply for a Business Line of Credit
A business line of credit allows you to borrow up to a certain limit and pay interest on the fraction of money borrowed. You can then draw and repay funds provided you don’t surpass your credit limit.
Crowdfunding platforms can support your small businesses. These platforms allow businesses to pool small investments from different investors instead of relying on one source. It’s wise to read the fine print before choosing a site. Some of them have payment processing fees or make it obligatory for businesses to state their full financial goal to access any money raised.
Benefits of Medical Equipment Finance
Choosing to finance your medical equipment means you get what your business requires without digging deep into your cash flow and reserves. With the right finance plan, your business can grow in the short and long term.
Here are some benefits of medical equipment financing:
Enjoy Tax Advantages
As long as the equipment generates taxable income, there are significant tax benefits in equipment financing as compared to outright purchase. The ongoing cost is claimable as a business expense.
With the advent of new technologies, equipment plays a major role in harnessing new opportunities. By accessing equipment finance, you increase the chances of harnessing opportunities by streamlining and improving medical care service delivery, saving your business money and time.
Preserve Working Capital
Equipment finance protects your business from running out of working capital by avoiding tying up cash. Since your lines of credit remain open, you have the liberty to enhance your cash flow and seize profitable business opportunities.
Improve Accurate Budgeting
Given that most medical equipment finance is set on an agreed fixed interest rate for a specific period, repayments aren’t subject to increases in interest rates. That makes it easier to predict business expenses and budget accurately.
With financing, repayment schedules are not only fixed, but structured to fit your cash flow. As a result, your business can enjoy flexibility when it comes to making payments.
If you finance one piece of equipment and your business grows, you may need to acquire another one to catch up with expansion. Whether you’re acquiring a new state-of-the-art piece of equipment or going big, financing enables you to get them without a large outlay.
Get a Loan Online
Getting equipment financing today is easier than before. Many lenders have embraced the internet, making communication smooth and the process more accessible.
Cons of Medical Equipment Financing
Though equipment financing offers a convenient, easy way to obtain the medical equipment you need, it’s prudent to read the fine print. Some cons to keep in mind include:
- Down payments: Since down payments can get pretty high, some businesses find it an uphill task raising it. As such, such businesses may not be able to start or maintain a steady payment.
- Credit: Some equipment financing requires strong creditworthiness. If your score is way below recommended thresholds, lenders may give you a cold shoulder, while some may finance you with undesirable terms.
- Updates: Equipment financing comes with the risk of equipment becoming obsolete once you’ve finished paying or even before. To ensure you’re safe, consider your projects and the type of equipment to acquire to maintain quality services during and after payments.
Medical equipment financing is a realistic strategy that gives practitioners high chances to venture into business. An equipment loan allows medical businesses to obtain equipment when needed. To make the most of this program, work with an experienced equipment finance expert. Call LenCred to speak with one.