Are you planning to acquire an existing medical practice?
Buying an existing medical practice is a good choice. That’s because it has several advantages over cash flow while you are setting up your business from scratch.
Acquiring an existing medical practice prevents you from experiencing the challenges of being a startup. It gives you immediate cash flow, and its reputation is already established.
However, acquiring an existing medical practice is sometimes more costly than setting up a new one. Fortunately, you can increase your capital by getting medical practice financing at a low interest rate.
In this blog post, we’ll talk about medical practice loan and financing and how you can get the best out of it.
Things to Know When Acquiring a Medical Practice
Acquiring an existing medical practice is more practical for some doctors. The right choice depends on your capital, location, or lifestyle.
With this in mind, it’s best to know your options first. You should know which medical practice to buy and where you can get your funds.
As I said earlier, you can get funds through medical practice financing. But before we talk more about that, here are a few things to consider before you buy a medical practice.
A Few Things to Consider for Doctors
There are a lot of things to consider before you buy a medical practice. For one thing, this is a huge investment. That’s at least one reason you should be careful about choosing a medical practice.
Considering the following factors can help you avoid making the wrong investment.
1) What are Your Priorities?
First, think of your goals. Doctors have different goals or intentions in their career.
It's important to base your acquisition on your priorities. Acquiring a medical practice should help you achieve your goals in your career.
So before you buy a medical practice, consider asking yourself the following questions:
Are you targeting a particular area? A distinct patient demographic?
Are you looking for sole ownership?
Are you making a partnership with other physicians or possibly a hospital?
The answers to the questions above will help you determine if acquiring a medical practice is the right thing to do.
2) Is the Medical Practice a Good Investment?
You need to evaluate the medical practice before purchasing it.
It’s necessary to do research. Try to figure out if the medical practice is a profitable investment. Look at the advantages and disadvantages of buying a certain medical practice actually buy it.
When evaluating the medical practice, consider the following:
How old is the medical practice?
What’s the organizational structure?
Would the medical practice be profitable?
Is there any compensation and benefits that you can get?
- How's the company culture?
Take time to answer questions like these before buying. Doing this will prevent you from making the wrong investment.
3) Can the Medical Practice Attract Patients?
The medical practice that you’re going to buy should be near your potential patients. Also, it should be in a growing area. This assures you of more potential patients in the future.
It’s best to acquire a medical practice that's in a good location to ensure that it’s profitable. However, some medical practices still aren’t profitable even though they’re in a good location. Again, you’ll have to do your research.
With that in mind, see if the medical practice has good value in the market. You can do this by checking its annual revenue. The medical practice should be earning at least the minimum annual revenue for a medical facility.
In addition to this, you should choose a medical practice that’s managed properly. You may want to reconsider the acquisition if the medical practice is in the throes of a malpractice lawsuit or if it's in “move-in” condition.
4) Can You Afford the Medical Practice?
Lastly, the cost of the medical practice is the most important factor that you should consider.
The cost of a medical practice varies widely. But most practices cost one to four times their annual net earnings and 20% to 80% of their annual gross collections.
According to Medical Practice Brokers, internal medicine practices sell for about 35% of their annual collections. But just like with other businesses, many owners will more likely sell the medical practice over its actual cost.
Consider seeking a professional advisor or team with specialized expertise in buying and selling practices. Ask them how you can acquire a medical practice without having to pay a lot of money.
Get Some Additional Funds
If you don’t want the shell out too much money for your new practice from the get-go, consider getting a medical practice loan.
Many medical practitioners like you can get additional funds through a business loan after going through the business line of credit. Since you’re already a healthcare professional, you can easily get approval for one. Lenders will just look at your income or the collateral that you can offer.
There are different ways to get a loan to purchase a medical practice. You can get it from the following:
1) SBA Loans
In general, SBA or small business administration loans are among the best small business loans available. The SBA loans are funded through intermediary lenders. SBA Loan also guarantees up to 85% by the US Small Business Administration.
2.) Medical Business Loans from Traditional Banks
This can be a great option if you’re a qualified borrower. US Bank and Wells Fargo are among the banks that offer special lending tailored to healthcare practitioners. They give loans that are made specifically for medical practice financing.
However, business loans from banks are difficult to obtain. Even the application process is a lengthy one when it comes to the business loans. They also have a long process of application. It’s not a good choice if you want fast-access to funds for medical practice financing.
3) Medical Practice Financing
You can also get medical practice financing. This type of medical practice financing is often offered to the business owner by the business finance companies.
Unlike bank loans, this type of financing is easy to obtain. Most medical practice financing companies are more forgiving about applicants’ financial circumstances than banks.
In addition to that, finance companies give you complete freedom on how you’re going to use medical practice financing. You can use a business loan or equipment financing to purchase an existing medical practice or to acquire equipment.
Where to Get the Best Medical Practice Financing
Most medical practitioners get medical practice financing from financing companies. Business finance companies can give you a business loan quickly and they will also assist you so you can get the most out of that money.
That speed and post-loan assistance are big benefits for those getting medical practice financing. However, they’re only available if you get your medical practice financing from the best finance company.
Before anything else, it’s best to do research for the best medical practice finance company and the amount of working capital they can provide. Look for a business finance company that has experience in medical practice financing.
You also want a business finance company that can give you the funds you need immediately after approval of your application.
This prevents you from missing out on a deal for a good practice. Someone else may want to buy it, so you need to act quickly once you get medical practice financing.
Also, the business finance company should be reliable and easy to work with like Trust Capital.
Trust Capital helps its clients maximize their medical practice financing. They aren’t just providing funds -- they also aid clients in making those funds work to their advantage. Trust Capital has a medical practice loan on terms up to 120 months with fixed rates at 5%. You can use this money like cash for tenant improvements and staff. You can also use it to buy medical equipment.
In addition to that, their company also has lower application requirements compared to banks. Any medical practitioner can get financing as long as they have a good credit score (at least 650). 3 years having a licence helps but isn't always necessary. Good six figure income on your tax returns helps. Save up money for 6 months of operational expenses helps. Having money to invest always helps a lot. Preparing a business plan with forecasts and an opening balance sheet goes a long ways in getting medical practice financing but isn't always necessary.
However, a medical practitioner can also get financing from Trust Capital even with a bad credit score. They’ll just have higher monthly payments for their medical practice financing.
Trust Capital also offers SBA loan programs that can be paid back in monthly payments. Short term Business loans of $350,000 or less are approved in hours, while term loans of up to $5 million are generally approved within 4-6 business days.
Final Thoughts on Medical Practice Financing
In this blog post, we talked about medical practice financing. You can use this type of financing to purchase an existing medical practice.
Unlike bank loans, medical practice financing or this type of financing is relatively easy to obtain. Medical practitioners can get it easily because finance companies often view people in their profession as good candidates for a loan.
Getting funds through business finance companies can give you many benefits. But to ensure that you’ll get those benefits, you need to make a partnership with the best finance companies like Trust Capital. Also, make sure to consider the factors that we discussed in this blog post before you purchase an existing medical practice.
If you have more questions about medical practice financing, contact Trust Capital at (866) 458-4777.