Are you a doctor or dentist looking to expand your practice? Or maybe you’ve always dreamed of having your own practice and are ready to move forward? Either way, you’ll need capital, and if you don’t have the funds on hand, a loan could be a suitable option.
Are There Business Loans Specifically for Doctors?
Yes, personal loans are available exclusively for doctors and dentists. You can use an online lending platform to help streamline your search and identify lenders that can assist you with your funding needs.
What Can You Use a Doctor Loan For?
Loans designed for medical professionals and dental practitioners can be used in many ways, such as:
Starting a New Practice
If you’ve dreamed of opening your own practice, a loan can provide the funding needed to cover the added costs.
Buying an Existing Practice
You can also use the loan proceeds to invest in a second practice that’s already up and running.
Getting Working Capital
Operational expenses, including the cost of supplies, payroll, and insurance, can be covered with the loan proceeds.
If you’re planning to expand your scope of offerings, you can use the loan to hire additional employees.
Purchasing Medical or Dental Equipment
Medical and dental equipment is pricey and can quickly drain your reserves, but you can use a loan to cover the costs and make monthly payments over time.
Purchasing Software, Technology and Office Equipment
It’s vital to keep your medical or dental office up to date with the latest software and technology. Unfortunately, these innovative tools can be pricey, but a loan can help you cover the associated costs on a more manageable schedule.
Renovating, Expanding Property or Practice Rooms
Does your office need improvements? Consider renovating the interior with the funds from your loan to give the practice room a facelift or expand the facility to accommodate more patients.
Word-of-mouth marketing is an effective way to spread the word about your practice, but you can ramp up your efforts significantly by investing in professional marketing services.
What Do You Need to Qualify for a Medical or Dental Practice Loan?
The eligibility criteria for a doctor loan vary by lender, but here are some general guidelines to be aware of:
Most lenders prefer physicians or dentists with practices that are at least three months old. However, getting approved for funding is possible even if you haven’t yet opened the doors to your new office.
Annual Gross Sales
Your annual gross sales should be at least $120,000 to have the best chance of qualifying for funding.
Credit Score (In lieu of Business Sales)
Perfect credit isn’t required to get approved for a loan if you meet the minimum criteria for annual gross sales and your practice has been open for at least six months. If you have stellar credit, you could still be eligible for funding even if you haven’t opened your medical or dental practice yet.
Alternatives to Medical and Dental Practice Loans
If a doctor or dentist loan isn’t a good fit, you may be eligible for another form of financing, like a small business loan, SBA loan, or business line of credit.
Small Business Loan
Small business loans are common amongst business owners just starting out and established business owners. The loan proceeds are dispersed in a lump sum and typically payable in equal installments over a set period.
As a medical or dental professional, you can use a small business loan to acquire supplies or equipment, hire more staff or invest in marketing materials and resources to spread the word about your practice, smooth out cash flow gaps resulting from seasonal slumps or take care of outstanding payables that will soon become delinquent. You can also use the funds to open up new locations, introduce new products or services, and cover operating expenses in the short term or however else you see fit.
The eligibility criteria for a small business loan varies based on the type of lender you select. Online lenders make it easy to apply and get a quick lending decision – sometimes in minutes. Plus, many offer rapid funding speeds, and you won’t need to submit a mountain of paperwork or have perfect credit to qualify for financing.
If you’re considering a traditional bank, you’ll likely need a FICO score of 680 or higher to demonstrate your practice has been profitable in the past two years. Furthermore, you should expect to provide at least two to three years of recent tax returns and financial statements to the lender for review when you apply. Unfortunately, this means a small business loan from a bank likely won’t be a good fit if you’re a newer practice or are seeking funding to get started. Plus, you should know that traditional banks sometimes take weeks to months to make a lending decision and months to disburse the loan proceeds to you.
Direct lenders are a bit more lenient, though. For example, a FICO score of at least 600 could be enough to get approved for a loan. The lender may also request your company’s most recent tax return and financial statements from the prior year, along with three to six months of recent bank statements. You can also expect to hear back from the lender with a decision in days or, sometimes, weeks, and the same applies to the funding timeline.
Backed by the U.S. Small Business Administration, SBA loans are another alternative to start or expand your medical or dental practice. They’re accessible through SBA-approved lenders, and you’ll work with the lender you choose to apply.
These loan products come with a complex application process, though, and you could spend several months awaiting a funding decision. Plus, it often takes a while before the loan proceeds are disbursed to you, even after you’re approved for funding.
Still, an SBA Loan could be a viable option if you haven’t had much luck when applying with traditional banks, credit unions and other lenders. Plus, you could access more capital, get a loan term of up to 25 years to make the monthly payments more affordable and secure a competitive interest rate to help keep borrowing costs down.
Business Line of Credit
A business line of credit is a more flexible funding solution that allows you to borrow on an as-needed basis. That said, you have the ability to control your monthly payments and the amount you pay in interest each month.
It operates like a credit card – you can make purchases and repay what you spend, and those funds will become available again for use. But you should be aware of the draw period or the timeframe that you’re permitted to make withdrawals. Once it ends, the outstanding balance will become a loan payable in monthly installments over a set period.
You’ll generally find that traditional banks and credit unions have more stringent eligibility criteria than online lenders. The minimum credit score is 680 – although a higher credit rating is often preferred – and you will likely need to put up some form of collateral. Plus, the lender will request tax returns and financial statements from the last two to three years that demonstrate you operated at a profit. And like small business loans, the approval and funding process is rather slow. But you could increase your approval odds and get the funds you need sooner by using an online lending marketplace to help you find lenders willing to work with you.
Another benefit of a business line of credit is the flexibility that it affords small business owners. You’ll have the freedom to use the funds however you see fit to open or expand your medical or dental practice. That means you can cover operating expenses, marketing costs, inventory or supply purchases, payroll expenses or other unexpected expenses that may come up. Or you can use the funds to keep operations afloat during slow periods where revenues are below average.
Buying into a medical or dental franchise could be an easier path for you, and this form of financing may make the process more seamless. However, in most instances, you’ll need to meet time in business, revenue and credit score requirements to qualify for funding.
But like many other forms of small business financing, direct lenders make it easier to access the capital you need to move your practice forward. Plus, you may qualify for competitive loan terms and an extended repayment period that makes the loan easier to manage.
There are online lenders that will approve you with just six months of business experience and $120,000 in gross annual sales, even if you don’t have perfect credit. But if you go the bank or credit union route, expect higher thresholds for eligibility and more paperwork requirements.
Are There Mortgage Loan Programs for Doctors and Dentists?
Some financial institutions offer home loans for medical doctors and dentists that are specifically designed to purchase real estate or buy a home to be used as a primary residence. These products are referred to as physician loans and often don’t require a down payment or private mortgage insurance (PMI).
Physician loans are ideal for professionals that have recently graduated from medical school, obtained licensure and entered the medical or dental field. The idea is to assist them with purchasing a home without jumping over several hurdles, as most lenders have stringent employment and debt-to-income and credit approval requirements that they likely won’t meet due to medical debt. It’s also not uncommon for lenders to approve these mortgage loan applications based on employment contracts that haven’t yet started.
You should know that if you opt to take advantage, the interest rate will likely be variable, which could cost you a fortune in interest over time unless you refinance after a few years. Furthermore, these loans are not designed to fund or expand medical practices.