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Medical Practice Financing: What To Know

Written by Allison Martin

Allison Martin is a personal finance enthusiast and a passionate entrepreneur. With over a decade of experience, Allison has made a name for herself as a syndicated financial writer. Her articles are published in leading publications, like, Bankrate, The Wall Street Journal, MSN Money, and Investopedia. When she’s not busy creating content, Allison travels nationwide, sharing her knowledge and expertise in financial literacy and entrepreneurship through interactive workshops and programs. She also works as a Certified Financial Education Instructor (CFEI) dedicated to helping people from all walks of life achieve financial freedom and success.

Updated March 12, 2024​

6 min. read​

Medical practice financing is vital for healthcare practitioners starting or expanding their practice. As someone in the healthcare industry, you may require financial assistance to cover various costs such as purchasing equipment, acquiring a practice or managing day-to-day expenses.

In this guide, you’ll learn more about how medical practice financing works and what to consider before taking out a loan. You’ll also discover a financing option that could be suitable for your medical practice.

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What is Medical Practice Financing?

Medical practice financing refers to the various funding options available to medical professionals looking to open, operate or expand their medical practices. It comes in many forms, and each lender has its own eligibility guidelines, loan amounts, interest rates and loan terms.

How Does Medical Practice Financing Work?

Medical practice financing helps cover the costs of opening or operating a medical office. Acquiring loans can help cover many expenses, including rent or mortgage payments, employee salaries and benefits, office supplies, materials and marketing costs.

As a medical professional interested in medical practice financing, remember that there are various sources for these loans. Options may include merchant cash advances or loans from traditional banks, credit unions or specialized lenders that focus on funding healthcare professionals. Government-backed options, such as Small Business Administration (SBA) loans, may also be available for qualified borrowers.

The Importance of Medical Practice Financing

Here’s a closer look at key reasons why this form of financing is important for medical practices.

Start-up Funding for New Practices

When you decide to start your medical practice, there are various expenses to consider, such as purchasing or leasing commercial space, acquiring advanced medical equipment, hiring skilled personnel and managing day-to-day operational costs. Medical practice practice financing can help you cover these expenses, making the process of setting up your practice more manageable.

Expansion Funding for Existing Practices

As a healthcare professional and business owner, expanding your medical practice is crucial to cater to the growing needs of your patients. Securing funding to help you grow can help you enhance your existing facilities, hire more staff and introduce new services to better suit your patient’s unique needs.

Purchase Medical and Office Equipment

Having the right equipment is essential for your practice’s success. You’ll need financing to purchase medical devices, diagnostic tools, office furniture, and computer systems.

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Stocking Up on Inventory

Maintaining an adequate inventory of medical supplies, pharmaceuticals, and other essential items is vital for smooth operations. You can use medical practice financing to stock up on inventory and ensure that you always have the necessary resources to provide quality care to your patients.

Funding Operations and Working Capital

Running a successful medical practice also requires sufficient working capital to cover day-to-day expenses, such as staff salaries, utility bills and other operational costs. Medical practice financing can provide you with the necessary working capital to manage your practice efficiently, ensuring that your focus remains on providing exceptional patient care.

Factors to Consider When Seeking Medical Practice Financing

Here’s what to keep in mind before applying for funding:

Assessing Your Financial Needs

Before you begin searching for medical practice financing, evaluating your financial needs is essential. Determine whether you need funds to purchase medical equipment, lease office space, hire staff or expand your existing practice. Estimate your total expenses and develop a budget to get a concrete idea of how much you actually need.

Understanding Your Credit Score and History

Your credit score and history play a significant role in securing medical practice financing. For some loans, lenders typically require a minimum credit score of just 600. A higher score can result in better loan terms, so be sure to review and improve your credit as needed. Obtain a copy of your credit report, check for any discrepancies, and address any issues before applying for financing.

Preparing a Comprehensive Business Plan

Whether you are starting a private practice or expanding your existing operation, developing a comprehensive business plan is essential. This plan should provide a clear roadmap of your objectives, strategies for growth, and detailed financial projections. Include information on past performance (if applicable) and future projections for revenue, expenses, and cash flow. A well-prepared business plan demonstrates to lenders that you have a viable medical practice and are a reliable borrower.

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Choosing the Right Financing Option

Various financing options are available for medical practitioners, such as merchant cash advances and medical practice loans. It’s essential to compare and contrast these options to find the most suitable one for your needs.

Consider factors like interest rates, loan terms, and repayment schedules when evaluating financing options. Be sure to scrutinize all possible financing options before making a decision, ensuring the chosen option aligns with your short and long-term financial goals.

How to Finance Your Medical Practice

When starting or expanding your medical practice, finding the right financing options is crucial for success. Here’s a step-by-step guide to help you navigate the process.

  • Step 1: Determine your financial needs by creating a detailed plan for your practice. Consider costs such as equipment, staff, rent, marketing, and other essentials to provide quality care to your patients. Assess your cash flow and evaluate potential expenses and revenues.
  • Step 2: Explore various financing options available to medical professionals. One option is applying for a merchant cash advance. Or you can apply for a small business loan from banks or alternative lenders. These loans can help you cover the initial costs of starting or expanding your practice. Another option is medical practice loans from specialized lenders. These loans are tailored to meet the unique needs of healthcare practitioners and often come with competitive interest rates.
  • Step 3: Keep an eye on your personal and business credit scores. Lenders often use these scores to determine your eligibility for loans and the interest rate they can offer you. Maintain a strong credit history by paying bills on time and keeping your debt-to-income ratio low.
  • Step 4: Be prepared to provide documentation when applying for financing. Lenders may require personal and business financial statements, tax returns, and information about your medical practice, among other documents. Gather these materials in advance to streamline the application process.

By following these steps and carefully considering your financing options, you can secure the funding needed to grow your medical practice and provide quality healthcare to your patients.

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The Role of Merchant Cash Advance

A merchant cash advance is a valuable financing option for medical practices in need of quick funding. This alternative solution is not a loan but rather a form of financing known as an “asset purchase.”

A merchant cash advance can be a valuable financing option for your medical practice when you need quick access to funds. Unlike traditional loans, which may have a lengthy application and approval process, a merchant cash advance provides a lump sum of cash upfront in exchange for a percentage of your future credit and debit card sales. This alternative financing method is especially useful for practices experiencing a temporary cash flow crunch or needing extra funds for growth.

The application process for merchant cash advances is also much faster than traditional loans. Even better, you could receive the funds in just a few days. And you don’t need perfect credit to qualify since your eligibility is based on credit card or sales volume.

Pros and Cons of Merchant Cash Advance

A merchant cash advance can be a viable alternative financing option for medical practices. Still, it’s important to understand the pros and cons before deciding if it’s right for you.


  • Flexibility: You can use the funds to address various aspects of your medical practice, such as replacing outdated equipment, hiring new staff members or expanding your services.
  • Easy approval process: A merchant cash advance is often easier to obtain than other financing options. Approval requirements tend to be less strict, and these funding solutions typically do not require collateral.
  • Quick access to funds: The approval and funding process for a merchant cash advance can be fast, sometimes in as little as a few days.
  • Repayment process: Merchant cash advance repayment is based on a percentage of daily credit card transactions, making them more flexible and easier to manage than fixed monthly payments.
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  • Higher costs: Merchant cash advances can have higher costs compared to other financing options. This is because they’re considered riskier for lenders, resulting in higher fees and interest rates.
  • Potential impact on cash flow: Since repayments are based on a percentage of daily credit card transactions, a merchant cash advance can affect your cash flow if your practice experiences a downturn in sales.
  • Variable regulations: Merchant cash advance regulations vary by state, and some providers might not be reputable. It’s important to do thorough research before signing a contract.

How to Get a Merchant Cash Advance

Here’s how you can obtain a merchant cash advance for your medical practice.

Step 1: Explore your options

Research lenders that specialize in providing merchant cash advances. Note that many alternative online lenders offer merchant cash advances, along with other financial products. Take the time to compare their rates, terms, and requirements, ensuring you make an informed decision.

Step 2: Collect the required documents

Gather your practice’s financial records. Lenders will likely require documentation such as bank statements or transaction history to evaluate your financial health and determine your eligibility for a merchant cash advance. You may also need information about your average monthly revenue and the percentage of your earnings that you are willing to use to repay the advance.

Step 3: Apply for Financing

Once you have selected a lender and collected your financial records, submit your application. The process for applying for a merchant cash advance is more streamlined and faster than traditional loans. Some lenders may even provide an online application. Be prepared to answer questions about your medical practice, your financial history, and any specific needs you have for the funding.

Step 4: Review and sign the documents

If your application is approved, review and sign the lender’s terms and conditions, which will outline the repayment schedule and process. Keep in mind that, unlike traditional loans, merchant cash advances are repaid through a percentage of your practice’s daily or weekly earnings, meaning the repayment period will vary based on your revenue.

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The Bottom Line

There are several funding options available if you’re looking to start or expand your medical practice. Merchant cash advances are worth considering, though, if you want a form of financing that comes with a simple application process and flexible repayment structure.

Obtaining a merchant cash advance for your medical practice can also provide quick access to funds during challenging times. Plus, they offer several other benefits that make them attractive. Still, there are drawbacks to consider when deciding if it’s the best fit or if you should seek alternative financing solutions.

If you decide to move forward, be sure to do your research. By examining available lenders, preparing necessary documentation, and understanding the repayment process, you can potentially secure the financing needed for your medical practice’s continued success.

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