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Business loans for a dermatology practice
Start or grow your practice with the right financing for equipment, supplies, expansion and more.
Sooner or later most small businesses need a loan, and dermatology practices are no different. Deciding which kind of financing is right for you can be tricky, but knowing what you need the funds for and having a budget on hand can make the process much easier.
What loan options are available for dermatologists?
You can choose from several financing products based on the needs of your practice.
- Small business term loan. Bank term loans often have fewer fees than other types of financing, lower rates and longer terms. They can be used to purchase a practice, consolidate debt, refinance an existing loan, hire more staff or for working capital. Generally, you need good to excellent credit and steady revenue to qualify.
- Short-term business loan. Short-term loans are usually used to finance an emergency expense or manage any lags in cash flow. While some lenders offer unsecured short-term loans, you may have to put up collateral or provide a personal guarantee if you don’t have the best credit.
- Line of credit. A line of credit offers flexibility and often has lower rates than other types of short-term financing. Much like a credit card, you withdraw funds from a set credit limit as you need them — usually over a set period of five to 10 years. You only pay interest on the amount you borrow. If your line of credit is revolving, funds become available again once you pay back what you borrowed. This type of financing is ideal for smaller-scale business expenses that are difficult to predict.
- Unsecured line of credit. The difference between a line of credit and an unsecured line of credit is the collateral required. Qualifying for an unsecured credit line is based on your credit score and doesn't require you to put up collateral — like equipment or personal assets. It can also be used to fund daily business expenses like office and medical supplies.
- SBA loan. Funding backed by the Small Business Administration (SBA) that are offered by banks, credit unions and other lending institutions. They have competitive rates and terms when compared to most other types of financing, but it can take up to three months to get approved and see your funds. You also need to meet strict eligibility criteria to qualify.
- Equipment financing. To keep up with changing technology, you may need to update or buy new equipment for your practice. Equipment leasing and loans allow you to use new equipment without paying the full cost up front.
- Accounts receivable financing. An accounts receivable line of credit is secured by your company’s accounts receivables. The credit line gives you immediate access to funds. And the amount you can access typically depends on the amount of money your business is owed.
Compare your options and apply for a small business loan today
Use our compare table to see available business loan options that may help you finance your dermatology practice.
How do I decide which loan is best for my business?
As every dermatology practice is different, so are the circumstances for getting a loan. To figure out the right one for your practice, nail down:
- What you need the funds for
- How much you need to borrow
- The type of rates, term length and repayments that will best fit your budget
- How soon you need the funds
Making sure you get the right type of loan can save you thousands of dollars in the long run.
What common business expenses can I cover with financing?
Business financing can help you get started on the right foot or keep your dermatology practice running smoothly when cash flow doesn't support a purchase you need to make.
Some common financing uses include:
- Hiring and paying staff. Invoice factoring or accounts receivable financing can be used to pay existing staff. But a term loan may be better to help you shoulder the costs of hiring and training medical or office staff.
- Equipment financing or leasing. Cosmetic dermatology can sometimes require expensive equipment purchases and upgrades. Leasing the equipment or getting a secured loan can help you make the purchases necessary to put your practice ahead of the competition.
- Marketing. Growing your practice can come with upfront marketing costs, which can be covered by a line of credit or term loan.
- Operational costs. Everything from supply purchases to covering rent for an office space is included under this. Many of these expenses can be covered with a working capital loan if your practice is experiencing a normal seasonal downswing.
- Moving or expanding. Getting into a new office space can take a fair amount of cash, and a term loan can help. With the funds, you can move your practice to a better location and potentially attract even more clients.
What do I need to apply?
Application and documentation requirements for a dermatology business loan vary by lender and loan type. But generally speaking, you’ll likely need the following:
- Business information. This includes your business name, address, date established, number of employees, tax ID number and Social Security number.
- Bank statements. Current account statements for the business will likely be necessary to determine how much working capital you have on a monthly basis.
- Tax returns. Your lender will be able to better assess your company's financial health by reviewing your tax returns.
- Current assets. Providing proof of current assets shows you have collateral if needed to secure the loan.
- Loan details. You should be prepared with what you're going to use the loan for and how much you need to borrow so you can make a case for why you need the financing.
- Personal and financial information. Your name, home address, date of birth, credit score and other personal details will likely be required to assess your risk. Many lenders require this information for all majority owners of the business.
What challenges might I face as a dermatology business owner?
Dermatology is a small specialty, representing less than 2% of physicians. However, many of the challenges faced by dermatologists are the same for all small business owners.
- Lack of working capital for improvements or expansion
- Funding new equipment
- The cost of hiring and training employees
- Acquiring and keeping clients
Limited provider networks, higher patient copays and challenges to insurance reimbursement also pose a real problem to board-certified dermatologists and the future of private practice.
The good news is that as dermatology becomes more mainstream for procedures like Botox, laser treatments, dermabrasion and screenings for skin cancer, dermatologists have a greater opportunity to expand, purchase new equipment and hire more employees. And, by creating appealing office spaces and offering a wider range of products and new techniques, you can up your chances of winning new patients.
5 tips to running a successful dermatology practice
Owning your own practice can require a strong mix of creativity and logic. Here are a few pointers to set your business up for success:
- Choose your specialty carefully. Your specialty can affect your bottom line, but practicing your passion may lead to more success than going for a safer option.
- Ensure the delivery of quality care. Keeping up to date with new technologies, equipment and techniques will help ensure you are providing the very best in care to your clients.
- Train and support your staff. It’s worth the investment of time and money to ensure your staff is current on all the latest technologies and techniques. Quality of care in your practice hinges on more than just your own knowledge, after all.
- Make sure you're meeting all state and federal compliance laws. Staying compliant with HIPAA, OSHA and CLIA can save you a lot of time, money and stress down the line.
- Be mindful of local and regional competition. Most competition comes from doctors practicing at large clinics. But dermatology offices typically offer shorter waiting times and more specialized care. Know how you can outpace your competition.
It costs money to keep the doors of your dermatology practice open. Having adequate cash flow, maintaining a steady client base and finding the right type of financing for your needs can help ensure you have the funds to succeed.
Ready to apply for financing? Compare lenders with our guide to business loans.
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