With a fixed term business loan, you can borrow a large lump sum and pay it back over the course of years. These can have fixed or variable interest rates. If your business qualifies, you may be able to borrow a Canada Small Business Financing Program (CSBFP) loan.
These are lump-sum loans with terms ranging from 3 to 12 months. Use it to cover unexpected expenses or seasonal cash flow shortages. They typically come with a quick and easy application process.
Compare top business loans you can apply for today
What can I use a medical practice business loan for?
Business loans typically aren’t for propping up a failing practice. Instead, they’re an option for medical practices that need to expand.
They’re also a suitable option for doctors who want to buy out another practice or start an independent one. A business loan can cover those crucial starting expenses that can make the difference between success and failure.
A business loan can be helpful for:
Financing what you need to establish a new practice.
Funding to purchase an existing practice.
Buying or upgrading business equipment.
Managing ongoing cash flow needs.
Covering the day-to-day costs of running your business.
Meeting the expense of extending or expanding your practice.
What should I consider when comparing business loans?
Taking the time to analyze your loan options will benefit your business and save you money in the long run. Here are some of the top features you should compare in different loans.
Interest rates. You’ll need to choose what sort of monthly or quarterly payment your practice can handle. A lower interest rate results in a smaller loan, overall. But fees and loan terms may not align with your business needs.
Loan fees. Most business loans have an origination, service and other fees that your lender will discuss with you during the application process.
Loan amounts. Most lenders has maximum loan amounts that they offer borrowers. Make sure that the lender you choose will cover your financial needs.
Loan terms. Some loans, like lines of credit, have short terms that last only a year or 2. Other larger loans can last for many years. Longer terms often mean lower monthly payments — but more money paid in interest.
What do I need to be approved?
Criteria for approval varies between lenders. Though, there are a few simple things you can do to improve the chances of your application being approved.
Check the criteria. Read the fine print to make sure you satisfy all of the loan eligibility criteria.
Prepare your financial documents. Make sure your balance sheets are in order. Have a detailed and realistic business plan in place that outlines how your business will grow in the future.
Get expert advice if needed. An independent accountant can crunch the numbers and help you make an informed decision about your practice’s financing options.
Costs to consider when starting a new practice
For many medical professionals, the opportunity to build your own practice from the ground up is an exciting opportunity. If you’re thinking of starting your own medical practice from scratch, consider the following expenses to factor into your budget:
Buying or leasing an office with enough space for each doctor.
Purchasing expensive medical equipment.
Acquiring essential office supplies.
Paying insurance premiums.
Advertising and marketing expenses.
Hiring and paying staff.
Many of these are upfront costs you’ll need pay before you even open your doors. A business loan can help get things set up so your first few months run smoothly.
Costs to consider when purchasing an existing practice
If you’ve decided that purchasing an existing medical practice is a better option, there are still several costs to consider. Your financing options will vary depending on if you’re buying only the business or the property too.
With both purchases, the office space will likely already be furnished and suited to many non-specialized medical practices. Lenders may be willing to extend between 60% and 80% of the business’s value if you’re buying without property. While some may finance 100% of the business if you’re buying the business and the property.
Apart from the actual cost of purchasing the business, other costs to consider when buying an existing practice include:
Any existing debts the business may have.
Funding necessary equipment upgrades.
Representative example: Yasmeen opens a medical practice
Yasmeen wants to start a private medical practice near her home in Ontario but needs a loan to cover the costs. Medical licensing and registration fees alone will cost just over $2,000.00, while a commercial property lease in her area will likely cost around $2,800.00/month. Along with other costs of starting a practice – including equipment, renovations, insurance, staffing and administrative expenses – Yasmeen calculates a total initial investment $100,000.00 to get up and running.
She applies for a business loan from her bank and, thanks to her solid credit history, gets approved. Yasmeen signs the loan documents, and the funds are soon deposited into her account.
Cost of purchasing a pharmacy
Business loan (term loan)
Interest rate (APR)
Origination fee of 3.00% ($3,000.00)
Total loan cost
*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.
A business loan can be an excellent way to increase your practice’s capital or fund a new venture, no matter your specialization. When you’re ready to apply, check for low rates and good terms to make sure your medical practice can flourish.
Frequently asked questions
It depends on the loan. Some lenders may be able to process and fund your application within a few days, while others may take weeks. CSBFP loans are approved and funded by banks, so the money will be released according to the timeline banks typically follow for loan disbursements.
It might. If you need to take out a larger loan, or your lender requires a personal guarantee, your personal debt may prevent you from taking out larger loan amounts. Many business lenders will take into account your personal credit score as well as your business credit score when evaluating your loan application.
Yes, but it may not be a wise decision. A personal loan could be useful if you’re looking to buy out a partner, but it may not be sufficient if you need to purchase equipment. Check with your accountant or other financial advisor when determining what type of loan you should borrow.
Tim Falk is a freelance writer for Finder, writing across a diverse range of topics. Over the course of his 15-year writing career, Tim has reported on everything from travel and personal finance to pets and TV soap operas. When he’s not staring at his computer, you can usually find him exploring the great outdoors.
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