As a healthcare professional, financial management can sometimes see unique situations, and have to adapt quickly. A physician has to deal with a myriad of matters, including equipment costs, payroll, materials, insurance, and more. To streamline the process, what you need to know is how to plan your growth with a business line of credit. You need answers to questions like "how can I apply for a line of credit for my medical practice?"
A medical line of credit is a financial instrument that allows your business to maintain operations by having extra cash on hand to: cover invoices on time, manage payroll and make purchases that allow you to keep your business alive. A line of credit allows for business growth, letting entrepreneurs operate with peace of mind.
A line of credit gives you power. It benefits the healthcare business in many ways. Here are a few.
Financing like this is invaluable for managing costs and building growth. You enjoy greater flexibility as the business will have access to funds for paying bills or taking on new opportunities. You can expand the business, your creditworthiness, and your reputation.
Business costs can be overwhelming. Through lines of credit, you always have cash on hand to manage your expenses. This can be beneficial during slow patient/client cycles.
Not having what you need is a deterrent to being ready. A line of credit lets you rent or purchase as needed. Use it for medical or office equipment that lets your team perform safely, timely, and effectively.
Business growth is about anticipating core healthcare business metrics, steps, and decisions in an effort to make things happen. These understandings have to align with your vision of the business’s future. It’s not only about explaining your intentions to clients and lenders, but about what you expect.
Your financial future has to be part of the vision. You can retool an original financial plan, taking expansion into account. Break plans down by time periods with ideas of how each new year (or five year) period will end. Plans should answer these questions (and more, based on your anticipations):
Along with a sound history, well-prepared projections encourage credit lenders to work with you. Talk with financing partners. Work with current entities or, after you’ve built a reliable credit history, reach out to ones who offer greater opportunities. Even if you go in as a risk, knowing how to qualify for a medical loan with bad credit can improve your odds.
Efficiency, growth, and getting optimal lines of credit will require a detailed overview of operational needs. You have to know your medical practice potential volume of output, individual employee output, costs of supply chain stages, and how a line of credit can balance things.
Lenders like the idea of tightly controlled expenses. Your operations plan will determine if a lender can trust your judgment with their money. Hopefully, your past with credit lenders will streamline the process. If you’re new, conduct your due diligence. Once you’ve entered into a contract, it may be difficult to change.
For a medical credit line, you’ll have a better cash flow, especially during slow periods. You’ll also have the funds to manage expenses, improve the adaptability of your processes, and build your business credit.
A lender may ask you to have some personal history in the medical industry to validate your trustworthiness. You’ll also need good personal credit. You don't exactly need strong business financials, even if you’re working with a lender that already knows you. They have to see that you can repay on time. Lenders will want repayment sources. This is usually proof of payments expected from customers and clients.
At the minimum, lenders may need no less than six months in business and no less than monthly revenue of $10,000 to consider you. Lenders may not bring up a credit score needed for a medical loan, but a good score of 600 or higher wouldn’t hurt.
Lastly, online lenders have leaner qualifications. But these entities are definitely more likely to have lower credit limits and higher interest rates.
You may be wondering, what are disadvantages of holding a line of credit?
Your medical business will always need plans for cash flow generation. It’s the only way to derive maximum profits and project product and service availability. With the medical business plan, you’ll be able to manage all stages of your supply chains in affordable, practical ways and, most importantly, grow your medical practice. To learn more about a Medical Line of credit, apply with Baceline Capital to speak with a Business Financing Advisor today.
