- Healthcare businesses have multiple financing options. These include equipment financing or leasing, term loans, business lines of credit, and SBA 7(a) loans.[1]
- Strong credit, organized documentation, and a clear funding plan may help you secure favorable loan terms or improve your chances of approval.
- Choosing financing that aligns with your goals and budget may help you expand without straining your business’s financial stability.
Keeping up with patient demand and medical innovation often requires capital. Healthcare businesses may see themselves investing in equipment, expanding office space, or upgrading their EHR system to support long-term growth.
However, the cost of these improvements may be too great for some healthcare businesses to foot the bill without it negatively impacting cash flow and savings. For these businesses, securing the right financing may be the key to staying competitive, improving patient care, and meeting the evolving expectations of today’s healthcare landscape.
Healthcare-Specific Financing Options
Healthcare businesses have access to several financing options tailored to healthcare equipment, practice expansion, and operational upgrades. Here are some of the more popular options that may be available to you.
Healthcare Equipment Financing or Leasing
Banks, lenders specializing in practice financing, and vendors may offer financing or leasing programs. Some manufacturers also offer in-house financing programs. Leasing may be ideal for fast-changing technology, while financing may be a better fit for assets you plan to keep long-term.
Term Loans or Practice Loans
Business term loans or practice loans provide a lump sum for major expenses like renovations or acquisitions. These loans often come with fixed repayment schedules and interest rates, making long-term planning more predictable.
Some new or smaller practices may consider personal loans, especially when business credit is limited. These loans rely on personal credit and may help cover early startup costs.
Business Lines of Credit
A business line of credit offers flexible, revolving access to funds. This structure may work well for covering variable costs, such as onboarding new staff or stocking supplies for a new location. Many business lines of credit also allow you to make interest-only payments on the amount you’ve drawn, potentially allowing for more flexibility when managing cash flow while keeping repayment costs lower in the short term.
How To Prepare for a Loan Application
A well-prepared application may improve your chances of approval and help secure favorable terms. Before applying, it could be a good idea to:
- Review your business and personal credit history: Address any errors or issues that could affect your eligibility.
- Organize key financial documents: This includes business tax returns, profit and loss statements, and current debt obligations.
- Prepare a business plan: Outline your growth strategy and how the funds will be used.
- Gather vendor quotes or cost estimates: Show lenders you’ve done your research and know your exact funding needs.
- Forecast ROI: Calculate expected revenue gains, cost savings, or patient volume increases tied to the investment.
- Define your funding request clearly: Include the loan amount and how each portion will be allocated.
Tips for a Smooth Financing Process
Once you’ve identified your financing needs and gathered the required documents, a few best practices may help you avoid delays and secure better terms. For example, consider working with lenders who have experience in the healthcare industry. They’ll be more familiar with the unique financial and regulatory landscape.
Lastly, be sure to take time to compare interest rates, fees, and repayment structures across lenders to find the best overall fit for your needs.
Positioning Your Healthcare Business for What’s Next
Growth in healthcare often requires strategic financial planning. By preparing early and choosing the right financing option, your healthcare business may be better positioned to expand and serve more people.
For more insights on managing and growing your healthcare business, visit PNC’s Healthcare Professionals page.
