When your medical practice needs financing, there are a number of ways to get it. Along with traditional financing options, doctors have the added benefit of additional financing options, including a doctor loan and medical factoring.
What Is a Doctor Loan?
Also called a physician loan, a doctor loan is offered by many financial institutions specifically to doctors. While most are structured as term loans with monthly payments, others can be structured as lines of credit to be paid as money is used. These loans are attractive to doctors starting their practices, growing a practice, or overcoming financial struggles during practice. The cap for a doctor loan is directly related to the number of years of training, the number of years of practice. The doctor’s specialty may also be considered in the maximum financing available.
What Is Medical Factoring?
Medical factoring is specifically designed for healthcare practices with problems that come from slow-paying medical insurance claims. You are provided with an advance on the insurance claims so expenses can be covered. Medical factoring typically has a flexible cap. The cap is determined by the amount billed on a monthly basis. In addition, most lines can be structured to grow with your practice.
Which Is the Better Choice?
Each solution has its own benefits and limitations, so there is no particular choice that is better than the other. Instead, a decision can be made based on the circumstances involved. For example, if you are having cash-flow problems due to slow-paying insurance claims, medical factoring would be a better option. Conversely, if you need an influx of cash to address a one-time problem, a doctor loan may be a better solution.
Regardless of which solution is better for you, both medical factoring and doctor loans are an effective way to get financing for your medical practice. By using your position as a doctor, you can get the financing you need to continue providing healthcare for your patients.