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The cash flow for a doctor's office works differently than other businesses. Clinical revenue takes a long time to land in your business bank account. On top of that, specialized diagnostic equipment is expensive, and the day-to-day costs of running a practice pile up quickly.
Medical practice financing gives you a way to fill gaps in cash flow and move quickly when opportunity knocks.
I've spent more than 15 years helping physicians, dentists, veterinarians, nurse practitioners, and other medical professionals secure financing. Below, I cover the financing options open to those who already run an operating practice.
| Financing type | Typical amount | Repayment term | Interest Rate | Funding Speed |
|---|---|---|---|---|
| SBA loan | Up to $5 million | 10 to 25 years | Starting at 6.75% | As fast as two weeks, usually 30 to 90 days |
| Business line of credit | Up to $5 million | 6 to 36 months, revolving | Starting at 6% | As quickly as same day |
| Equipment financing | Finance up to 100% of equipment value | 12 to 72 months | Starting at 6% | 1 to 5 days |
| Short-term business loan | $10,000 to $5 million | 6 to 36 months | Starting at 6% | As quickly as same day |
| Home equity line of credit (HELOC) | Up to $750,000 | Up to 30 years | Starting at prime, commonly 8% to 13% | As fast as one week |
Financing Options for Physician Loans
Below, I break down the different financing options medical professionals use to grow their practices.
SBA Loans
The U.S. Small Business Administration (SBA) guarantees part of these loans, which lowers the lender's risk and lets them offer better terms. Borrow up to $5 million, with terms up to 10 years. That extends up to 25 years when real estate is part of the deal. There's no down payment required on SBA 7(a) loans through Clarify Capital's network of lenders.
The SBA 504 program is specifically for commercial real estate and heavy equipment. A bank lends up to half the cost of the project, a Certified Development Company lends up to 40%, and you're responsible for at least 10%.
Traditional Bank Loans
A traditional bank loan pays out in a lump sum and is paid back over a fixed term. Banks offer competitive interest rates, but they also look for borrowers with strong credit, assets, and industry experience. Expect to provide proof of income and other financial documentation alongside clear details on how you plan to use the money for your medical practice.
Business Lines of Credit
A business line of credit is a revolving credit line that you can draw against as needed to pay for practice expenses. You only pay interest on what you use, and the limit refreshes once you pay it down. Lines through Clarify Capital's lender network run up to $5 million with interest rates starting at 6%.
Equipment Financing
Use equipment financing to cover imaging systems, chairs, sterilizers, lasers, and any other diagnostic tools for your practice. Finance up to 100% of the equipment value through Clarify Capital's network of lenders. Financing typically lands in one to five days.
Short-Term Business Loans
A short-term loan is a lump sum payment that's repaid over a short, fixed term. Medical doctors often reach for these loans when they need money quickly, like for an urgent staffing issue or a lease opportunity. Borrow up to $5 million with repayment terms over six to 36 months through Clarify Capital's network. Financing can arrive as quickly as same day.
Home Equity Line of Credit (HELOC)
If you own a home, another option available to you is a home equity line of credit (HELOC). This is a revolving credit line that's secured by your house. HELOC rates start at prime, which typically makes them an affordable option for physicians who have equity in their home.
Credit lines are available up to $750,000 with a draw period of up to five years. Financing can arrive as quickly as one week. The trade-off is that the loan is secured by your home. If you default, you could put your house at risk.
Minimum Qualifications
$10,000 in monthly revenue
Your business must earn at least $10K per month in a business bank account.
500+ credit score
You can get approved with any credit score. But the better your credit rating, the better interest rates lenders offer. Your FICO score should be above 500.
Minimum six months in business
Your company should be operational for a minimum of six months. This shows business lenders that your company is sustainable and won't go out of business.
Have a business bank account
Your Clarify advisor will need three or four months of your most recent bank statements to verify income. This is just to see you're actually making $10K+ month in revenue.
Other Routes Worth Considering
Depending on what you're looking to finance, there are other financing options available.
If you want to purchase another practice, practice acquisition financing can help you pay for another partner's share of the business.
Vendor financing is another option available if you're looking to purchase equipment. Sometimes vendors offer promotional rates. Compare it against regular equipment financing before making a decision.
If you're looking to finance a primary residence, a physician mortgage is a home loan specifically designed for doctors. They often include no down payment and no private mortgage insurance (PMI). Another benefit is that physician mortgages are often more flexible when it comes to student loan debt compared to a conventional mortgage.
How To Get Approved for a Physician Loan
Ready to apply for a doctor loan?
Determine exactly how you'll use the money: maybe you're a dentist with money set aside for a new operatory and a hygienist.
Match the purpose to the financing type. In this case, equipment financing may make sense for the medical equipment, and a line of credit can supplement gaps in payroll.
Put your documents together and apply.
Every lender weighs things differently, but they tend to review the same information. Here's what they consider:
Time in practice
Lenders usually want to see a few months to a few years in practice.
Consistent revenue
Consistent monthly revenue shows that you can afford to take on an additional payment.
Personal and business credit
Your personal and business credit scores and payment history are all fair game.
Existing debt
Lenders review the practice's debt and any student loan debt you have.
Collateral
For equipment financing and HELOCs, the equipment or the primary residence secures the loan.
Use of funds
Some lenders may require a business plan, or a clear outline of how you plan to use the money.
Medical professionals always ask me how much lenders consider your student loan debt. The truth is, most lenders understand that doctors often carry six figures of student loan debt. But it does come into consideration when they look at your debt-to-income ratio.
What Medical Practice Financing Costs
The interest rate is only one part of the total cost of your loan. Origination fees, SBA guarantee fees, and prepayment penalties are just a few of the fees you could run into with a loan.
Repayment term is another thing that can affect the total cost of your loan. Let's take an equipment financing example.
Say you have a $150,000 equipment loan at an 8% interest rate. Over three years, that payment is $4,700 a month. Total interest is roughly $19,200.
If the same loan is repaid over six years, the monthly payment drops to $2,630. But total interest goes up to $39,400. You typically either pay more per month or more over the life of the loan, depending on what your cash flow can manage.
If you're struggling with cash flow, our cash flow management guide can help you figure out how to balance all of your payments on a monthly basis.
Physician Loans That Match Your Needs
The right financing for your practice matches your needs. Maybe you need to purchase expensive diagnostic equipment, or you want to add onto a booming practice.
No matter the scenario, Clarify Capital shops your application across its network of 75+ vetted, reputable lenders to find the best fit. Apply today. Checking your options won't affect your credit score.
Physician Loans FAQ
These are the most common questions I hear from clients about physician loans.
How Do Physician Loans Work?
Physician loans typically refer to two different types of loans.
The first is a physician mortgage, which is a home loan offered to doctors to help buy a primary residence. These loans are often more flexible on student loan debt and have a more relaxed down payment structure.
The second type of loan is business financing to cover expenses related to your medical practice. Practice financing covers any costs related to the business itself: equipment, payroll, expansion, and buildouts. This page covers practice financing.
Do Physician Loans Still Exist?
Yes, physician loans are a common type of financing for doctors. A number of banks offer physician mortgage programs. Practice financing is also widely available.
Is a Physician Loan Worth It?
It depends on your specific situation and what you need the money for. Financing can help cover the cost of a big purchase or day-to-day expenses, without putting a strain on your cash flow. It's important to consider your debt-to-income ratio before making a decision.
How Much Can I Borrow With a Physician Loan?
It depends on the financing option you're considering. Through Clarify Capital's network of lenders, you can borrow up to $5 million. Equipment financing through Clarify's network can cover up to 100% of the equipment value. HELOCs can reach $750,000.
How Do You Qualify for a Physician Loan?
Requirements differ depending on where you're applying. But lenders typically review your time in business, monthly revenue, personal and business credit score, debt (including student loan debt), and your plan for the money.
Is My Information Secure When I Apply With Clarify Capital?
Yes. Clarify follows SOC 2 security principles, and your application data stays protected throughout the process.
Michael Baynes
Co-founder, Clarify
Michael has over 15 years of experience in the business finance industry working directly with entrepreneurs. He co-founded Clarify Capital with the mission to cut through the noise in the finance industry by providing fast funding and clear answers. He holds dual degrees in Accounting and Finance from the Kelley School of Business at Indiana University. More about the Clarify team →
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