Finding The Right Loan For Your Healthcare Business
Growing and expanding a small business in today’s economy can be quite a challenge. After paying staff, overhead, and expenses, it can be difficult to find the capital necessary to do what is needed to help the business grow. This is why more and more healthcare businesses are looking for loans to fund their growth. Business loans offer the ideal opportunity to obtain the capital necessary, without taking away from employees, equipment or patient care. Some of the reasons that businesses seek a loan include:
- Increasing or hiring additional staff
- Buying equipment or inventory to provide better customer/patient care
- Increasing operating expenses, which may occur when growing and expanding
Criteria Lenders Take Into Consideration
There are strict guidelines in which the lenders look at before even considering the approval of any loan applications; they are listed below:
- Equity Investment – although seeking a loan, lenders like to see the amount that has been invested in the business already
- Earnings Requirements – ensures that the cash outflow and inflow are not exceeded each other
- Working Capital – look into the liabilities versus the assets and which are the most liquid at the time of the loan application process
- Collateral – this serves as additional security that the lender will not be losing out on what financial assistance they provide
- Resource Management – an in-depth look into daily operations, budget, payouts, etc.
Applying for the Loan
Regardless of the type of loan you apply for, it is essential to get the information about your business organized and in order ahead of applying. Every lender will want to look at what revenue you have earned as well as the projected profits for the future. Evaluating this information will help them determine whether or not to supply you with the financing you are requesting. The fact is, receiving the capital necessary for a business does not have to be overly complicated. Knowing what is available and preparing for the application process will likely provide the desired outcome. Items to have available before contacting a lender include:
- Electronic copies of six month’s bank statement
- Recent balance sheet and income statement from your finance system such as Quickbooks
- Color copy of your driver’s license
- IRS tax identification verification letter
- An electronic copy of debt agreements for other company borrowings, if any
- An electronic copy of any agreements with the IRS for taxes owed or liens for the business or the primary business owner
Types of Business Loans to Consider
When you are ready to apply for a financing program, you will quickly discover there is an abundance of choices. Some of the most common options for small businesses include:
- SBA loans
- Bank or credit union loans or lines of credit
- Small business specialty finance company loans
Loans from the SBA
The Small Business Association offers loans for a number of different, often specific, purposes. It is essential to get to know what is available to apply for the loan that best suits your business needs. Loans offered by the SBA include:
- General small business loans: by far the most common loan program offered by the SBA, designed for businesses that have special requirements.
- Microloan program: Provides short-term loans for small businesses.
- Real estate and equipment loans: provides special financing for those with fixed assets.
- Disaster loans: used for repairs or replacement of losses from disastrous situations
Loans from the SBA require strict adherence to their predefined standards set by this government agency. Advantages include larger sizes available, long repayment returns, and low-interest rates. Disadvantages include strict credit standards, long time to approval and funding, and higher rejection rates.
Bank or Credit Union Loans/Lines of Credit
Banks and credit unions offer a number of loan products to small businesses. These include term loans, credit card loans, real estate loans, and lines of credit. Banks and credit unions will each have their own credit approval process, but all will generally require significant documentation from the borrower. Advantages are similar to SBA loans including the possibility of larger sizes where collateral is available and likely fairly low rates. Disadvantages include relatively strict credit standards, long time to approval, and lower cash funding amounts.
Small Business Specialty Finance Loans
There is one more option, which may not be as well known. There are a number of companies who specialize in providing small businesses with the funds they need for growth, purchases, overhead, and virtually any other purpose you can imagine. Specialty finance lenders in the small business market typically provide shorter-term loans with terms typically under one-year. Advantages include very fast application and funding process, high approval rates, and relatively large funding amounts based on business cash flow – not collateral. Disadvantages include higher interest rates and shorter terms.
Aquina Health is one example of these specialty finance companies that offer a number of benefits for healthcare professionals who are seeking alternative financing options. This type of financing offers an alternative to fixed payments and allows payments to fluctuate with the cash flow of the business.
When in need of funds, it is essential to consider all the options available to find the best one for your business’ particular needs. While some alternatives discussed above offer lower rates with longer terms, others highlight speed and high approval rates.
For those interested in finding more information about finding growth capital for your business, please Contact Us here or call us at 855-860-9700, and allow us to help you come up with innovative solutions for your business needs.