Healthcare practices are attractive credit profiles: recurring patient volume, stable demand and valuable equipment. The complication is reimbursement timing, which stretches cash flow even in a profitable practice.
Common funding needs
- Imaging, chairs, lasers and diagnostic equipment
- Operatory expansion and office build-out
- Practice acquisition or partner buy-in
- Working capital through insurance reimbursement lag
- Software, EHR migration and compliance upgrades
- Hiring associates ahead of the revenue they generate
How reimbursement affects underwriting
Underwriters distinguish between production and collections. A practice can produce heavily while collecting slowly, so bank deposits may understate the true health of the business.
Providing an aging report of insurance receivables alongside bank statements often increases both the approval size and the term offered.
Best-fit structures
Equipment financing carries the best pricing for capital purchases because the device secures the transaction. Practice acquisition is typically an SBA or conventional term loan given the size and horizon.
For reimbursement timing, a line of credit or medical receivables financing is a better fit than a short-term advance with daily debits.
What to prepare
Three to six months of bank statements, a current receivables aging report, your production versus collections summary, and equipment quotes where applicable. Practices with a clean file frequently get terms well above what generic small business underwriting would suggest.
Frequently asked questions
- Can a new practice get funded?
- Startup practices are usually financed through equipment lenders and SBA programs designed for professional practices rather than revenue-based products.
- Is a personal guarantee required?
- In most cases yes, particularly for practice acquisition and larger equipment transactions.
- How quickly can working capital fund?
- Typically within 24 to 48 hours once statements and identification are provided.