Common Mistakes Doctors Make When Obtaining Medical Financing
Borrowing money is common and relatively easy for doctors since banks and other lenders are eager to earn a medical practice’s business. However, there are several overlooked, important details that often get doctors into trouble. Here are a few of the most common mistakes doctors make when obtaining medical financing.
Using the wrong borrowing tool
There are several different tools doctors can choose from when borrowing money that go beyond just a credit card or a loan from a traditional bank. Instead, doctors should set aside the time every two years to review their finances and educate themselves about what tools would benefit them the most.
Choosing to not shop for a banker
It is a mistake for doctors to choose a bank simply because it is the nearest in proximity. Most experts agree that doctors should speak with at least three different banks before making a decision. It is important that the bank has experience lending to medical practices and has an in-depth understanding of the type of medical financing that the doctor is looking to obtain.
Failing to do the math
Another critical aspect of borrowing that is often overlooked is ensuring that the loan actually pays for itself in the long run. It is imperative that doctors make sure the new technology they purchase with their loan does its job and generates income for the practice.
Borrowing to cover operating costs
It is never a good idea to obtain medical financing simply to pay rent or make payroll. The only time this is an acceptable situation is when the practice is undergoing a major business change, like the practice is just starting or a new partner joined.
Failing on the paperwork
A final, but major, mistake that doctors often make is failing to update their financing paperwork when a large business change occurs, like when a physician leaves the practice. It is important that doctors protect themselves since the majority of lenders require a personal guarantee for all small business loans.
If you are looking to obtain medical financing for your practice, consider Clear Capital Group.