Opening and maintaining an accomplished dermatological medical facility is not an easy or inexpensive feat. A lot of time, money, and hard work needs to go into your practice if you want it to run smoothly. And a business loan can go a long way in making sure your dermatological office succeeds and remains profitable in the medical community. Moreover, when a patient is looking for a new dermatologist to visit, they want a clean, professional, and practical service. An affordable and convenient business loan can help you attain a dermatological practice that can deliver the best service.
As we mentioned above, we understand just how expensive and time consuming running your own dermatological practice can be. That being said, if you’ve already put forth your best efforts into becoming a dermatologist, why not manage a top-notch facility for your patients to return to, time and time again? Here are some of the ways a business loan can benefit your dermatology office, including, but certainly not limited to:
Business Licenses, Permits, and Insurance
As a business in the medical industry, you’ll need to acquire certain business licenses and permits to legally operate in Canada. Moreover, depending on the province, you may need additional permits. In addition, when running a business you’ll need to purchase various types of insurance such as medical liability, workers’ compensation, and malpractice.
Dermatology Business Equipment
A business loan can help you afford the latest in dermatological equipment and technology such as an ablative/fractional laser system, liquid nitrogen guns, microdermabrasion systems and other surgical equipment. It can also help finance furniture for your examination room such as cabinets, patient examination chairs, sinks, overhead examination lights, and more.
Smaller expenses can also be financed with a business loan. It can help you purchase lab uniforms, sanitary masks, gloves, surgical garments, and other items to stock your examination rooms and laboratories.
A business loan can help you move to a new location or buy up more space for your current practice. It can also finance any repairs, installations, and other modifications to your waiting room, office, and workspace.
Paying employee wages is by far the most expensive cost for most service-based businesses. Unfortunately, you simply can’t skip payroll or negotiate a new payment plan with your employees, like you could with a lender. Since your employees are the backbone of your business it’s imperative you keep paying them in order to run your dermatology practice.
The Best Business Loan Providers For Your Dermatology Practice
Cost of Financing Your Dermatology With a Business Loan
When you borrow money to finance your business goals and expenses, there are a few factors you should consider to help minimize your cost of borrowing.
Interest – The interest rate you get has the greatest impact on the cost of your loan. The higher your rate the more money you’ll pay in interest.
Fees – The fees charged also impact the cost of your loan. It’s important to ask your lender if there are any administrative fees, origination fees, as well as other potential fees such as NSF fees, prepayment fees, and late fees. Origination fees alone can add a few hundred to a couple of thousand dollars to your loan with fees ranging between 0.5% – 8% of your total loan. For example, a $40,000 loan can lead to $200 – $3,200 in origination fees.
Term – The longer your term, the more interest you’ll pay on the loan. While it may provide lower monthly payments, it’s best to choose a term based on how much you can afford rather than the longest you can get.
For example, a $40,000 loan with an interest rate of 6.5% for 3 years will lead to a monthly payment of $1,225.96 and a total of $4,134.56 paid in interest. On a 5 year term, your monthly payment would be $782.65 and your total interest paid would be $ 6,958.76. That’s approximately $3,000 more in interest for a monthly payment that is approximately $400 lower.
Getting a business loan can be a stressful process, but here are 4 steps you can take to smooth the process.
Are you Eligible? – Each lender has its own set of requirements you must meet in order to be eligible. Before applying with a bank, credit union, or alternative lender, you should find out if you’re eligible in order to avoid multiple credit inquiries and potential rejection. By scouting each lender’s requirements, you’ll have a better chance of being approved. In general, lenders will have specific requirements in terms of time in business, monthly sales or revenue, debt levels, assets, and credit score.
Organize Your Documents – Before applying for a business loan, gather all the documents necessary for the underwriting process. Lack of proper documentation can lead to your application being rejected. Here are some of the documents you may need to provide:
A business plan.
Financial documents such as tax returns, revenue statements, bank statements, and more.
Personal documents such as a government-issued photo ID for identification.
Business identification documents such as a business license and permits.
Compare Rates – In order to get the best rate and loan terms, it’s best to compare lenders and obtain quotes. You can also use loan comparison websites to gather information regarding the lender’s lending capacity, funding time, borrowing process, as well as information regarding the lender itself. Doing so will ensure you’re making the best decision for your business.
Apply – Now that you’ve done your due diligence, you can apply for a business loan. If approved, be sure to review all the details and ensure it is what you wanted. Once signed, you should receive your funds shortly after.
Apart from a business loan, there are several other ways you can finance your business.
An equipment loan is an easier way to finance high-value equipment as the equipment you purchase is used as collateral to secure the loan. Moreover, due to the security it provides, you may be able to qualify for a lower interest rate. However, lenders usually only finance up to 80% of the equipment value, so you’ll need to find another way to finance the other 20%.
Business Line of Credit
A business line of credit allows you to have a reserve of cash that you can withdraw from whenever you need up to a certain credit limit. It is a form of credit that provides good financial security in emergency situations and for general business expenses. With fast access and no limitations on how you can use it, a business line of credit can help your dermatology practice with any number of expenses.
Merchant Cash Advance
If you accept card payments at your dermatology practice, you can use a merchant cash advance to fund any business expense. It is particularly advantageous for emergency expenses as it’s easy to qualify for and it has a fast funding process. In exchange for a portion of your future card sales, you’ll be granted a lump sum of cash. However, merchant cash advances should be used carefully as it is an expensive way to borrow.
Can I get a business loan to open my own dermatology practice?
While it can be difficult to qualify for a business loan when starting up, there are alternative lenders in Canada who provide start-up loans for businesses. However, due to the lack of financial information on your business, lenders will scrutinize your personal credit instead. In general, lenders will require a good personal credit score or a personal guarantee to approve you.
How much of a loan can my dermatology practice qualify for?
The loan amount you can qualify for depends on your business revenue, experience, debt, and collateral you can offer. In general, you can expect lenders to lend no more than 10% – 30% of your business’s annual revenue.
What interest rate can I expect to get on my business loan?
According to a study by the ISED, the average debt financing rate was 5.7%. However, interest rates for a business loan can range anywhere between 2% to 30%. Depending on the health of personal and business finances, the rate you receive will vary.
Get a Business Loan Today
Whether you’re trying to open, grow, or cover an unexpected business expense, a business loan can help you realize your goals. Apply with Loans Canada today to access:
Affordable and competitive financing rates
Payment plans that will fit your particular financial necessities
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