Having the best equipment on the market may not always be a top priority for business owners. However, for those working in the medical, industry like dentists, rehab facilities and private practices, having state-of-the-art equipment ensures their work is as efficient and accurate as possible.
Whether it’s the cutting-edge technology or the newest medical tools, medical equipment financing is a resource all business owners should be aware of. Better equipment can make an immediate impact on your company and provide better care for your patients.
Let’s find out what you need to know about medical equipment financing and how it can work for your practice.
How Does Medical Equipment Financing Work?
Medical equipment finance works similarly to a traditional business loan; the biggest difference is that the equipment you’re purchasing acts as collateral for the loan. How it works is the lender you apply with will purchase the equipment you need and then allow your business to use it while you repay the funds they laid out.
How long does it take to repay a medical equipment loan?
The terms of a medical equipment loan vary depending on how much funding is needed and your business’s current financial situation. The terms of most business equipment loans are between 1 to 5 years.
Do I own my equipment if I purchase it with a business equipment loan?
When you use a small business loan to purchase equipment for your medical practice, the equipment will be available for your use immediately. However, you won’t rightfully own the equipment until you’ve finished repaying your lender.
What type of medical equipment can I finance?
If the equipment you’re looking for is easily obtainable and your business gets approved for enough funding to continue operating comfortably, you can purchase whatever equipment your business needs.
The most common types of business equipment being financed in the medical industry are:
- Physical therapy equipment
- Dental equipment
- Medical Lasers
- Imaging equipment like x-rays and ultrasound machines
- Diagnostic equipment
- Dermatology equipment
- Optometry equipment
- Chiropractic equipment
Is equipment financing expensive?
Interest rates will vary from lender to lender, but the overall cost of the loan will depend on the type of equipment you’re purchasing. If your business needs to replace an expensive piece of equipment, which is common in the medical industry, financing this equipment will allow you to break an otherwise unattainable price for your business into smaller, more manageable payments.
For example, let’s say your medical practice needs a new x-ray room set-up. In this scenario, the upfront costs of this upgrade can be $80,000 or more, a major upfront cost for any business. An equipment business loan can be used to purchase this equipment without having to pay $80,000 out of your own working capital to secure what you need when you need it.
Medical financing companies will provide the funds to purchase the equipment which you will then repay, along with any fees and interest, over the term of your loan. Typically with medical equipment loans, interest rates start at around 8% and up.
What Do I Need to Qualify for Medical Equipment Financing?
Like all loans, there are qualifications that medical finance companies want their applicants to meet before they can approve them for a loan.
Most applicants who were approved for a medical business equipment loan had:
- 2+ years in business
- $50,000 in annual revenue
- 650+ credit score
While lenders promote the ability to provide your business with 100% of the equipment’s value, you may only be approved for a portion of the amount depending on your businesses qualifications and the price of the machine you are hoping to purchase.
Even if you’re unable to secure 100% of the costs of the equipment you need, any help you can get towards purchasing new medical equipment is beneficial. Keep in mind that there are also lenders who specialize in additional business funding who may be able to offer you additional funding to help manage your cash flow.
How Do I Apply for a Medical Business Equipment Loan?
Applying for a medical equipment loan is similar to applying for any other type of funding.
Let’s review how to apply for medical equipment financing.
First, you’ll fill out an online application.
Most medical equipment finance companies offer an online application that can be filled out right from your smartphone, tablet or desktop. You’ll answer questions basic questions about your business, provide proof that you are the owner of the business and include your plans for the funding – in this case, it’s to purchase new business equipment.
Next, you’ll have a phone call or an in-person meeting.
Lenders want to know to want to learn more about the businesses they are considering funding by having a quick interview with them either in person or over the phone. This interview can either hurt your chances of being approved or help them. For the most part, your business will speak for itself with its annual revenue, credit score and time in business. However, you can improve your likeliness of being approved by being well prepared and organized.
Finally, get to work.
Once you’ve been approved for a medical business equipment loan, get your new piece of equipment delivered and start making the most out of your investment. Your business had a need for new equipment either because it was time to upgrade or something broke and you had no choice. Either way, your business is now in a better position than it was.
Get the Equipment Your Medical Practice Needs
Having the best equipment available isn’t always necessary. But in the medical industry, keeping your practice equipped with the best new tools can make your job easier while providing better care to your patients as well. However, medical equipment is expensive and may require you take out a loan to purchase the tools you need.
If you own a medical business, knowing how equipment loans work and how to apply won’t only make purchasing new medical equipment easier, it will help you provide the best possible experience for your patients. Learn more about business equipment financing or give us a call today at (800) 735-6107 to speak directly with one of our Business Advisors dedicated to guiding your business in the right direction.