A lot of investment has been channeled towards the provision of better healthcare, with the most notable cases being in the private practice. Physicians in the private practice are usually faced with the challenge of raising the high capital required to start and maintain their practice. You may also wish to expand or acquire new and more efficient pieces of equipment to boost and better the services that you provide to your clients. If you are in need of medical financing, you can seek a merchant cash advance (MCA).
MCAs are among the alternative lending options that have become preferred by most small business entities for a couple of reasons. They are more reliable with an encouraging approval rate relative to traditional lending options. This article is meant to be an eye-opener to the basics of merchant cash advances for those seeking medical financing.
What are MCAs?
Alternative lenders comprise of a large group of lenders who chose to offer more prompt and reliable lending services. Merchant cash advance providers are among the top alternative lenders in the industry today. They basically offer clients a lump sum of cash which is to be repaid from a fixed percentage of the business’s daily credit sales. You can consider them to be more of an investment on your future credit sales. Physicians can consider approaching MCA providers for the provision of medical financing.
The lending world is now crowded with MCA companies and what is more is there exist some which have specialized in offering financial backing for medical practices. Your practice needs to accept the use of credit or debit cards during your business transactions and you also need to be a relatively established business. With MCAs, you will not be asked to provide any form of collateral for the loan and those with a bad credit history are free to apply too.
What you need during the application process
As mentioned above, you need to have a relatively established private practice for you to be considered by most of the MCA providers. Most of them would consider your application for medical financing if you have been operating for more than a year. Since the revenue that you can generate is viewed as the security for the loan, the MCA provider will have to assess the amount of revenue that you can generate on a monthly basis. Generating at least $10,000 per month will be satisfactory to most of the MCA companies.
During the application process you will need to provide the following documents:
- The financial statement of your business
- A copy of your past credit sales
- An estimation of your future credit sales
However, no form of collateral is needed and you can also apply for medical financing despite having a history of bad debts.
The Approval and Repayment of MCA loans
After applying for an MCA loan, it takes only a matter of days for your application to be approved and for the cash advance to be sent to your account. There are some MCA providers who will offer you medical financing within a day after receiving your application. This is in stark contrast to the traditional lenders who are known for their long and strenuous application procedures.
The repayment schedule for the MCA loan is designed to suit the needs of any small business albeit it’s expensive in the long run. For the MCA offered for medical financing, you will have to part with a fixed percentage of your daily credit sales. It is a sustainable model since only a fixed percentage of your earnings will be deducted on a daily basis; this leaves you with enough cash to meet your working capital needs for the subsequent days. Days with high credit earnings will see you part with a sizeable amount while you will be left with sufficient funds on days with low credit earnings.
Most of the MCA companies will have their preferred repayment period range, from around 3 months to as long as 12 months. The duration of the repayment will depend between your agreement with the MCA provider that offered you an MCA for medical financing. Although the cumulative interest on the MCA loan will be higher in comparison with other loans, you will have an easy time repaying the loan. The reason for this is that you won’t be faced with the challenge of paying a fixed amount in each month like is the case for most of the traditional loans.
Reasons for considering an MCA loan for medical financing
MCA providers are responsive to the needs of most of the small business entities and most of the physicians having a private practice fall in this category. If you are searching for preferable sources of medical financing trying out the use of MCA loans could be quite satisfying. Here are a few reasons why this is so:
- You will enjoy prompt and reliable services; compared to the other lenders especially the traditional lenders, MCA providers offer quick solutions to your medical financing needs. The application, approval and disbursement of the MCAs are done in just a matter of days and in some cases within a single day. In addition to this, they also have higher approval rates implying that your chances of getting the much needed medical financing are higher when you approach MCA providers.
- They have simple and less strenuous application procedures; the traditional lenders used to frustrate most of the small businesses due to their long and tedious application procedures or rather bureaucracies. However with the services of alternative lenders such as MCA companies, application has been redefined and simplified. You will need to provide few documents and follow few steps for you to qualify for medical financing from them.
- No form of collateral is required during the application; unlike most of the traditional loans, you don’t need to provide any form of collateral while applying for an MCA loan. MCAs are offered with the security for them being the revenue that your private practice can generate. This explains why so much of the process involves the assessment of your revenue base and how much you can generate on a regular basis. In case you need medical financing without the use of any form of collateral, MCAs are the way to go.
- You will enjoy a sustainable repayment schedule; as opposed to paying fixed amounts on a regular basis irrespective of how your practice has been, MCA repayment schedules are designed to take only a fixed percentage of your daily credit earnings. This implies that you will be left with some cash to meet your subsequent days’ needs. Though the cumulative interest is higher, you will enjoy a less taxing repayment period for the medical financing you sourced from MCA providers.
Those with bad debt history can apply for an MCA; having poor credit scores is usually not tolerated by most of the lenders but MCA providers are a different lot of lenders. Despite you having a bad debt history, most of the MCA providers will still consider giving you the medical financing you need. This could be quite handy and key in meeting your financial needs in the most prompt manner.
These are some of the key reasons why you need to opt for MCA loans for your medical financing needs. With this easier to apply, more prompt and reliable lending option, you can keep your practice alive and boom with the use of the most advanced equipment.
Special scenarios that may demand medical financing through MCAs
Some physicians may be in more capital-intensive medical practices, for instance, chiropractors and dentists. These kind of practices are quite capital intensive and your earnings may not enable you to acquire all that you need to serve your clients in a better way. If you are faced with such situations, MCA loans could offer you the medical financing that you direly need. It is important to add that, it is a prompt and more reliable way of seeking for finances. With the minimal and reasonable requirements besides their approval rates being high, you will be on course in no time.
Other cases may require that you expand your practice to cater for a higher demand or take advantage of an opportunity. These are needs that need to be addressed in the shortest time possible. Considering that MCA loans are approved and disbursement is completed in a quicker way, certainly makes it a better source of medical financing.
The equipment you are using might also suddenly break down, and an easier and faster way of sorting out this could be through applying for an MCA loan. Though this might prove to be costly in the long run, the return on investment could work to your favor if you have an established medical career.
In conclusion, medical financing could be sort from the MCA providers who are inarguably taking over the lending world. Their rates are higher compared to other lenders but they offer prompt and reliable financial solutions to meet your medical financing needs in the shortest time possible.