Caring for patients may come naturally, but you may find that navigating the lending process isn’t as straightforward as diagnosing a sinus infection.
Whether starting a new practice, expanding an existing one, or relocating to a new permanent space, there may come a time when you need external funding to elevate your career to the next step.
Deciding which loan you will apply for is only half of the battle. Lenders are going to examine you personally and professionally to determine your credit worthiness. You need to make a strong case for why a lender should issue you a loan.
Before you head to the bank, it may be beneficial to complete a personal audit so you can improve any shortcomings and maximize your chances of receiving the needed funding. To begin, review the three C’s to financing: cash, credit, and character.
To determine your credit worthiness and ability to repay your loan, your lender will first take a look at your complete financial profile. This may include your personal assets, expenses, and financial history.
Most lenders prefer that you have at least a 10 percent down payment, but you should also have an additional 5 to 10 percent available to cover project costs and overages. These expenses are often underestimated and overlooked, but failure to have additional cash on hand could lead to trouble. Whatever the amount, it is important that you do not completely drain your bank account to meet your down payment requirements.
In addition to maintaining your current lifestyle, you need a cash reserve in case of emergencies. Take inventory of all your assets — property, stocks, investments, and anything else you could liquidate quickly. If you aren’t confident that you have enough capital to keep you out of financial trouble, it may be wisest to postpone your purchase.
Your personal credit rating will have a large influence on your loan. Lenders like to see a FICO score of at least 650, and your credit history will also be thoroughly examined. An excessive number of late payments and multiple charge-offs are bad signs. Delinquent accounts, foreclosures, and outstanding debt are also red flags. Unfavorable information on your credit report does not automatically mean your loan will be denied, but it will affect the interest rate and amount of funds you receive.