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Take a look at both types of funding; including what they are, their advantages, and their disadvantages.
If you are considering applying for a loan for your medical practice, the first thing you need to decide is which type of funding is right for you. There are two common options: Small Business Administration (SBA) loans or alternative funding.
In this post, we will take a look at both types of funding, including what they are, their advantages, and their disadvantages to help you determine which one is a better match for your practice.
SBA loans are provided by SBA-approved lenders—including conventional banks or microlending institutions—and are guaranteed by the SBA up to a maximum amount (usually 80-90%). This means that if you default on your loan, the SBA will reimburse the lender for a portion of the total loan value.
Multiple types of SBA loans are available, including:
SBA loans offer small business owners a number of advantages, including lower rates, favorable repayment terms, and larger loan amounts. Just remember that these advantages come at the cost of strict underwriting requirements, extensive paperwork, long application timelines, and other drawbacks.
“Alternative funding” refers to any lending that occurs outside of a traditional financial institution such as a bank or a credit union. It uses new technologies to support the underwriting process and provides a streamlined application that asks less of borrowers than traditional lenders. This makes it ideal for medical practice owners who wouldn’t normally be approved, including:
Multiple types of alternative funding are available, including:
Direct online lenders offer small business owners a number of advantages, including simplified applications, faster turnaround, more loan options, and fewer restrictions on how funds are used.
The streamlined application and underwriting process makes alternative business loans easier to acquire, but it also means they pose more risk to the lender. For this reason, they come with higher rates, shorter terms, and more frequent payments.
Alternative loans makes sense for your practice if:
SBA loans make sense for your practice if:
Ultimately, the type of lender that is right for you depends on your financial history, the financial health of your medical practice, how quickly you need the money, how much money you need, and what you intend to use it for.
Andrea Carmine is the Content and Social Media Manager at Greenbox Capital®. With over 5 years of experience in digital marketing, social media management, content, and social media strategy, Andrea is an expert at developing and executing the company's online marketing initiatives including website content, blog posts, social media content, and email campaigns. Andrea is a graduate of Florida International University with a BA in Communication and Media Studies.