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Why Merchant Cash Advances are an Ideal Funding Source for Physicians

Why Merchant Cash Advances are an Ideal Funding Source for Physicians

From time to time, like any business, medical practices can benefit from additional capital and an array of business loans. Growth, obstacles, and opportunities tend to come when we least expect them to – and they all require cash. However, many physicians are unsure where to start and which options are best suited to their industry.

Some physicians find Small Business Administration (SBA) loans are suited to their needs. But others have found they are actually better off with alternative or new financing solutions. That being said, you might be wondering where you should start your search.

The Truth About SBA Loans

SBA loans help businesses obtain the funds they need by giving the government’s guarantee to lenders. The lender extends the loan, with the guarantee that the SBA will repay up to 85% of any loss in the event of default. Since this is technically a bank loan, applications are submitted to the bank, as well as loan payments.

SBA loans come in a variety of forms, including the 7(a) Guaranteed Loan Program, microloans, and express loans. Physicians have found this option beneficial in several ways including the longest terms and lowest rates. Even so, they can be incredibly difficult to secure. This loan type requires collateral or a personal guarantee and business and personal financial records that span several years, for example.

The Traditional Bank Loan

Bank loans often prove to be helpful where an SBA loan could not be obtained. For example, some banks offer loan options that are specifically tailored to the needs of physicians. They might consider physician-specific issues like student debt or low cash savings. But this more traditional option can also prove difficult to qualify for. This is where alternative lenders offering non-loan options have really begun to shine. Options like a merchant cash advance (MCA), for example, provide fast cash, in as little as 24 hours. 

The Merchant Cash Advance

A merchant cash advance is a funding option that allows physicians to receive a one-time, lump-sum payment which you then repay through a percentage of their sales over time (usually debit and credit card transactions). These payments are typically made daily and automatically as the physician generates transactions. The total amount to be repaid is calculated by a factor rate, generally based on the business’s financial status.

MCAs are best suited for physicians in need of a quick boost of working capital, those with low credit scores, and physicians who need smaller loans, short-term. As a physician, the key is to make sure you’re choosing an MCA provider that specializes in working with those in the healthcare industry and provides customized products and support that meet your unique needs.