Equipment Financing for Private Practice Doctors
Related: 5 Common Mistakes to Avoid When Starting a Medical Practice
Medical equipment financing has many advantages for a medical practice. By leveraging an equipment financing plan, you can expand your practice and provide your patients with the high-quality care they need without depleting your cash reserves or being strapped down by overwhelming debt. Since the medical field is quite competitive, you have to gain an advantage over your competitors. With that, you’d need top-notch tools like x-rays, MRI, and other diagnostic equipment to make sure your patients are well-taken care of.
Equipment financing is one option to help your practice obtain the tools you need. If you’re looking to learn more about it, you’ve come to the right place. Today, we are going to discuss equipment financing options that are available for your medical private practice.
What is Equipment Financing?
Every business needs equipment. From office desks, chairs, and computers to large machinery or vehicles. In fact equipment purchases often make up a huge chunk of spending. Especially in a medical office, where the quality of equipment can determine the quality of care. This makes purchasing new equipment extremely important.
Equipment financing companies offer equipment leases or equipment loans to businesses that don’t want to pay to purchase their equipment outright. Whether it is to save money for other expenses, or simply because the business needs the equipment now and cannot afford to drain its cash reserves.
Each type of equipment comes with different terms and interest rate plans. When considering a financing plan for your equipment, the equipment itself acts as collateral, so there are certain kinds of equipment that lenders prefer to finance. If you default on payments, the lenders will confiscate the financed equipment and sell it to cover your remaining loan amount.
Lenders prefer financing equipment that is crucial for day-to-day operations as well as equipment that maintains high resale value. For example, if you are a trucking company, you need trucks to operate, those trucks are critical for the job and hold their value pretty well. Other equipment, like desk chairs or office supplies, doesn’t hold value as well and is less likely to be financed.
Equipment Loans vs. Leases
Equipment loans are not that different from other types of loans. Essentially, when you get an equipment loan, you borrow a lump sum of money from a lender. When you go over the terms of the loan, you negotiate your interest rates, the length of the loan terms, and the repayment options.
The biggest difference between an equipment loan and a traditional bank term loan is the restrictions on purchases and the way the money is handled. With an equipment loan, the money can only be spent on equipment purchases. When you get an equipment loan, the lender pays the equipment company directly for the equipment and you pay them the monthly payments.
Related: 6 Reasons Why Equipment Financing is the Best for Your Business
Equipment leasing is virtually a rental agreement. Much like a car lease, you set up terms with a lender and pay to use the equipment you need. The lender owns the equipment, you either make payments directly to the equipment company or they sometimes have third-party finance their leases.
At the end of your equipment lease term, there are usually three options available. First, you can end the lease, stop making payments, and return the equipment. Another option is to extend the terms of the lease and keep making payments. You can also opt to buy out the equipment directly.
Many equipment leasing plans have a $1 buyout option. Because the lending company holds the title, they own the equipment at the end of your lease term. This means that at the end of the lease term, you can buy the title to the equipment for $1.
Equipment Financing for Doctor’s Offices
Running a medical office comes with a huge expense that ensures your patients receive the treatment they need. Patients want to see state-of-the-art equipment when it comes to their health. From different kinds of scanners and computers to surgical and sterilization equipment, these tools cost a great deal of money.
Purchasing new equipment is costly. Setting up a financing plan is key to the success of your medical office. Equipment financing is one way to cover equipment purchases for your practice without the burden of draining your cash reserves.