3 Mistakes Doctors Make When Borrowing Money

Posted By Kalamata Capital LLC || 1-Oct-2015

1. Not Knowing Their Options

When physicians need to borrow money for new equipment or buy out a practice partner or buy the real estate for their office, most of the time they don’t know their best options.

Depending on many factors, the best option could be a working capital loan, SBA loan, real estate loan, line of credit or equipment lease. Each options has pros and cons, but many doctors just take the first option offered by their bank.

It’s tempting to use a line of credit for everything the practice might need, because physicians often qualify for a large line of credit at low interest rates, but it may not be the best solution.

Steven Mandis at Kalamata Capital LLC recommends: “Match your funding with your funding needs. Use long-term debt for long-term needs to buy a practice or buy real estate and use equipment leases for medical equipment.”

2. Not Taking Advantage of All Assets

Mandis added, “If you want to factor your medical, insurance or healthcare receivables to free up cash for a short-term opportunity, then there are lots of options.”

Doctors often think about financing in narrow compartments because most financing sources are specialists in one financing product. Think out of the box.

Mandis said that doctors that have luxury assets can often use those assets (wine, classic car, art, or jewelry) to get a loan very quickly without credit checks if confidentiality was an important factor or get a loan without a personal gurantee.

3. Too Busy for Paperwork

Many doctors are very busy and do not have the time to fill out bank applications and miss out on financing opportunities. Banks often require historical financial statements, personal tax returns and projections. So, doctors just let opportunities to finance their business pass.

Options exist to get approved for a loan within 24 hours with minimal paperwork.

Want to Learn More.

Speak to Kalamata Capital LLC.