What Professional Practice Financing Options Are There?

by Kieran Daly
March 14, 2024
What Professional Practice Financing Options Are There?

Owning your own professional practice is a rewarding endeavor, but it can also be expensive. With equipment costing thousands of dollars if you run a medical practice, the high cost of office rentals or real estate, and the general expenses of running a business, you may find yourself in need of extra funding. 

Whether you’re a lawyer, own a medical or dental practice, or run an accounting business, professional practice financing can help you take your business to the next level.

Keep reading to better understand what professional practice financing is and what can be used for, which funding options are available, and what to consider when choosing what’s best for your business.

What Is Professional Practice Financing?

Professional practice financing provides business funding to lawyers; healthcare and medical professionals (like physicians, dentists, and optometrists); veterinarians; or accountants.

You can use these funds for a variety of business financing needs (depending on the type of funding and the lender):

  • Practice acquisition: You can get the financing you need to buy out another existing practice or buy into a practice as an associate or partner. Acquiring a practice can help you expand your existing practice or be used as an alternative method to starting a new practice from scratch. 

  • Office renovations or leasehold improvements: You can receive loan funds to remodel an office building you own or to make improvements to a space you’re leasing, such as adding an extra exam room or expanding the waiting area. 

  • Equipment financing: This allows you to buy the new equipment, machinery, and technology you need to keep your practice up-to-date and stay competitive.

  • Commercial real estate purchases: You can use some professional practice financing to buy an office space or building for your business.

  • Debt refinancing: Consolidate or refinance your existing debt with professional practice funding.

  • Working capital: During cash flow gaps, you can use financing to cover your short-term and day-to-day expenses.

What Financing Options Are Available for Professional Practices? 

Here are some of the funding and loan options that practice owners might want to consider when looking for financing solutions.

Traditional Loans

Getting a business loan through a traditional lender like a bank or credit union is one option for professionals. However, you often need to put up collateral to back the loan, provide a great deal of information during the application process (such as a business plan and financials), and depending on your credit history, you may not get the best interest rate offer. That’s why this type of business financing may not make sense if you have a poor or low business credit score or if you need financing quickly.

SBA Loans

Getting a loan that’s backed by the U.S. Small Business Administration is a popular way for business owners to get the funding they need. SBA loans are made through lending partners or certified development companies, but because they are partially backed by the government, they offer more favorable terms than you might get through a bank. However, SBA loans are competitive, and it can take a long time to get approved.

Specialized Loans for Professional Practices

Another option is to get professional practice financing by applying for loans that are specialized to your industry. For example, if you have a healthcare practice, you can apply for a medical practice loan. This type of medical practice financing is designed especially for the needs of doctors. Some banks may also offer loans for veterinary, dental, or optometry practices.

The loan terms will vary depending on the lender and the details of specific financial solutions, so you’ll need to compare these specialized loans to your other options.

Alternative Financing Solutions

Besides getting loans, you can also apply for alternative financing. Some of the funding options that could make sense for professionals include:

  • Business lines of credit: With a business line of credit, you have a set limit on the amount of funds you can withdraw. But unlike a loan, you don’t receive a lump sum. Instead, you borrow money when you need it and in whatever amount you wish up to the limit. Once you pay back money you’ve borrowed, that amount of credit opens up again, similar to how a credit card works. 

  • Working capital advances: A working capital advance is a short-term loan that can be used to cover day-to-day expenses. The amount you can receive usually depends on the lender as well as your business's annual revenue, but you may be able to borrow between $10,000 and $2 million.

  • Equipment financing: With this type of financing, you can use the funds to purchase equipment. That can include large equipment, like ultrasound or MRI machines, or smaller tools like computers and software.

  • Invoice factoring: When you get funds through invoice factoring, you sell some of your company’s invoices to a third party in exchange for money. That company then pursues the invoices and takes a percentage of the funds.

What to Consider When Looking for Professional Practice Financing

Searching for financing can be time consuming, so it’s helpful to know what to look for when you’re deciding which type of professional practice financing to pursue. Here’s what to consider and think about:

  • Loan amount: Before you apply for a loan, you need to know how much you’ll need. Consider all the factors you might need in your practice, from the cost of equipment to overhead and operating expenses. Then, compare this to the loan amounts available from the lender(s) you’re looking at. 

  • Repayment terms: Make sure you read the details and understand the term loan requirements. Some loans require you to pay monthly, while others might ask for weekly or even daily payments.

  • Interest rates: Be sure to compare interest rates and any other fees associated with the financing options you are considering. Try to find a rate that is competitive, but remember to balance this with the other terms you need. Interest rates and fees may not be an apples-to-apples comparison if the funding doesn’t meet your other requirements.

  • Credit requirements: Some lenders require a higher credit score than others. If you have low or poor credit, you may want to look at alternative financing options or find ways to increase your credit score.

  • Collateral: Some lenders may require collateral. Review the assets you have that you can use as collateral. You may need to provide documentation on their value or have them assessed by a third-party.

  • Flexibility: When looking for a loan, try to find a lender who is flexible about repayment and loan modifications. Flexibility might also mean how quickly you can apply for and receive funds.

  • Specialization: Finally, consider working with a lender who has experience financing your industry. If you work with someone who understands the nuances of your professional practice, they will likely be more willing to offer you terms that take your business structure into account. 

Find the Right Financing Option for Your Practice  

Having your own practice can be very rewarding. Getting professional practice financing can help take the stress out of paying the bills, let you obtain the most up-to-date equipment, or give you the funds you need to grow your practice.

Regardless of your profession, there are many funding options available. You can even get specialized financing, such as medical loans or loans for lawyers. There are also a number of alternative financing options that could be worth looking into. Make sure to consider all of the terms and conditions before applying, and find a lender that makes the most sense for your business needs. 

With Backd’s working capital advance, you can get up to $2 million in funding, and with the business line of credit, you can get a revolving facility of up to $750,000. With flexible term lengths and repayment terms, Backd can help you quickly get the funding you need.

Apply today and find out if you qualify in just one business day.

What would you do with the right amount of capital?

Working Capital Advance

Easy payment structures offer amounts with fast turnaround, Simple and easy process to access working capital.

  • Flexible - no collateral required
  • $10K - $2M
  • Terms up to 16 months
  • Automatic daily or weekly, or semi-monthly payments

Business Line of Credit

Get instant access to revolving credit with unlimited terms, and the best rates for your business.

  • Draw funds anytime
  • $10K - $750K
  • Unlimited terms, incredible rates
  • Soft credit pull that doesn't affect your credit score