There are several reasons why a doctor’s office might consider direct lenders funding options instead of traditional bank loans or other traditional sources of financing. One of the main reasons is that a doctor’s office is essentially a business as much as it is a place where patients get treated for their illnesses.
Like any other business, a doctor’s office can face cash flow disruptions that may prevent the resolution of crisis situations or need quick cash to invest in a growth opportunity.
The main source of revenue in a doctor’s office is tied up to the health insurance industry, which is not a stable source of income.
When you factor in the insurance reimbursements, patient deductibles, and co-pays, that form the bulk of the revenue variables of a doctor’s office; the uncertainty is quite obvious.
The uncertainty in the insurance claim payouts actually begins from the specific and unique issues that every patient has with their insurance provider.
Insurance companies have their own set of compliance rules that their customers must meet to get their claim payments released.
The cash flow in a doctor’s office is almost entirely connected to such insurance claim payments. Unfortunately, overheads like payroll expenses and utility outgoings have strict deadlines, which often result in debt crises at a doctor’s office.
Finding fast and easy access to credit for meeting such payment crises is not easy. You need to ensure that your funding application goes to the right lender, wherein you get hassle-free credit in a quick time.
You could face difficulty obtaining traditional funding
Your clinic may have difficulty qualifying for traditional bank loans or other traditional financing options due to factors such as a lack of credit history, insufficient collateral, or a high debt-to-income ratio.
Stringent requirements: Traditional lenders typically have strict lending requirements, which can make it difficult for you to borrow if you don’t meet their funding criteria. This may include a high credit score, a stable income, and collateral.
Lengthy approval process: Traditional lenders often have lengthy approval processes that take weeks or months. This can be problematic if you need funds in quick time to cover expenses or unexpected emergencies.
Lack of flexibility: Traditional lenders may not be as flexible as alternative lenders in their loan terms and repayment options. They may also be less willing to work with borrowers who have unique or non-traditional circumstances.
Unfavorable risk assessment: Traditional lenders are often risk-averse and may be hesitant to lend to borrowers who they deem to be high-risk. This can include new businesses or those in industries that are considered high-risk.
Today, traditional lenders face competition from alternative lenders who offer funding options like a business line of credit, among many others, on easy terms.
A doctor’s office should not face difficulties in raising funds
The services that a doctor’s office provides to society is unsurpassed, and it is unfair for such a business to be denied funding simply because it doesn’t meet unnecessary criteria.
Oftentimes, nobody can do anything about it because of the policies followed by many of the big traditional lenders.
The doctor’s offices mostly fall under the small business category, which is another reason for their funding requests to be rejected by big traditional lenders.
These lenders like to play with big loads of cash running into millions of dollars. If only they appreciated that small businesses account for over 44% of all economic activities in the United States and around 40% of the country’s GDP.
That’s a huge market to be ignored, and enough alternative funding companies are ready to serve this market for win-win deals.
A doctor’s office mostly needs fast access to capital
Traditional bank loans can take weeks or even months to obtain, while alternative funding options that offer online lending platforms often provide access to funds within a matter of days.
The lending criteria of alternative funding companies can vary depending on the specific company and the type of financing being offered. However, here are some general criteria that these companies may use:
Business revenue: Such lenders mainly take a close look at the revenue of your business, as this will help them determine if you have the necessary cash flow to repay the loan on time.
Cash flow: Companies may also review the cash flow of your business to ensure that they will be able to make loan payments.
Credit score: Alternative funding companies mostly do not consider an applicant’s credit score as an important factor in determining their creditworthiness.
Time in business: The length of time that your business has been in operation can also be a factor, as funding companies may prefer to lend to businesses with a track record of success.
Collateral: Some alternative funding companies may require collateral, such as property or inventory, to secure the loan, although that depends on the type of funding you go for.
Business plan: Companies may also review the borrower’s business plan to ensure that they have a clear plan for using the cash advance and generating higher revenue.
Focus on specific Industries: Some alternative funding companies may specialize in certain industries and may have specific criteria for businesses in those industries.
Funding that is suited to a wider range of businesses
It’s important to note that each alternative funding company may have its own unique lending criteria, and you should research the requirements of several companies before applying for funding. Borrowers also need funding to meet their specific requirements, and taking credit without considering the terms and cost of borrowing is not advisable.
Flexibility in loan terms: Alternative funding options usually offer more flexible borrowing terms than traditional bank loans, including lower credit score requirements, shorter repayment periods, and lower interest rates.
No collateral required: Some alternative funding options, such as revenue-based financing or merchant cash advances, do not require collateral, making them more accessible for small businesses that do not have valuable assets to pledge as collateral.
Unique business models: Some small businesses may have unique business models that do not fit within the parameters of traditional financing options.
Overall, alternative funding sources may be better suited to specific types of businesses, as they may have more experience with non-traditional financing models. It’s obvious that the choice of funding options that these lenders offer, is much wider, and it covers almost all kinds of legit businesses.
