Healthcare industry is one of India’s fastest growing sectors. It almost doubled its size reaching Rs. 4,026 Crore in 2018. It is now one of the largest medical hubs in Asia, thanks to the low cost of surgery, lower medication prices, and quality healthcare on offer.
One driving factor behind this tremendous growth is the availability of financing for medical practitioners. Medical practice financing allows independent doctors and physicians to run their own practice without worrying about inadequate capital. The substantial amount of fund can help maintain a clinic’s working capital, cash flow, restock its inventory whenever needed, purchase cutting-edge medical equipment, etc.
Medical practice loans are a form of doctor loan offered by various financial institutions. It provides funds (of up to Rs. 30 Lakh) to self-employed medical practitioners like super specialists, MBBS doctors, dentists, and others. Less stringent eligibility criteria, minimum documentation and quick disbursal make this mode of financing a preferred choice of many healthcare providers.
However, applicants should consider a few things before they apply for a medical practice loan. These factors include various facts about the credit itself, its fees and charges, and the creditworthiness of a borrower. Let’s take a look at the details to consider when applying for a loan for doctors.
- Interest rates – Interest rate determines the total amount of money a borrower has to pay back to the lender. Ideally, you should choose an interest rate that keeps your EMIs at the lowest. It makes the loan more cost-effective as it puts less strain on your budget. It also makes repayment much easier.
Various sources of business finance available offering medical practice financing to borrowers at competitive interest rates. Choose a product as per your eligibility and repayment capability.
- Credit score – Financial institutions look at your credit score to determine your creditworthiness. It is a three digit score ranging from 300 to 900. Credit bureaus calculate this rating depending on your financial history. You will have a higher approval chance of your medical practice financing with a good credit score of 750+. A lender might also offer you a lower interest rate against the credit.
There are various ways how doctors with low credit score can improve their ratings. Take smaller loans and repay those within the due date. Reduce your dependency on credit and improve your fixed obligation to income ratio to increase your credit score.
- Tenor – Choosing an appropriate tenor is another crucial thing to consider when you apply for a medical practice loan. A longer tenor will decrease the EMI but extend the time it takes to clear off your credit, whereas a shorter tenor pays off the advance faster but sets in higher EMIs.
So, carefully consider the tenor and EMI before you apply for financing. The balance between these two factors so that you pay an EMI that does not strain your budget yet allows you to pay off the dues on time.
Certain financial institutions including NBFCs allow you to choose a flexible repayment schedule when you apply for a loan. Companies like Bajaj Finserv let you decide on a tenor ranging from 12 to 96 months for your medical practice financing. It enables you to create a repayment plan according to your clinic’s earning.
- Extra charges levied on the loan – You will have to pay various charges like processing fees, part-prepayment charges, foreclosure charges, etc. when you apply for medical practice financing. These can contribute to the cost of taking a loan; so, you should choose a lender who is transparent about these charges and levy nominal fees against the credit.
Medical practice loans are an ideal financing option for self-employed practitioners. With a high loan amount, you can boost your working capital, pay for overhead costs, purchase and integrate must-have point of care medical equipment or even pay for additional staff to run your healthcare clinic. Consider the above-mentioned factors carefully before you apply for medical practice financing and find the best product and lender meeting all your requirements.