If there’s one thing you need to do before applying for a medical business loan, it’s plan. Working with banks or private lenders can be easy or difficult – it all boils down to how prepared you are. Thorough planning and preparation are crucial to the success of your loan application. Whether you want to purchase medical equipment or start your own practice, here are five steps on how to prepare for a medical business loan:
1. Organize and Update Documents
If you have an existing medical practice or business, potential lenders will most likely check your business records to see how it’s doing. Make sure you have the following documents ready:
- Business Credit
- Business Assets
- Current Debts
- Profit and Loss Reports and Balance Sheets
- Tax Returns
If you don’t have an existing business but are looking to start one, you will need to create a financial forecast (a minimum of three years) for your future practice.
2. Prepare a Business Plan
You can’t expect lenders to fund your business if you don’t have a business plan. This doesn’t mean you have to create a 25-page plan. If you can cover all of the necessary information in three pages, then by all means do that. However long it is, just be sure it covers these three key factors:
- How much money you need.
- Why you need it and what you will spend it on.
- How you will be able to repay the loan.
3. Prepare Answers for Questions Regarding Capital, Collateral, and Credit
Credit (both personal and business), collateral (cash you can use to secure your loan), and capital (business assets that can be used to secure a loan), are the three most important factors lenders consider for business loans. If you don’t have enough of the three Cs, you may want to look for a co-signer who can pledge for you.
4. Include Your Personal Financial Information
Whether you’re currently applying for a startup loan or you’ve applied for a business loan in the past, lenders will want to know more about your personal financial information. Depending on the type of lender, you may be asked to personally guarantee your loan. Before you apply for a medical business loan, be sure you get your finances in order. Some lenders may require you to submit one (or more) of the following documents:
- A credit report that shows your FICO score.
- Your personal budget to show the amount of money you will need to take from your business to pay for living expenses.
- Your personal financial statement which lists all your personal assets and liabilities, as well as your net worth.
5. Put Everything Together to Create a Medical Business Loan Proposal
Organize all of the necessary documents detailed above in a binder or folder so it’s easier for lenders to view everything in one place. You may want to include an executive summary to tie it all together.
Looking to apply for a medical business loan? The SMB Compass’ team of professionals will guide you through the entire loan process – from inquiries to closing.