Getting a loan is a big financial decision. With so many lenders and financial solutions available today, finding the right partner and business loan to meet your unique medical needs can be difficult. It can be worth putting prospective lenders to the test: the right questions will show the quality of funding, the simplicity of the process, and the timeline for raising the funds needed.
Whether you own a medical company or work as an employed physician, you may need funding for a number of reasons: continuing education, investing in technology and equipment, funding new initiatives, or growing and expanding. Not all lenders or loans are created equal and asking the right questions beforehand can clarify their differences and help you find the best solution.
Here are eight basic questions you should ask lenders to ensure they are meeting your expectations, business needs, and level of comfort:
What type of tariff do you offer?
Loans have either a fixed or a floating rate that determines whether or not the rate remains constant for its entire term or if it fluctuates due to market conditions. With a fixed rate, you always know what your interest cost will be, which makes your payments (and monthly budget) more predictable.
Do you need personal security?
One of the major drawbacks of many loans is that it can be difficult to obtain if you do not have valuable collateral. While some lenders require it, others don’t, so you can protect your property. You have worked incredibly hard to make your fortune – are you really ready to risk it?
How long do I have to repay my debts?
The term of your loan determines how much you will pay each month. Longer terms usually mean that your monthly payment is lower and more manageable. If you need more cash flow on a monthly basis, look for a loan with longer repayment terms.
Will this loan show up on my credit report?
Applying for a loan can put your creditworthiness at risk. During the application process, some lenders will do the following: hard credit withdrawalthat provides a complete report on your credit history and credit history. This type of request can have a negative impact on your creditworthiness and remain on your report for up to two years. Other lenders do a gentle credit pull that won’t affect your credit score or end up on your report.
How is your application process?
As a doctor, you already have a lot of paperwork to deal with on a regular basis. Your time is valuable so find out how much the application process may take. Knowing in advance what documents you will need to provide will also help you estimate the amount of time you will need.
How quickly do you make approval decisions?
Establishing the approval period can help you set expectations as to whether the process will take days, weeks, or even months. This is an especially critical detail when you urgently need to raise funds.
How quickly do you finance after approval?
Some lenders may take weeks or even months to deposit funds into your account after it’s approved, while others can do it within days. If you need money by a certain point, make sure the schedule coincides with yours.
What is your experience of working with others in my industry?
Doctors have unique needs, which is why it is important to work with a lender who has experience in their industry. Some lenders have a process that doesn’t distinguish a doctor from other borrowers, while others specialize in working with doctors or clients whose profiles match yours.
No two lenders or loans are the same. Understanding the basic components and details can help you assess the credit quality and the overall experience with confidence. By addressing a lender’s expectations for schedules, results, and expertise, you reduce the chances of unexpected surprises.
Chris Panebianco is the Chief Marketing Officer of Bankers Healthcare Group (BHG), a provider of financial solutions for physicians. He is responsible for marketing initiatives in support of BHG’s commercial working capital loans, personal finance, commercial and personal credit cards, Small Business Administration (SBA) loans, and collections management. Panebianco has more than 11 years of experience in financing. More information is available at bankershealthcaregroup.com.