Dr. Emily always dreamed of opening her own practice. After years of working for someone else, she was eager to create a space that reflected her values and approach to medicine. However, she quickly discovered that financing the venture was more complex than anticipated.

Like many Medico professionals, Dr. Emily was unaware that nearly 80% of new practices in Australia are funded through specialised healthcare loans. These loans are tailored specifically for healthcare providers such as doctors and dentists, offering a significant advantage when starting a practice.

This blog post will explore the financing strategies available to Medico professionals looking to start or expand their practice, focusing on loan options, financial planning, and the benefits of expert advice. 

Understanding Medico-Specific Financing Options

Medico professionals have access to a range of specialised financing options tailored to the unique needs of healthcare providers.

1. Goodwill Lending and Practice Purchase Loans

A common route for medico professionals is goodwill lending, which is particularly useful when purchasing an established practice. 

Goodwill lending helps finance the purchase of an established practice.

• It covers intangible assets like the patient base and reputation.
• Lenders can offer:
  • Up to 100% financing
  • Terms up to 15 years

This allows Medico professionals to transition into ownership without significant upfront capital.

Goodwill lending comes with specific criteria—borrowers must be actively engaged in providing professional services and meet certain character and credit standards. This type of financing is often complemented by traditional loans for acquiring physical assets, such as property or equipment.

2. Asset Finance for Equipment and Fit-outs

Starting a practice or upgrading an existing one often requires substantial investment in medical equipment and clinic fit-outs. 

• Asset finance provides up to 100% funding for medical and dental equipment, as well as practice fit-outs.
• Loan terms typically range from 5 to 7 years.
• Progressive drawdown options are available, ideal for new practices requiring funds to be disbursed over time.

3. Practice Property Construction Lending:

This option allows Medical professionals to custom-design a space tailored to their practice and patient needs and is ideal when the perfect building isn’t available in the desired location.

These facilities can offer:

• Up to 12 months of interest-only payments during construction to help with cash flow.
• Can be combined with Fit-out or Asset Finance to match the loan to the specific assets required.

4. Self-Managed Super Fund (SMSF) Lending

Another financing avenue for medical professionals is leveraging their Self-Managed Super Funds (SMSFs) to purchase a practice. 

• Benefits include:
  • The practice property becomes a key retirement asset 
  • Builds long-term wealth 
  • Tax advantages

However, this type of financing requires careful planning and understanding of the rules around SMSFs, as well as the potential tax implications. Lenders offer tailored SMSF loan products specifically for medical practitioners looking to capitalise on this opportunity.

Key Considerations for Medico Practice Financing

1. Understand Your Loan Terms and Conditions

–       Assess the interest rates, repayment structures, and security requirements of each loan option.

–       Ensure the loan terms align with your practice’s financial capabilities and long-term goals. 

2. Effective Cash Flow Management

Maintaining healthy cash flow is crucial, especially during the early stages of your practice. Some considerations:

• Create accurate cash flow projections to ensure your practice can support loan repayments.
• Interest-only periods
• Flexible repayment structures offered by lenders

3. Seek Professional Financial Advice

Leveraging expert financial advice is crucial when navigating medico practice financing. Medico professionals should work closely with specialized lenders and financial advisors who understand the intricacies of healthcare financing and can tailor solutions to specific needs.

Conclusion

Financing a medical practice is a complex process, but with the right strategies, medico professionals can set themselves up for long-term success. From goodwill lending to asset finance and SMSF lending, the options available are diverse and cater specifically to the unique needs of the healthcare industry. By understanding the terms and leveraging expert advice, medicos can focus on what they do best—providing exceptional care to their patients—while their financial foundations remain strong and secure.

Key Takeaways:

• Goodwill Lending: Up to 100% financing for intangible practice assets.
• Asset Finance: Covers equipment and fit-out costs with flexible terms.
• SMSF Lending: Offers tax benefits but requires careful planning.
• Cash Flow Management: Essential for managing loan repayments.
• Professional Advice: Ensures tailored financing solutions and long-term success

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