There is no single answer: the term is set by what the money buys and by the partner's offer. Equipment can be matched to its working life, a buy-in or practice purchase to a longer schedule, and a claims gap to months, not years.
An article from Elmgate Lending in Opelika, Alabama on how loan terms for physician and dental practices are set, from imaging equipment to buy-ins, with Lee County, AL Census counts and invented examples.
Equipment Life Versus Loan Term at a Physician or Dental Office
How long a practice takes to repay depends on what the loan paid for. The principle is simple: the term should not outlast the thing it bought. An imaging unit expected to work for seven years can be financed over a term within those years; a computer workstation replaced every three or four years fits a shorter one. A buy-in, which buys a share of a practice that keeps earning, can run longer than any equipment.
Illustration only, invented figures: a $90,000 imaging unit financed at an annual rate of 8.5% costs about $1,846 a month over 60 months, with $110,789 paid in all, or about $1,425 a month over 84 months, with $119,724 paid in all (our arithmetic). The longer term lowers the payment and raises the total by $8,935 (our arithmetic).
Physician and Dental Offices in the Lee County, AL Counts
County Business Patterns counted 72 offices of physicians and 49 offices of dentists with paid employees in Lee County, AL for 2023. Physician offices had 833 paid employees and about $68 million in payroll; dental offices had 445 paid employees and $23.9 million in payroll. In ZIP 36801, ZIP Code Business Patterns counted 24 physician offices and 15 dental offices.
Health care and social assistance as a whole paid $392.7 million in wages in the county in 2023, second only to manufacturing.
Dental Practice Loan Refinance: Dental Chairs and a Practice Purchase
Refinancing a dental practice loan replaces an existing loan with a new one, ideally on a longer term, a lower rate, or both. A practice that bought chairs on a short, costly agreement, or bought the practice itself with a loan that has since become expensive, can ask whether a refinance makes sense. Check the old loan for a prepayment penalty, and add the new loan's fees to the comparison.
A practice purchase refinanced into a longer term lowers the monthly payment, which can release cash for new equipment. The total paid over the life of the loan can rise. Dental office loans covers chairs, scanners and purchases.
Working Capital for Medical Practices: Ultrasound Units and a Clinic Build-Out
Working capital for a medical practice covers the gap between seeing patients and being paid by insurers. Its term is short, measured in months, because the claims it bridges are paid within months. Ultrasound units and a clinic build-out are different: they last for years and fit equipment financing and a term loan.
Mixing them, putting a build-out on short-term working capital, crowds a long-lived cost into a short payment schedule. A business line of credit sized to a typical month of claims can carry the gap instead.
How to Value a Medical Clinic? An Example With EHR Hardware
Valuing a medical clinic can start with its collections and its earnings after the owner physician is paid a fair salary. Equipment, including EHR hardware, is valued separately, at what it would sell for. Patient records and the clinic's name carry value only if patients are expected to stay after the sale.
Illustration only, invented figures: a buyer financing a $180,000 practice purchase at an annual rate of 9% over 120 months would pay about $2,280 a month (our arithmetic). The buyer checks that the clinic's earnings, after the buyer's own pay, cover that payment with room to spare. Business term loans walks through a purchase.
Provider Hiring: Where It Shows Up in a Medical Practice's Funding File
Hiring a new provider shows up in a practice's funding file as a gap: the provider is paid from day one, but collections for their visits arrive later, and their schedule takes time to fill. A partner reading a hiring request looks at the practice's current collections, the new provider's expected schedule, and how long it took previous hires to reach a full patient load.
A credit line or working capital loan sized to those first months is one approach. Medical practice loans covers provider hiring in more detail.
Five Records a Practice Owner Can Pull Before Asking About Terms
- Collections reports by month for the past year.
- The practice's latest tax return and balance sheet.
- The equipment quote, buy-in agreement or purchase agreement.
- A list of existing loans and leases with their terms.
- Payroll reports for providers and staff.
Those five records make a first call to (334) 336-5822, or the online form, far more useful. Equipment financing and the Opelika, AL business page have more.
By Elmgate Lending · Updated
