Accessing the appropriate finance can be one of the biggest hurdles you'll face when starting your new practice.
To help you navigate through this process, our finance advisors have compiled a list of important considerations and options when looking at finance for your new practice.
Accountant's letter
This can be a powerful tool for medical practitioners.
If you have recently started in private practice or private billings have recently formed part of your remuneration, certain brokers with medical-specific funding expertise and well-established relationships with banks can accept an accountant’s letter as part of the supporting information.
Sometimes, as little as one-quarter of private patient income (net of service fees and expenses) can be annualised to maximise borrowing capacity.
Brokers with expertise in this area will understand the career and income progressions of medical practitioners and, in turn, the borrowing capacity available for you and your new medical practice.
Working capital
According to lenders, medical practitioners are ordinarily considered low-risk borrowers and have plenty of financing options to help with working capital. The key is to find a financing solution that will help preserve your cashflow and not put any stress on your medical practice during the early days.
Options available can include an overdraft facility or an unsecured loan. Various factors need to be considered when using this form of finance.
However, such a resource can be a significant lifeline for new practices starting out to cover day-to-day costs such as staff wages or to market the practice.
Equipment finance
The problem with any equipment finance is trying to compare apples with apples; there are so many options available.
The most common forms are a lease (essentially renting over a period of time), chattel mortgage (you are the owner of the equipment with finance against it) or hire purchase (paid off in instalments, where you become the owner at the end of the period).
Having a well-planned approach to purchasing new medical equipment can be critical to the growth and success of your practice.
Ask an expert
Your accountant and finance advisor should be your first contact and will have the best understanding of your financial position and what could be possible.
Our trusted advisors can provide you with personalised advice on appropriate financing options and debt structuring, and analyse the taxation and cashflow implications of them. Our team has guided numerous medical professionals through the early days of starting their medical practices.
The transition to starting your practice can be daunting — we're here to help guide you through it.
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Dean is the head of the Residential & Commercial Finance division at Cutcher & Neale. With over a decade of experience previously working within the private banking industry, he enables the firm to provide independent, dedicated and personal finance solutions to clients.
Dean specialises in finance solutions such as home loans, investment loans, refinance, commercial loans and bespoke lending for certain professions.
