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Putting prospective lenders to the test can pay off greatly: asking the right questions will reveal the quality of the financing, ease of the process, and timeline for getting the funds you need.
Taking out a loan is a major financial decision. With so many lenders and financial solutions available today, it can be challenging to find the right partner and business loan to meet your unique needs as a physician. Putting prospective lenders to the test can pay off greatly: asking the right questions will reveal the quality of the financing, ease of the process, and timeline for getting the funds you need.
Whether you own a medical business or work as an employed physician, you may need financing for any number of reasons: continuing education courses, investing in technology and equipment, funding new initiatives, or growth and expansion. Not all lenders or loans are created equal and asking the right questions in advance can create clarity around their differences to help you find the best solution.
Here are eight essential questions you should ask lenders to ensure that your expectations, business needs, and comfort level are met:
What type of rate do you offer?
Loans will have either a fixed rate or variable rate, which dictates whether the rate will stay consistent for its entire term or if it will fluctuate based on market conditions. With a fixed rate, you’ll always know what your interest costs will be, making your payments (and monthly budget) more predictable.
Do you require personal collateral?
One of the biggest disadvantages with many loans is that they can be challenging to obtain unless you have valuable collateral. While some lenders require it, others don’t, enabling you to safeguard what you own. You’ve worked incredibly hard to acquire your assets—are you really willing to put them on the line?
How long do I have to repay what I owe?
The length of your loan dictates how much you’ll pay each month. Longer terms typically mean that your monthly payment will be lower and more manageable. If you need more cash flow on a monthly basis, then look for a loan that offers longer payback terms.
Will this loan show up on my credit report?
Applying for a loan could put your credit score at risk. During the application process, some lenders will do a hard credit pull, which provides a full report of your credit history and credit score. This type of inquiry can negatively impact your credit score and stay on your report for up to two years. Other lenders perform a soft credit pull, which neither impacts your credit score nor ends up on your report.
What is your application process?
As a physician, you already deal with a large amount of paperwork on a regular basis. Your time is valuable, so find out how much may be required for the application process. Also, knowing in advance what paperwork you need to provide can help you estimate the time you’ll need to commit.
How soon do you make approval decisions?
Establishing the approval timeline can help you set expectations on whether the process is going to take days, weeks, or even months. This is an especially critical detail if you have an urgent need to acquire funds.
How quickly do you fund upon approval?
Some lenders can take weeks or even months to deposit funds into your account after you’ve been approved, while others can do so in a few days. If you need to get funds by a certain time, ensure their timeline aligns with yours.
What experience do you have working with others in my industry?
Physicians have unique needs, which is why partnering with a lender that has experience working in their industry matters. Some lenders have a process that does not differentiate a physician from any other borrower, while others specialize in working with physicians, or with customers whose profiles match yours.
No lender or loan is alike. Understanding the fundamental components and the details can help you evaluate the loan quality and overall experience with confidence. By digging into a lender’s expectations around timelines, deliverables, and expertise, you’ll decrease the chances of unexpected surprises.
Chris Panebianco is Chief Marketing Officer for Bankers Healthcare Group (BHG), a provider of financial solutions for physicians. He is responsible for marketing initiatives to support BHG’s commercial working capital loans, personal financing, commercial and personal credit cards, Small Business Administration (SBA) loans, and collection management. Panebianco has more than 11 years’ experience in financing. For more information, visit bankershealthcaregroup.com.