According to a May 2014 article published on the CBS News website, banks have become more willing to lend money once again. They have started to ease their restrictions on their loans, and now they experiencing a higher demand for their lending services. One report also noted that large banks are approaching record approval rates for loans to small businesses. But a closer examination of the facts reveals that these sky high approval rates are still only 19.4%.
That means that if you are starting your own medical clinic, you stand at least a 4 out of 5 chance of getting your loan application denied. And even if you do get the loan you need, you may find that the entire process proceeds at a snail’s pace. It’s not exactly a quick way to obtain working capital.
Getting a line of credit or a working capital loan can also be difficult. Even if you are a doctor, you can only qualify if you have considerable assets and you can offer well-documented financial statements. For most medical clinics today, these standards are still too high.
But some of the more popular alternative quick ways to get cash may also be inappropriate for medical companies because they offer very limited amounts of cash. These options include using a credit card and a payday loan. These are simply not enough for a clinic, especially when you need upgrades for your medical equipment. Even a loan from friends and family may not suffice.
But there is still one way of getting fast working capital for medical companies: factoring.
How Factoring Gets You Working Capital Quickly
There are several distinctive features about invoice factoring that allows for fast working capital for medical companies:
- The entire application process takes a very short time. It may take only a couple of weeks. In addition, the approval rate for this kind of financing can be among the highest compared to other sources of working capital.
- The speed is because there are very few requirements. Your clinics should be free of any taxation or legal problems, and the insurance carriers of your patients should have a good track record when it comes to paying medical bills. The factoring company will also evaluate your billing system to see if it’s up to standards.
- You no longer have to wait for the insurance companies to pay. That’s how factoring works. The factoring company takes the invoices, and then gives you a percentage (from 70% to 80%) in advance.
Using your Working Capital
That gives you the working capital you need for your operational expenses. You can now pay your employees, take care of overhead bills, and make payments for your medical equipment. You can also replenish the medical paraphernalia you need on a daily basis, like gloves and face masks. You can also pay for your own malpractice insurance as well. If you want, you can also remodel your office to make it more welcoming for your patient.