Although the healthcare industry is flushed with cash, it becomes increasingly difficult to find funding for medical offices. New medical businesses may need to finance their own operations and secure their practice against tough economic times via alternative cash-building methods.
10 Funding Sources Your Medical Office Should Use
EHR billing and coding software from companies can help you manage patient claims, but it can’t help you build a financial safety net. But the following funding sources absolutely can.
1. Government or Program Grants
The US Department of Health and Human Services offers a variety of grants, including those specifically for rural health services, clinical research, and primary care access. Most of these grants are tied to government programs, like the Small Business Innovation Research Program.
2. Bank and Small Business Loans
Many banks offer special loan programs for medical offices, with low-interest rates and flexible repayment terms. If traditional loans are out of your reach, try microloans for small business loans. With that said, you may need business credit to get the most out of certain bank loans.
3. Business Credit Cards
Business credit cards can be a good way to get funding for a medical office if you have good credit and have few funding options. That’s because business credit cards typically have higher interest rates than other types of loans. Fortunately, they can be used for a variety of expenses.
4. Medical Financing Companies
Medical financing companies specialize in providing funding to medical practices. These companies may offer a variety of loan options, such as equipment financing and working capital loans. While interest rates are often high on these loans, they’re often lower than credit cards.
5. Venture Capitalist or Investor Funding
You may be able to secure investment capital from venture capitalists, angel investors, or other private investors. Both venture capitalists and angel investors will expect a significant ownership stake in your company and/or control over your business in exchange for their investment.
6. Crowdfunding or Online Group Funding
Websites like Kickstarter, GoFundMe, and Indiegogo are great places to launch a crowdfunding campaign to help cover your medical office costs. You’ll find that everyday people are more than happy to donate a few dollars to help open your office, especially in an understaffed community.
7. Medical Practice Abatement
In some cases, medical practices may be eligible for abatement or tax incentives from the government. While this could provide a significant source of funding for your medical office, you may not cash in on your savings until tax time, so you may need additional cash flow elsewhere.
8. Retirement Savings Accounts
Some medical office owners may be able to use funds from their retirement accounts to fund their businesses. These options include 401(k) plans and individual retirement accounts (IRAs). Keep in mind that you may have to pay taxes and penalties if you withdraw these funds.
9. Philanthropists or Charitable Individuals
Philanthropists are individuals who are willing to donate money to support medical offices. You can reach out to local philanthropists to see if they would be ready to provide funding for your medical office. Oftentimes, a philanthropist won’t expect you to pay back the money you use.
10. Ethical Corporate Sponsorships
Companies may provide financial assistance in exchange for promotional opportunities or other perks. As corporate deals are known to be predatory, be sure to research any company you plan to be sponsored by. Otherwise, you may have to promote a product you don’t believe in.
When it comes to funding a medical office, there are many options available. Be sure to create a business plan and provide the lender with bank statements to improve your chance of approval.