While you were dreaming of opening your private medical practice, were you also dreaming of running a small business? Chances are, helping your patients was foremost in your mind, not how to pay for the high-tech tools or instruments your practice needs to get up and running. Fortunately, options like medical equipment financing exist to provide the capital to make these vital purchases without paying out of pocket. Obtaining your medical office’s equipment through using some form of financing allows you to provide the highest level of care to your patients without putting yourself into further debt. Two options to consider are equipment loans or equipment leases.
What Is an Equipment Lease?
Similar to an auto lease, an equipment lease is essentially a rental agreement. You do not own the equipment; the lender does. Typically, the lender is responsible for the delivery, set-up, repair and maintenance of the equipment. Payments are made either to the lender or a third party. The equipment is considered the collateral; therefore, if you fall behind on the payment schedule, the lender could seize the equipment. At the end of the lease, you can return the equipment, extend the lease, keep the equipment, or buy out the equipment’s title, usually for $1.
What Is an Equipment Loan?
An equipment loan differs from a standard bank term loan in that the lump sum borrowed can only be used towards the equipment purchase. Once you agree upon the terms of loan length, interest rate and repayment schedule, the lender purchases the equipment from the vendor, but you make the direct payments. As with leasing, the lender will recover the equipment if you miss payments and likely sell it to recoup any loss.
Why Does Equipment Financing Benefit Your Medical Practice?
You invested in yourself when you earned your medical license. Investing in your medical practice by upgrading, improving or adding cutting-edge instrumentation or diagnostic tools benefits your business and your patients. These purchases are typically your biggest expenses. Medical equipment financing allows your practice to grow and stay competitive by providing the necessary purchase capital without hindering your positive cash flow. Because the equipment serves as collateral, lenders often simplify the application process and require less documentation. Not only does financing enable you to keep money in your practice, but the interest you pay is tax-deductible.
In the end, financing your medical practice’s equipment not only benefits your business’s bottom line but provides your patients with state-of-the-art care.