Setting up your own clinic

Setting up  a private medical practice can be hard . Significant amount of  preparation is required to make your practice successful.  To set up your private practice, you need clinic space, equipment, staff and several overheads. All these require substantial funds.

It might be a good idea to seek a loan to cover the cost of starting up, as well as the operating costs for the first year or so. In general, it is advisable  to seek funds slightly over and above your initial estimation, since it would ensure that you are not constrained by any unplanned  requirement while putting your plans into action.

Following are some points you should bear in mind while planning the finances of your upcoming clinic.

1. Estimate your expenses

One of the most critical steps is to estimate how much money you  would actually need to set up your practice, and how much of it will you need to borrow? While drawing up the estimate, make sure you take everything including cost of renting space for the clinic, purchasing equipment, hiring staff, etc. into account.

Double and triple check everything. While it is a good idea to keep the cost estimate conservative, make sure that you account for all the major expenses to avoid suddenly running out of money at any point in the future.

2. Come up with a business plan or a Road-map

A private practice like any other small business, will follow a path similar to the one taken by other startups and small businesses in their search for initial funding.  Whether it is a bank or a private lender, you would need a concrete plan, that accounts for your expected expenses, revenues, and profits before you can hope to convince them to back your venture.

Generating projections for the next 3 to 5 years is usual and banks are pretty good at separating realistic projections from unrealistic ones. So, it may be a good idea to involve SME loan experts while coming up with your pro farma.

3. Account for negative net worth

Medical education is expensive and many doctors usually have outstanding medical school loans during  the time they are looking for funding their private practice. A negative net worth can damage your prospects of getting a loan. As such, it may be a good idea to sit down with loan experts and discuss your options before you start applying for a doctor loan.

4. Look at your options

Assuming that you have your pro forma/ business plan ready, you may be tempted to submit the same to as many banks and other institutional lenders as possible so that you receive different offers to pick from. However, applying for a doctor loan at multiple places can hurt your credit score, so it is advisable to use a service like Loan Frame for applying to multiple lenders with a single application — without adversely affecting  your credit score.

5. Consider buying a pre-existing practice

Banks may sometimes be more willing to lend money when you are attempting to buy a pre-established practice, as opposed to starting your own from scratch. Doctors who are retiring may often be inclined to sell their existing practice to a competent newcomer.

Besides  the fact that the clinic will have some credibility and reputation, it would also be easy to come up with a roadmap, along with expense and revenue projections. You can then use the same to apply for a doctor loan with a greater probability of success.

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