Perhaps you’re opening a new healthcare service business, or you’re an established healthcare professional who’s in need of financing to support your existing practice. No matter how successful you are with treating your patients, there are could be times in your career when you’ll experience cash flow problems.

When you need access to funding, there are numerous options you could choose. One of these is applying for a small business loan. There are multiple types of small business loans available; if you aren’t knowledgeable about your options, consider the following information on small business loans for health professionals.

Secured vs Unsecured Business Loans in Australia

What Are Unsecured Business Loans?

When a lender lends money to a business or an individual, it is typical for that lender to require that the loan be secured on a valuable piece of property or other collateral. If you’re able to obtain an unsecured business loan, there is no requirement to provide such collateral.

An unsecured business loan could be an attractive and viable option for healthcare professionals who are hoping to borrow less than around $100,000. On an unsecured basis, funding is more readily available to small and medium enterprises (SMEs) for smaller amounts of capital than it is for sizable sums.

According to experts at the Reserve Bank of Australia (RBA), it is routine for lenders to lend sums of more than $100,000 to large businesses, but it is difficult for small businesses to obtain unsecured financing for very large sums of capital. They report that more than 95 percent of all lending to SMEs is secured on collateral.

It is typical for lenders to require small business owners to provide their own residential property as collateral for their business loans. However, they may be reluctant to go through with risking their homes in order to obtain the funding they need – and who can blame them when there are other viable funding options available?

One possible solution to this problem is to venture outside of the traditional banking system to obtain financing. Data available from the RBA suggests that Australian business owners are becoming more comfortable with using non-traditional sources of business financing. Non-traditional lenders still make up a small percentage of financing in Australia overall, but their market share is growing.

One typical downside is that the small business loan interest rate is likely to be higher on small business loans obtained from a non-traditional lender – so if you can provide a suitable piece of equipment or property as a collateral for the loan, the overall long-term cost of the loan is likely to be lower. However, collateral may not always be available, in which case an unsecured loan is still worth considering.

If you’re hoping to borrow money to start a new practice within Australia, you’re likely to need to obtain a sum that falls somewhere between $30,000 – $500,000 AUD, according to staff at GPSupport, a popular and widely used Australian healthcare IT technology provider. If you’re fitting out an existing clinic to continue using, they estimate that you might be able to get away with borrowing an amount at the lower end of the scale. If you’re building a new clinic or facility from scratch, you most likely would realistically need to borrow an amount towards the upper end of this range and beyond.

Why Banks Cannot Always Reliably Provide the Support a Health Professional May Need

There are some instances where it wouldn’t cause any harm if a healthcare provider were to wait for the necessary amount of time it takes to obtain a traditional bank loan. If you’re opening a brand new practice, there isn’t anyone urgently relying on that practice for care yet – so you could choose to wait the amount of time it takes to seek funding through a bank.

However, there are likely to be cases where traditional funding is far too slow to be viable for a medical practice. For example, if you have a kidney dialysis machine at your facility that breaks, and your technician tells you it’s irreparable, you no doubt have patients who are relying on that machine. In that case, you don’t have time to wait around for bankers to decide whether or not they’re willing to loan you the funds to buy a replacement machine. You need to secure a replacement machine immediately.

In that type of situation, non-traditional funding sources can typically come through for you much faster than a bank loan would. Many of them can provide funds within days rather than weeks or months. Some non-traditional lenders can even provide funds within hours.

Can a Health Professional Who Is a Sole Trader Apply for a Business Loan With Online Lenders?

If you’re a well-established sole trader with a solid business plan, it is possible that you may be able to obtain funding from online lenders. You will most likely need to provide 2 years’ worth of tax returns and other records detailing the profits or losses from your business. Potential lenders will want to review your records before deciding whether to lend to you and how much money they are willing to lend.

As a sole trader, some types of funding you may be able to obtain are as follows:

• Credit cards
• Line of credit
• Business overdraft protection
• Secured and unsecured business loans
• Invoice financing and invoice factoring