Medical Practitioners

Medical practitioners can reap the benefits of commercial lending

Owning your own practice, or expanding the one you already have, will be a goal for many medical professionals in the coming financial year.

New incentives for bulk billing patients were part of a range of recent budget measures that will inject an extra $28bn into the health sector over the next five years, with GPs and other allied health professionals all set to benefit.

However, securing the right commercial loan to establish your own medical practice, or growing your existing operations, can be a complicated process.

The good news for medical practitioners is that the banking sector is keen to secure commercial business in the health sector at present, with some excellent deals available in the current market.

Increased benefits

Commercial lending arrangements tend to be more complex than a standard residential home loan, with lending options available for acquiring new premises, buying another business or purchasing new fittings and equipment.

The difference for medical practitioners is that many lenders will offer additional benefits to the medical profession for commercial lending, primarily because they are seen as low risk.

For example, a retail franchise business can normally borrow up to 70% of an asset (such as their commercial property) to fund expansion plans.

Yet for a medical practice, this loan to asset ratio is significantly higher, with some specialist practices managing to secure commercial loans up to 100% of their asset value in recent times.

It’s worth pointing out that commercial lending requires your business to provide collateral for the loan – usually a property or equipment – to secure the funds, but if you’re just starting out it is also possible to use your home as the asset to borrow against.

The value of flexibility

As with any type of lending, flexibility can be extremely valuable for the borrower, and financial institutions are often willing to offer medical professionals preferential terms on repayments.

Lending arrangements are available to fund a full fit-out with all the expensive equipment you may need to establish or grow your practice, and again the banks will offer medical professionals up to 100% loan to asset ratios for this type of loan. Repayments on loans for equipment and fit-outs tend to be over shorter terms (5-10 years typically), but flexibility is definitely an option.

Given the current interest rate climate, it’s also worth knowing you can choose between fixed or variable-rate loans, just like you can with a residential or personal loan.

Having flexibility on loan repayments can be a big help when starting or growing a business. Knowing that flexibility is likely to be on offer as a medical practitioner can give you peace of mind when embarking on your commercial lending journey.

Consulting an expert

So now we know some of the benefits for medical professionals when considering commercial lending, what is the best way to identify which loan is best for your needs?

Although applying for a commercial loan can be done directly with your financial institution, there are advantages in consulting an expert third party such as a mortgage broker to navigate the complexities of the market.

The biggest one is understanding what products each lender offers, with every bank or financial institution having a slightly different offering.

Each area of healthcare tends to have lenders that prioritise their business. For example, GP’s or surgeons may be able to get a better deal from certain banks than is the case for physiotherapists or psychologists (and vice versa).

Using a specialist broker who understands the medical sector is the quickest way to a favourable outcome, and they’ll also save you a lot of time in preparing the paperwork once the right product has been identified.

With the economy entering a challenging period and the likelihood of a recession rising with each interest rate rise, financial institution will be looking to focus their lending on industries that will continue to thrive in an economic downturn.

Health is the ultimate recession proof sector, making medical professionals the ideal commercial lending customer in the eyes of the banks. Capitalising on this sentiment to secure funding for establishing your own practice or growing an existing one would seem like a prudent financial move.

Loanscope have supported many medical practitioners secure commercial lending, having a broad understanding of this specialist market. For more information on our services in this area, click here 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Emmanuel Guignard (MBA)
Director & Principal Mortgage Broker
With over 15 years’ experience in the finance industry and a recently completed MBA in Financial Planning, Emmanuel leads the broking team at Loanscope. His experience includes working with a wide range of property investors, from first time buyers to investors with large property portfolios. This includes handling complex applications involving trusts, company structures and self-managed super funds. He also operates as a qualified mentor to other mortgage brokers via the FBBA mentor program.
Emmanuel Guignard