How to Get Financing for Medical Equipment

Print

Medical technology has made immense leaps in the past century, especially with the advent of computer technology. Thanks to these rapid medical equipment advances, doctors today can conduct procedures that were not thought possible in the past. Advancements in medical technology, however, are not cheap. The latest in cutting edge medical equipment tends to be pricey and often out of the budget range of many new medical practices. Even equipment that might not be technologically revolutionary, but is nonetheless essential (e.g. a dentist’s chair) can cost thousands. The steep price tag of many of today’s medical devices can make financing difficult. But there are some options out there that can make financing large medical equipment purchases easier.

The Right Finance Company

There are financing companies out there that specialize in medical equipment loans. These companies know the ins and outs of the business and also how to work with the needs of doctors and medical practices, thus being a potentially better option than your local bank branch. Choose a financing company that is experienced in the health and medical financing industry. Check out their history and consumer reviews before making your final choice.

Medical Equipment Loans

Medical equipment loans are the most common financing method for the purchase of high end medical equipment. Make sure that you pre-quality comfortably for a loan before you start the application for any given loan program. For most small medical practices and medical start up companies, credit will be their main resource for building up and expanding their inventory. If you’re going the medical equipment loan route, it’s important to consider a few key issues. Know your FICO score and exactly how much money you actually need for the equipment you plan to buy. Are you going to be taking out the loan personally, or will it be under a company name or other legal entity? Do you have any assets that you could pledge for the loan? Knowing all this will help make sure that you don’t end up with an equipment loan debt that you can’t afford.

Leasing Medical Equipment

Leasing medical equipment has become an increasingly popular financing alternative to traditional medical equipment loans. Leasing is a good money-saving strategy for new medical practices that are just starting up and need to focus on building up their profits as much as possible. Leasing allows doctors to conserve more of their working capital, making it so they only have to put up a minimum initial investment into acquiring the equipment. With the large initial down payment no longer necessary, your working capital is free for other crucial investments or expenses. Leasing also helps preserve your line of credit, and there are even some options that provide 100% financing, and consulting, maintenance, installation and training costs are included by many medical equipment companies.  

The tax benefits of opting for the medical equipment leasing option are also a big attraction. Leasing can let you get a dollar-for-dollar tax write off on all your lease rental payments. You might be able to do the same for the lump sum of a piece of medical equipment purchased via conventional loans, but depending on the lease payments and where you fall in your tax bracket, the tax benefits of the leasing option might actually end up being better. In most cases, the depreciation advantage of ownership does not stand up to the benefits of the leasing option. After all, the profitability of a piece of high-tech medical equipment comes from its use, not from its ownership.

Preventing against obsolescence is also a big advantage of medical equipment leasing. As technology advances at an ever-more rapid pace, a piece of medical equipment can easily become obsolete before it generates enough revenue to pay for itself. A good financial rule of thumb when it comes to investing in any kind of equipment expense is that the productive life-span of a device should match the liability incurred in its purchase. Leasing often gives you the option of setting up a payment plant that matches up with the projected useful lifespan of a medical device. This means you only pay for as long as you’re using the device. When you switch to a newer, more advanced piece of equipment, you can do so without having to be stuck with old, outdated devices.