The home health care system is continuing to grow. With over 300 million people in the United States and many of these people of retirement age, home healthcare is becoming a more important staple to the healthcare system. In addition to the aging population, a significant percentage has a chronic illness. Home care is more efficient and continues to grow in popularity. You need adequate medical financing to run these facilities. Here is what you need to know about the financing options available to you.
Bank Loans
Bank loans are among the most popular financing option. Traditional financial institutions offer these traditional loans. The lenders that you can expect to offer a bank loan are:
- Small banks
- Large banks
- Credit unions
- Community lenders
Of the financing options available from traditional lenders, you will encounter term loans and lines of credit. The lines of credit are more of a revolving financing option where you borrow against a sum of money. A term loan, on the other hand, is a sum of money that you are given and have to start paying back right away, whether or not you use it.
SBA Loans
SBA loans are similar to traditional financing. You can expect the rates and the terms to be essentially the same. The biggest difference between SBA financing and traditional financing is the guarantee. The Small Business Administration guarantees a large percentage of the loan so that if you default on it, the lender is not going to lose much. This takes away some of the risks from the lender. Of course, given that this is an SBA loan, the healthcare facility will have to follow certain rules and regulations.
Alternative Loans
Non-bank lenders offer alternative loans. These companies are interested in funding small businesses. Alternative loans tend to have looser requirements than traditional loans. For instance, if you need medical financing, you can expect to provide less documentation and may have a higher approval chance. Alternative lenders tend to approve medical facilities and small businesses for funding at a higher rate than other lenders.
Cash Advance
Cash advances allow for home health care agencies to sell future revenue in exchange for immediate financing. Now, keep in mind that not all revenues end up sold. This is only a portion. Once the funds are in your account, you will have to begin repayment through deduction from a bank account or through credit card processing.
As home health care agencies grow in popularity, there have to be more financing options available for business owners. Fortunately, no matter your business, there are several medical financing options available for you to choose from.