Making sure you can access the most appropriate finance for your new practice can be one of the biggest hurdles you will need to face.
To help you navigate through this process we have compiled a list of important finance considerations and options when looking at finance for your new practice.
An accountant's letter
This can be a powerful tool for practitioners.
If you have recently started in private practice or private billings have recently formed part of your remuneration, certain brokers with medical and dental specific funding expertise and well-established relationships with banks can accept an accountant’s letter along with other supporting information.
In some instances, as little as one quarter of private patient income (net of service fees and expenses) can be annualised to maximise borrowing capacity.
Brokers with expertise in this area will understand the career and income progression of a practitioner and in turn their borrowing capacity for you and your new practice.
Working capital
Practitioners are ordinarily considered to be low risk according to lenders and have plenty of financing options available to help with working capital.
The key is to find a financing solution that will help preserve your cashflow and not put any stress on your practice during the early days.
Options available can include an overdraft facility or an unsecured loan. There are various factors that need to be considered when using this form of finance. However, such a resource can be a significant lifeline for new practices starting out to cover day to day costs such as staff wages or to market the practice.
Equipment finance
Having a well-planned approach to purchasing new equipment can be critical to the growth and success of your practice.
The problem with any equipment finance is trying to compare apples with apples when it comes to all options available. The most common forms being a lease (essentially renting over a period of time), chattel mortgage (you are the owner of the equipment with finance against it) or hire purchase (paid off in instalments, where you become the owner at the end of the period).
Understanding and choosing the right equipment finance option will be critical in ensuring your finance is the most tax effective for you and your practice.
Always ask an expert
Your accountant should be your first contact and will have the best understanding of your financial position and what could be possible.
A good accountant will be able to provide advice on appropriate financing options you could consider, structuring of this debt as well as be able to analyse the taxation and cashflow implications.
We understand this transition is a daunting decision for many practitioners and have guided numerous clients through the early days of starting their own practice.
