During this period of tight credit, medical and dental providers are having a difficult time getting the working capital they need to grow or even maintain their practice. Establishing a merchant cash advance program is an easy way to accelerate cash flow, which can be used to expand or remodel, pay emergency expenses, or just pay bills in a timely manner.
With merchant cash advances for medical or dental professionals, a poor credit score or lack of historical profits usually doesn’t keep the provider from being disqualified. This form of financing is based upon the provider’s MasterCard and Visa receipts. The financing source funds the future credit card sales of the provider at a discounted rate and provides upfront cash based upon those estimated monthly receipts. Payback of the loan is through the credit card receipts in subsequent months. This is done electronically. When a patient makes a payment, a pre-determined percentage of the amount is sent to the funding source. The usual amount of time to pay back the loan is seven or eight months, but some funding sources will allow for a longer payback. The original amount the credit line is the average monthly credit card receipts for the practice, clinic, or hospital, but can be expanded as business grows after 60% of the original loan has been paid back.
Because the payback is done electronically, most funding sources require the medical or dental provider to switch their credit card processor to the one they use. This can often be a benefit, as the merchant advance company is able to get excellent rates due to the volume they run.
Benefits of utilizing merchant cash advances
- Most cash advances are unsecured, so no collateral needs to be pledged
- Cash proceeds can be available as soon as 10 days
- Unlike a bank loan, payback is variable based upon credit card sales, so cash flow is not strained
- No personal guaranty is required
- Applying is easy, with a simple application and the past 4 months credit card statements needed
For medical and dental practitioners, merchant cash advances providers an easy and fast way to bolster cash flow needed to sustain or grow a practice.