When Is the Right Time for Doctors to Pursue a Business Loan Refinance?
Deciding once to pursue a commercial loan refinance is a crucial thought for doctors. It isn’t to be taken gently however here are steps to create the method easier to grasp.
For a business loan for doctor refinancing to make proper sense, it has to benefit the borrower. Will a new loan with more benefits profit the doctor saving enough money so that they are able to reinvest in their practice?
Will the doctors be able to buy new medical equipment or provide variety of services to their patients? If the benefits are more, then refinancing is a right solution.
In some of the refinancing cases, doctors may work with lenders who provide advisory services that also add value to their practice. They will able to enhance the financial profile and improve their credit score. That would certainly make a difference in the future.
Here are two such hypothetical situations to give you a brief understanding:
When it Saves Both Time and Money
Imagine Health First Clinic is currently making Rs.1, 790,000 every month in net revenue. About Rs.352,000 of it is earmarked for debt services and Rs.173, 000 of that amount goes for interest payments.
The practice wants to cut down their debt to around Rs.288, 000 per month, and their interest payments to Rs.128,000. But within the next 60 days Health First Clinic will face a payment of Rs.1, 281, 900 and a potential increase of their interest rate, which threatens to put them in the trouble by the end of year.
As Health First Clinic is only two years old, they use short-term financing for purchasing equipment and payroll, but they want to build cash reserve and come up with better methods to manage their debt and improve financial profile.
Their current lender has not come up with a cost-effective and efficient way to reduce their debt expenditures and enable them to invest in any new technology. The clinic owner would like to avail a new nano-machine-based system that has digitally enhanced MRIs and the technology to repair certain kinds of cell damage.
Health First Clinic has to come up with the money in order to buy this radical new treatment. Fortunately they turned to Bajaj Finserv, who not only renegotiated Health First Clinic’s debt to around Rs.243, 561 per month and Rs.96, 142 in interest payments, they also helped them to avoid the pending balloon payment and kept their doctor loan interest rate fixed for two years.
They reaped several benefits from refinancing its outstanding business loans.
When a Borrower Wants to Make It through a Seasonal Downfall
In this case, we are considering Happy Paediatrics which is the only medical clinic in the vicinity flocked by numerous schools. The schools sought their consultation and conduct medical camps at school frequently.
They also have a good flow of sick children coming in everyday almost. So much so, that they are now in need of more staff and new equipments. But during long vacations, there is hardly in patient as the schools are closed down for a month.
The business is down by 70% during this time. So, Dr. Gupta the owner of the clinic wants to open another branch of the clinic in the city where he can have new staff members and also more modern equipment.
For this he is looking for a short term financing option to pay of his existing business loan for doctors and move forward with his new venture. He turns to Bajaj Finserv who helps him to lease a property in the city.
The interest from the outstanding business loans were structured into a single line of debt and refinanced at a much lower rate.
As a result, Happy Paediatrics could reduce its debt by 35% and a moratorium was allowed on interest payments from June to September to account for the seasonal business footfall for them.
Happy Paediatrics could expand its business, digitalised its operations, and let its staff enjoy vacations. Best of all, it restructured its debt to overcome the vocational doldrums. You too can transform your business anew with doctor loan.
Category: Loans
