Equipment Financing: How to Secure Clinical Equipment

Equipment financing starts with evaluating the clinical equipment your practice needs and deciding whether to buy, lease, or use another financing option such as a loan or SBA-backed financing. For chiropractors and naturopathic physicians starting or managing a practice, the right choice affects overhead, cash flow, and how easily you can equip the office without tying up working capital.

Posted in Equipment Financing & Loans on Thursday, December 15, 2016

How to Evaluate Your Practice's Needs

The equipment you need will primarily depend on how you intend to practice. Financing decisions should also be based on cash flow, not just clinical needs.

You'll want to answer questions such as:

• Do you want to see a high or low volume of patients?
• What type of adjusting technique will you be using?
• Do you want an open layout or private rooms?
• Will you be administering physio therapies; if so, what types?
• Will you be taking X-rays?
• How will records and files be stored?

Answering questions such as these and knowing your facility's floor plan will help you take the first steps to determine what equipment you'll need. From there, you can compare budgeting, cost-benefit tradeoffs, buying versus leasing, equipment brands, and reputable vendors. Paying cash avoids financing costs, but it can reduce liquidity for other practice expenses, and you’ll want to maintain adequate reserves in case you ever need to navigate unexpected expenses.

What Equipment is Necessary?

Equipment financing can make an equipment purchase easier when cash is limited. If you're on a tight budget or are just starting into practice, you'll especially want to choose equipment wisely.

You can keep your overhead low by starting with the basics. Leasing often has a lower initial outlay, can preserve working capital, and may make upgrades easier as technology changes. Then, when your budget permits, buying more or upgrading what you have can build equity and offer benefits such as possible Section 179 tax deductions, so get complete tax guidance before you act.

Make sure that a break-even point analysis is done to justify the acquisition of any new equipment, and compare total costs, expected monthly payments, and equipment lifespan when deciding whether to lease or purchase. Financing often uses the equipment as collateral, may cover up to 100% of costs with no down payment, but approval still depends on existing debts and credit.

For a start-up doctor, purchasing well-cared-for used equipment may make good financial sense. Remember to perform due diligence on the equipment and the vendor. Using specialized equipment financing and working capital loans can also help preserve capital and cash flow compared with paying the full amount up front, with potential savings over time.

Choosing the Brand of Equipment

Once you have decided what equipment will be necessary (and is essential from a cost-benefit analysis), it's time to shop. But how do you know which brand is best? And who are the vendors in your area that sell and service these types of equipment?

Begin by contacting other DCs to find out about the reputation of the equipment and that of the vendor (availability and accessibility to service the equipment). Some vendors and lenders offer flexible financing programs with promotional rates and a simpler process for an office purchase. Another doctor who has had experience in working with a vendor will be the best resource you can find.

You can also ask your state chiropractic association/society for a list of reputable vendors. Resources such as comprehensive chiropractic association directories can help you locate state and national organizations to contact. Your association/society may have “endorsed” a vendor, which typically means they have done the due diligence and deemed the vendor to be of high quality and reliability. It also helps to choose a company and team that understand chiropractors, their office needs, and the services they want to expand or use to treat more patients and customers.

The Application Process and Terms

Many applications qualify for approval within 2-4 hours, with documents sent for review and signatures. Funding can follow within 1-2 business days. For equipment financing and tailored practice loans, terms often range from 24 to 60 months.

Equipment loans are offered by NCMIC Finance Corporation (NCMIC) and are subject to credit approval. A $200 documentation fee is required upon funding. NCMIC and the equipment vendor you select are separate companies, are not agents of one another, and have no authority to bind one another to financial or other contractual obligations. Consult your attorney or financial advisor for specific legal or tax advice before entering into any type of financing arrangement and for information on Section 179 deduction eligibility and procedures. When original or electronic signed loan documents are received by 2 p.m. CT, funding can be sent same day via ACH. Your financial institution may not allow access to funds until the following day.

Working capital loans are offered by NCMIC Finance Corporation and are subject to credit approval. They are for business purposes only and may not be used for personal, family or household purposes. Minimum working capital loan amount is $5,000.