Doctor Loan or Medical Factoring: Which is a Better Financing Option?

loan for doctors

As a doctor running your own practice, there are times when you need an infusion of cash to maintain positive working capital, buy new equipment, undertake expansion along with various other personal needs.

A customised doctor loan or a medical factoring can help you address your financing needs. While the former is a tailor-made loan for medical professionals, the latter gives you a cash advance in lieu of pending medical claims and invoices. Let’s see what makes loans for doctors a better financing option than medical factoring.

loan for doctors

Benefits of doctor loan

  • Serves professional and personal needs

A loan for doctors not only helps you solve issues related to your clinic’s cash flow but can be used to fund diverse professional and personal needs. For instance, while a business loan for doctors can be used for buying new equipment, renovating clinic and implementing new technology into practice, a loan against a property for doctors can be availed to fund expansion, pay for your child’s higher education or meet any high-ticket purchase. A medical factoring can only be used to address cash flow issues arising out of non or late payment of Mediclaim.

  • Availability of an exclusive suit of doctor loans

Today, lenders are offering a range of tailor-made doctor loans for medical professionals. For instance, Bajaj Finserv offers an exclusive suite of doctor loans including:

  • Personal Loan for Doctors
  • Business Loan for Doctors
  • Home Loan for Doctors
  • Loan Against Property for Doctors

Offering substantial funds, all the above-mentioned loans come with a Flexi Loan facility whereby you can withdraw funds as per your needs from an approved loan limit. Interest is charged only on the amount utilised and not on the entire limit, thus reducing your EMIs. Such a flexible feature is not absent in case of medical factoring.

  • Minimal documentation with fast disbursal
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Doctor loans require minimal documentation. Though the list may vary across lenders, the most common documents required are related to KYC, medical registration certificate with the concerned medical body, etc. Today, potential lenders specify the documents needed to avail the loan on their respective websites.

Fast disbursal of doctor loans is another major advantage, with funds credited into your account within a day or two.

Benefits of medical factoring

  • Ideal for meeting short-term financing needs

Medical factoring is ideal for meeting short-term financing needs of a lower amount. You may face a temporary cash crunch due to late settlement of a Mediclaim. In such a scenario, medical factoring can help you overcome cash crunch. However, in case you need a substantial amount of funds and to fund a variety of needs, medical factoring may not be the ideal option.

  • Instant financing

This is another benefit of medical factoring. When you are in need of instant financing, you can utilise the unpaid invoices for receiving instant cash. However, note that you can avail cash only 75-80% of the value of the accounts receivables.

As evident, a doctor loan gives you a wider scope to avail finances along with a large loan amount compared to medical factoring. Also applying for a doctor loan is easier with lenders making provision for online application.

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