How can a Physician Apply For a Medical Business Loan in India?

 

Business loans have always helped owners get their enterprises on track. Some used the funds as working capital, while others used for purchasing machinery. Some invested it to restock inventory; others utilised it for consolidating debts.

Similarly, physicians in India can also avail medical business loans which are customised for the various needs of a healthcare professional.

Being unsecured, these small business loans for physicians come with no restrictions on their utilisation and are readily available with multiple NBFCs. These advances come to a physician’s rescue when setting up a clinic, expanding it, buying new equipment, etc.

Business loans for doctors also do not have a lengthy application process. Thus, doctors get the funds in their account within a short span of time, mostly in 24 hours. However, they have to fulfil various criteria for that, some of which are mentioned below:

  1. A high credit/ CIBIL score

NBFCs give more preference to borrowers who have a credit score of 750 or more. A high score makes a customer more creditworthy. Moreover, such rating also acts as a security for the lender.

A high CIBIL score means individuals have repaid all their previous credits in due time without fail. Moreover, they also don’t exhibit a credit hungry nature.

Doctors who have maintained a sound credit history will have a higher chance of having a medical business loan sanctioned.

  1. Post-qualification experience

Applicants require certain years of post-qualification experience when applying for small business loans for physicians. The required experience may differ with NBFCs.

  • Super specialist doctors (MD/MS/DM)- No experience needed
  • Graduate doctors (MBBS) – 2 years of post-qualification experience
  • Dentists (BDS/MDS) – 5 years of post-qualification experience
  • Ayurveda and Homeopathic doctors – 6 years of post-qualification experience

Super-specialist doctors (MS/MD/DM) may not require a minimum experience.

  1. Necessary documents

Physicians have to submit various necessary documents when applying for medical professional loans.

These documents can include:

  • Medical registration certificate
  • KYC documents – PAN, Aadhaar, Voter ID, Passport, Driving License, etc.
  • Address proof – Any KYC document with the permanent address, house rent agreement, latest utility bill, etc.
  • Financial statements – Balance sheet, Profit & Loss account statement, etc.
  • Income tax returns

Individuals may also have to audit their financial statements with a Chartered Accountant when applying for small business loans for physicians in certain financial institutions.

  1. Low Fixed Obligation to Income Ratio (FOIR)

The Fixed Obligation to Income Ratio (FOIR) or debt-to-income ratio is the ratio between the fixed monthly debts and monthly income of an individual.

NBFCs prefer customers who keep this ratio around 50% or lower. Such a ratio leaves the individual with more cash in hand to pay off the loan EMIs. Thus, chances of a default are reduced.

Apart from the above, physicians need to keep the following things in mind when applying for medical professional loans:

  1. A higher loan amount can lead to application rejection

NBFCs may reject an application if the loan amount is unusually high. Physicians can use a business loans eligibility calculator to check the amount they can receive.

They only have to provide some personal details and their existing debts to know their eligible loan amount.

  1. A longer loan tenure will mean higher interest

Business loans have tenures ranging up to 96 months. However, the longer is the tenure; the higher is the interest one needs to pay.

Taking small business loans for physicians can help you in various ways and also make your practice more visible.

 

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