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:
- 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.
- 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.
- 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.
- 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:
- 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.
- 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.