They can be structured as a term loan as well as a Flexi loan. When structured as term loans, doctors make monthly repayments on their loans regularly. When offered as a Flexi loan, doctors can borrow within the assigned credit amount and pay back as and when required.
1. Addressing Problems Due to Cash Flow: The Common Connection
Both doctor loans and medical factoring help physicians overcome woes related to cash flow. As pointed out in the survey conducted by Capital One Spark Business (COSB), 70% of physicians cited cash flow along with reimbursement for patient treatment as their biggest concern in 2021. However, the common connection ends here.
Unlike medical factoring where the sole objective is to address problems related to medical insurance cash flow, doctor loans serve a wide variety of purposes, from funding education to working capital to practice expansion.
2. Funding Higher Education
Physicians can avail doctor loans to fund their higher education. Pursuing MD or MS from a private college in India or an overseas university are both expensive affairs where fees can run into several lakhs of rupees. In some private colleges in the country, the average fee for MD/MS is as high as Rs.40 lakh per year. A doctor loan is a more prudent financial tool here. CRR offers two loans which can be used for higher studies-personal loans for doctors that offer up to Rs.35 lakhs and a loan against property for doctors that offer up to Rs.50 lakh. These loans offer a relatively higher loan amount than regular education loans.
3. Expanding Your Practice
It is estimated that 600 million people in India have little or no access to health care, with most of them in rural areas. Providing health care facilities in such remote areas requires expansion that involves setting up infrastructure, buying equipment, hiring and training staff, investment in technology, and much more. As its difficult to exactly anticipate the funds needed for expansion, a doctor loan in a Flexi format goes a long way to satisfy business expansion needs for medical practitioners. Such loans allow doctors to withdraw the full amount in one go or in parts as per their requirements and pay only the interest as EMI, with an option to prepay/ part prepay the amount anytime during the tenor.
4. Purchasing and Maintaining Equipment
With India slowly becoming a medical tourism hub – experts expect the Indian medical tourism market to reach US$ 8 billion by 2021 – it’s imperative to invest in equipment and medical devices to provide healthcare of global standards. However, in India almost 80% of medical equipment are imported.
Dr. Nalla G Palaniswami, MD of Kovai Medical Center and Hospital, Coimbatore, says, “Maintenance cost for an imported machine worth Rs.5 to 6 crores is between Rs.25 lakh and Rs.30 lakh.”
Doctor loans with high loan amounts of up to Rs.50 lakh, and flexible repayment options come with minimal documentation and 24-hour approval features are a handy tool to purchase and maintain equipment.
Additional Read: Why should medical professionals consider taking a loan for doctors?