Asset Based Lending For Medical Practices

Asset based lending has been on the rise over recent years. Medical practices of all sizes are leveraging fixed assets for working capital as an alternative to traditional bank loans. But how does asset based lending work for medical practices?

What Is Asset Based Lending?

Asset based lending is a means of creating a line of credit, structured around fixed assets. In the realm of commercial finance, fixed assets refer to those items owned by a medical practice. In this case, fixed assets are real estate, vehicles, inventory, receivables, equipment, and more. Asset based lending provides a revolving line of credit based on the value of the aforementioned items. This means medical practices can access working capital as it is needed, rather than taking it all in one lump sum. When the amount used is repaid, the line of credit is replenished, which provides an ongoing source of funding.

Asset Based Lending Is Not A Loan

Despite the name, this type of financing is far from being a loan, in the traditional sense. First, there is no debt placed on the balance sheets. Second, credit scores are not negatively impacted. In fact, medical practices can actually improve their credit ratings by using asset based lines of credit. Third, asset based financing gives medical practices the ability to grow, without preventing them from seeking larger forms of financing.

How Asset Based Financing Promotes Growth

As a medical practice grows, so does the line of credit. When medical practices acquire new and better equipment, see an increase in receivables, expand inventory, move into larger facilities, or perform mergers and acquisitions of other practices, the line of credit is revised with a higher spending limit. This provides medical practices with an increasing amount of renewable funding and purchasing power.

There Are No Restrictions

Unlike traditional bank loans, which typically have a singular intended purpose, asset based lending can be used for anything. Medical practices of all sizes use asset based lines of credit for purchasing supplies, acquiring equipment, paying down financial obligations, general working capital, as a supplement to larger financing for growth-focused projects, and much more.

Learn More About Asset Based Financing

BG Capital Funding Group provides financing solutions to medical practices of all sizes. Our team of experts will work with you directly to understand your needs, perform a deep analysis, and get you the most value for your fixed assets. Contact our offices today.


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