A clinic, hospital, or any other medical related business, has several fixed assets, and operational costs. According to Dr. Srinivasan of Aravind Eye Care, about 80% of eye health care costs are fixed and the variable costs comprise only 20%. However, the ratio of fixed to variable costs, differ for different clinics, and medical businesses. These costs can be leveraged with business loans for doctors from NBFCs such as Bajaj Finserv.
Here Are the Dos and Don’ts for Availing Business Loan for The Doctors
Opt for Flexible Business Flexi Loan
Choosing a flexible business loan for doctors, rather than a business term loan has several benefits. A flexible business loan is a credit facility, where you get a credit line approved for a particular tenor. However, you can borrow as you need, without utilising the whole amount. You will be charged interest on the borrowed sum, and not the whole amount.
For example, you borrow Rs. 2 lakh, for buying an eye testing computer, while the flexible business line is for Rs. 10 lakh. An Auto Refractometer R 20+ may cost around Rs. 2 lakh. You will have to pay interest only on Rs. 2 lakh.
Later, if you borrow another Rs. 3 lakh for holding camps, the interest will be applicable only on the sum withdrawn. Holding camps is a marketing strategy for many clinics. It helps to increase the volume of patients.
In case of a term loan, the interest is applicable on the whole amount, irrespective of the usage.
Second benefit of a flexible credit line is that the EMIs include only the interest component. Since you repay the principal at the end, the monthly payments decrease. Here is a table to highlight the difference of EMIs between the two.
|Business Term Loan||Flexible Credit Line|
|Amount in Rs.||10 lakh||10 lakh|
|Amount Utilized||NA||2 lakh|
|EMIs in Rs.||13334||2667|
Have the Required Liquidity
Lenders assess the liquidity of your company, to see whether you can repay the loan. Some of the important ratios that are considered are the current ratio, and the debt service coverage ratio (DSCR).
The current ratio is calculated as current assets to current liabilities. DSCR is the net operating income divided by total debt service. Both the ratios should not be lower than 1. If you have the required liquidity, it positively affects the processing of your loan application.
Once you have taken care of these, there are things that you should avoid doing.
Do Not Forget the Eligibility Criteria
Assessing your eligibility criteria, is important, to reduce the chances of rejection of loan application. It is not prudent to ignore it, as different loans have specific criteria. For example, graduate doctors (MBBS) should have minimum 2 years of post-qualification experience for business loans for doctors by Bajaj Finserv.
Ayurvedic and Homeopathic Doctors (BHMS/BAMS) with minimum 8 years of post-qualification experience can also avail these loans. More information can be found at the Eligibility & Documents section of Bajaj Finserv.
Keep the Documents Ready
There are certain documents required for doctor loan, even though there is no asset evaluation for the collateral. Some of the basic documents include Medical Registration Certification, and KYC. You can contact the NBFC for more information. Not having the proper documents will keep the loans at bay. With these dos and don’ts, it is easy to get business loans for doctors. Bajaj Finserv offers business loans for doctors up to Rs. 30 lakh which is approved within 24 hours. You can even apply online.