Obtaining Bank Line of Credit: 6 Points for Orthopedic Surgeons and Practices

Practice Management

This article is written by Lawrence Hoffman, owner of www.larrythelawyer.net and www.lhfundingcorp.com, has been a personal injury attorney for 15 years. Obtaining a bank line of credit will provide you with needed income while you wait for your accounts receivable to arrive. The benefit of using a Bank Line of Credit is that the interest rates are lower than the money obtained through other financing vehicles.

This option may be the one most medical professionals are familiar with, but it is important to note, this option has disadvantages associated with it compared with other options:

1. Most banks will not provide a line of credit (LOC) for a medical professional based upon your outstanding receivables. This greatly limits the amount of money you can access compared with other financing options.
2. Most bank LOCs will be smaller amounts of money and not provide the amount of money you truly require.  
3. A bank LOC is a debt which you must repay. Debt becomes part of your balance sheet.   
4. A bank Line of Credit usually comes with a cumbersome application process.  
5. Banks generally lend only a specific amount of money, and often you reach your limit more rapidly than you anticipate. You will not likely be able to acquire additional funds needed in a quick and simple process.
6. You have to begin paying your loan principle back as soon as you secure it.  

The Bank Line of Credit solution may work for certain medical professionals whose needs are not as great as others, but for most medical professionals this is not a long-term solution that will help grow your practice or relieve the additional stress associated with trying to collect on funds owed.  Other solutions may be more effective as long term solutions in obtaining funds.

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