Home Health Care Loans: How Your Business Can Qualify
That’s where a home health care business loan comes in. It can provide you with the working capital you need to cover a variety of expenses. However, it’s important to weigh your small business financing options first.
In this blog post, we’ll explain what a home health care loan is and how it works.
Home Health Care Loan Options
There are a variety of home health care business loans available including:
- Traditional Fixed-Term Loan: With this type of loan, you receive a lump sum of money upfront and repay it with interest via fixed monthly payments. A traditional fixed-term loan may make sense if you have a large upcoming expense and know exactly how much financing you need.
- Line of Credit: If you’d like some flexibility, a line of credit can be a smart choice. Just like with a credit card, you’ll be able to withdraw as much or as little money as you want up to a set credit limit. In addition, you’ll only pay interest on the amount you borrow.
- Equipment Loan: Chances are you need equipment like software, wheelchairs, walkers, and crutches. An equipment loan is specifically designed to help you pay for it. Your equipment will serve as collateral so the lender can seize it if you default on your loan.
- Real Estate Loan: A real estate loan may be a good fit if you need funds to pay for an office building. It’s intended for commercial property and can make it easier for you to afford a space for your employees.
- Invoice Financing: Invoice financing is when you borrow against outstanding invoices. Note that you probably won’t be able to get approved for invoice financing on Medicare and Medicaid payments because it’s very unlikely that these providers will let you sell a claim to a third party.
- Business Credit Cards: If you like the idea of a business line of credit but only want to borrow a bit of money, a business credit card is worth considering. It’s easier to qualify for than other financing types and often comes with cash back or rewards points. As long as you pay off your loan balance every month, you won’t face any interest rate charges.
Types of Costs to Cover with a Home Health Care Loan
If you take out a business for a home health care company, you can use it to pay for a wide array of expenses such as:
- Overhead Costs: These may include marketing, payroll, and medical supplies. You can think of overhead costs as any expenses you must incur to run your business.
- Medical Equipment. There’s no denying that medical equipment can cost thousands of dollars. However, it’s essential to provide clients with quality care. Some examples of medical equipment are portable oxygen tanks, walkers, wheelchairs, and respiratory devices.
- Commercial Real Estate: You probably need an office building for your administrative team to work in on a regular basis. Home care workers may also stop by to drop off paperwork and attend meetings as needed.
- Franchise Costs: If your home health care company is a franchise, you’ll have to pay franchise costs. These can add up and become very expensive.
- Debt Consolidation: In the event your business has a lot of debt, it might be a good idea to consolidate it. This can make your payments far more manageable and debt less overwhelming.
- Expansion Costs: At some point in time, you might want to expand your home healthcare business to a new territory. A home health care loan can make this process much easier.
How to Qualify for a Home Health Care Business Loan
Even though every lender that offers home health care business loans has its own requirements, most of them will ask you to provide your personal information like your name, contact details, and Social Security number.
They may also request you show them business bank statements from at least the past three months. While some will consider your business credit score, many will look at your personal credit score. In addition, almost every lender will want you to share a business plan that outlines your goals and what you plan to do with the loan
Conclusion: Choose the Right Business Loan for Your Home Health Care Company
Before you pursue any loan for your home health care business, consider your goals. Then, shop around to find the ideal financing options for your unique operation. Once you take out a home health care business loan, do your best to repay it. This way you’ll keep your finances in check while boosting your business credit score and opening the doors to other opportunities in the future.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.