Avoid these mistakes when borrowing money for your practice


Office expansions and new equipment for your practice are expensive.  If you’re planning either of these changes, you’ll likely need to take out a loan. Before you do, make sure you aren’t making one of these common mistakes.

Jeffrey A. Orr, senior vice president for distribution at Millennium Brokerage Group, shares the top mistakes physicians make when seeking financing.

  • Using the wrong banker. “Picking out a good banker is essential,” Orr said. “You want to have someone who understands physician needs, equipment and expansion needs and who is well acquainted with the collateral required for those loans. Bankers who aren’t acquainted with physicians aren’t going to have the same kind of insight into putting a practice together.” 
  • Misjudging your ability to repay. Orr said physicians should take into account their ability to repay loans by examining the practice’s cash flow and thinking realistically about their options. “Sometimes physicians are so busy that they don’t think about their real capacity for lending,” Orr said.
  • Turning a blind eye to your financial profile. “Often physicians are targets for identity theft, and things can creep onto their credit reports without them being aware,” Orr said. Before you seek financing, he recommends examining your own credit history and the credit reports of your practice or your partners to be sure there are no surprises. If there are things that may be red flags to lenders, take action on those items or make sure you can explain the issue to your lending institution.
  • Borrowing money for your own spending. “Some physicians finance their accounts receivable just to have the cash,” Orr said. “It’s inadvisable for a physician to borrow money against his accounts receivable to buy a new car, for example. It’s never a good idea.” If you need to borrow money, first ask yourself if you plan to use the money for something that adds value and income to the practice.
  • Having unrealistic expectations. Take a solid, realistic look at your own situation and the typical requirements of loans that will work for you. Once you’ve put your own financials in order, see if you are to show a growth trend. “Get educated about what’s possible and how to put together a lending request,” Orr said. “Make sure that what you bring to a lending institution is realistic and you’ve got a good story around it.”

Millennium Brokerage Group is an approved member of AMA Insurance’s Physicians Financial Partners program.