Things to Know Before You Take a Med Loan for Your Practice

Before you take a med loan, know this: for most practices the fastest, most attainable funding is not a bank term loan but a revenue-based advance underwritten on your bank deposits and collections rather than your credit score — typically available to practices doing at least ~$10,000/month in revenue, with FICO 500+, and funding in about 24-48 hours. A "med loan" can mean anything from an SBA loan to equipment financing to a working-capital advance, and the right one depends less on the sticker rate and more on how your cash flow actually behaves week to week. The three things that decide your outcome are how you get underwritten (credit vs. revenue), how fast you need the money, and how repayment lines up with your collections cycle — especially if a chunk of your revenue sits in insurance receivables that pay 30-90 days out.

What "med loan" actually covers — and why the label matters

"Med loan" is a catch-all, and lumping everything together is where practice owners get burned. In underwriting terms you're usually choosing among a few distinct products:

• Bank or SBA term loan — lowest cost, longest terms, but credit-driven, document-heavy, and often 3-8 weeks to fund. Great for a planned buildout, painful for a cash crunch.
• Equipment financing — the equipment itself is collateral (a laser, a CBCT/pano, chairs, imaging). Cost is moderate; the machine secures the deal.
• Practice line of credit — revolving, good for smoothing payroll gaps, but limits are often modest and banks can pull them.
• Revenue-based financing / merchant cash advance — you receive a lump sum against future deposits and repay as a small slice of ongoing revenue. Approval leans on deposits and collections, not FICO. Fastest to fund, most forgiving on credit, higher cost of capital.

The label matters because each product is underwritten on a different thing. If your credit is thin or your practice is young, a bank will decline you on paper even when your chairs are full and your deposits are healthy. That's exactly the gap revenue-based funding fills. For the mechanics of that product, see our merchant cash advance overview.

How practice financing is actually underwritten

Here's the distinction that changes everything: a bank underwrites your past (credit history, tax returns, debt schedule), while a revenue-based funder underwrites your present cash flow. On the revenue-based side, an underwriter is mostly reading your last 3-6 months of business bank statements and asking three questions:

1. Deposit consistency — are collections steady, or wildly lumpy? A practice with regular daily/weekly deposits underwrites cleanly.
2. Average daily balance and negative days — frequent overdrafts and long stretches near zero signal repayment risk.
3. Existing advances / stacking — how many other daily or weekly obligations are already hitting the account.

Because the review is deposit-based, minimums are practical rather than credit-perfect: roughly $10,000/month in revenue, FICO 500+, and typically 6+ months in business. Your personal credit is checked but it's a factor, not a gate. This is why a specialist practice recovering from a rough personal-credit year can still get funded on the strength of its collections. No legitimate funder will call approval "guaranteed" — anyone who does is a red flag.

The insurance-receivable problem nobody warns you about

Medical and dental practices carry a cash-flow quirk that most generic lenders ignore: a meaningful share of your revenue is booked long before it's collected. You perform the procedure today, but the insurance payment lands 30, 60, sometimes 90 days later. Your P&L looks profitable while your bank account is tight — that's the receivables gap.

This matters for two reasons. First, if a funder repays on a fixed daily debit, a slow claims cycle can squeeze you right when a big AR batch hasn't cleared yet. Second, revenue-based structures that flex with your actual deposits are a natural fit here — when collections dip, the amount collected dips with them, so repayment breathes with your cash flow instead of fighting it. Before you sign anything, map your real deposit rhythm (not your production numbers) and ask how the repayment adjusts when a slow week hits. Match the structure to the collections cycle, not to the revenue you've earned on paper but haven't banked.

Documents and timeline — what to have ready

The single biggest cause of slow funding is a slow document handoff. For a revenue-based advance the file is deliberately light, and having it ready is what turns a multi-day process into a same-day approval:

• 3-6 months of business bank statements (the core of the decision)
• A simple one-page application — legal entity, ownership, time in business
• Voided check / bank verification for the funding account
• Government ID for the majority owner
• Sometimes a recent merchant-processing statement if card volume is relevant

Notice what's not there: tax returns, full financials, business plans, collateral appraisals. That's the trade — lighter file, faster money, higher cost than a bank. A realistic timeline for revenue-based funding is submit-to-offer the same day, and funds in 24-48 hours once you accept and the bank account is verified. A bank or SBA loan for the same amount is a different animal: expect tax returns, a debt schedule, and weeks of processing. Decide which timeline your situation can actually tolerate before you apply.

Reading an offer without getting fooled by the rate

Revenue-based advances aren't quoted as an APR — they're quoted as an amount advanced plus a factor, with repayment as a fixed percentage or fixed amount pulled from ongoing deposits. To compare offers honestly, look at four things together, not the factor alone: the amount funded, the collection frequency (daily vs. weekly), the holdback or fixed debit size, and the expected term. A lower factor with a punishing daily debit can strain cash flow more than a slightly higher factor collected weekly. The right question isn't "what's the rate" — it's "what does this pull out of my account each week, and can my slowest collection week absorb it?"

Below are illustrative structures to show how the shape of a deal changes the daily reality. These are examples, not quotes.

Example terms (illustration only)

All figures above are hypothetical examples to illustrate structure. Your actual amount, factor, frequency, and term depend on your bank statements and are set at offer.

Decision framework: when a revenue-based med loan fits — and when to avoid it

It works best when:

• You need money in days, not weeks — an equipment failure, a payroll gap, a time-sensitive opportunity.
• Your credit disqualifies you at the bank but your deposits are healthy (FICO 500+, ~$10k+/month).
• Your revenue is seasonal or lumpy and you want repayment that flexes with collections.
• The use of funds generates return quickly — a new revenue-producing service line, a chair that lets you see more patients, marketing that fills the schedule.

Avoid it (or pause) when:

• You're funding a long-horizon, low-return project where a cheaper SBA/term loan has time to work.
• You're already carrying multiple advances and stacking another would break your weekly cash flow.
• Your deposits are too thin or erratic to comfortably absorb any regular collection.
• A vendor is offering equipment financing secured by the machine at a lower cost — use the cheaper, purpose-built tool.

The honest rule: revenue-based funding is a speed-and-access instrument, not a lowest-cost one. Use it where speed or approvability is the deciding factor, and reach for a bank product where time and credit are on your side. If you're weighing the two, our merchant cash advance overview breaks down the mechanics in detail.