The Truth About Financing for Medical Equipment and the Better Alternative

Joey Randazzo
Nov 14, 2022
Last Update: 
Reading Time:

Medical equipment can be ultra-expensive and unless you’re independently wealthy, you’ll probably need to finance such an expense. 

But with financing comes medical equipment financing rates, which may cost you more in interest than you’d ideally like to pay.

Is there another option for financing medical equipment? A way that gets your medical practice the equipment you need without paying exorbitant interest fees?

The answer is a resounding yes.

We’ll discuss the pros and cons of medical equipment financing and share an alternative that just might get your attention.

Your Solution To Financing Medical Equipment: The Flexbase Card

If you need to purchase expensive medical equipment, like an X-ray or ultrasound machine, but want to avoid paying interest for months on end, the Flexbase card may be the solution you’ve been looking for.

With the Flexbase card, you can make expensive equipment purchases and receive 0% interest for 60 days

When you pay off your transaction within 60 days, you’ll not only save on interest, but you’ll be able to focus on running your business with less stress and financial worry.

Unlike cards and bank loans that require loads of paperwork and a stellar credit score, Flexbase makes the entire process easy by using your credit score in combination with your business data (average bank balance and dozens of other indicators.) 

At the same time, the Flexbase card gives you ten times the credit of other types of credit cards.

What Is Medical Equipment Financing?

In the most basic terms, equipment financing has to do with loans used to purchase equipment for your business. 

Medical equipment financing refers to loans or a lease used to purchase medical equipment for a medical clinic or doctor’s office. 

Like other types of loans, the terms vary according to the amount borrowed and other criteria, but most medical equipment loans will require payments ranging from one to eight years. 

How To Obtain Medical Equipment Financing

Obtaining financing for medical equipment is similar to getting financing for other large purchases like cars, homes, or large commercial equipment. With all of these types of loans, you usually need:

  • A downpayment
  • Verification of income/employment
  • Positive credit report
  • And more

When seeking financing for medical equipment, the requirements generally fall into two categories:

  1. Criteria for approval
  2. Documentation needed

Let’s take a look at both of these in more detail.

To qualify to finance medical equipment, you’ll need to meet certain criteria, which may include the following:

  • A positive credit score and a history of paying bills on time
  • Knowledge of the equipment and how it will be used
  • A minimum of three to five years in the medical practice
  • A one-year repayment history
  • One year of banking transactions
  • Registrations/approvals/licenses from appropriate authorities to operate your business

In addition to meeting certain criteria, medical equipment finance companies may also require you to present many documents. Banks and other loaning institutions differ in their requirements, but many may ask for the following documents:

  • KYC (Know Your Customer) documents that establish your identity and address and may include:
  • Passport
  • Voter’s card
  • Driver’s License
  • Utility bill
  • Bank statement
  • Credit card statement
  • Property deed
  • And more
  • A Memorandum of Understanding or partnership agreement may be necessary for private limited companies
  • Loan payment information
  • Bank statements for the past twelve months
  • Income tax returns

In addition to these documents and requirements, medical equipment financing companies may also require a pro forma. Pro forma (Latin for “for the sake of form”) financials are a way of computing based on earning projections. 

Dr. William Kemper, a pediatric dentist in Louisville, Kentucky, says, “A realistic pro forma helps … because getting a standard bank loan might be difficult since many doctors have negative net worth after paying for medical school.” Showing the lending institution that you have an income-earning strategy will help in acquiring funding.

When creating a pro forma, Dr. Kemper suggests breaking out monthly or quarterly cash flow requirements and debt predictions for visibility. He also suggests including …

  • Fees to establish the practice
  • Per square-foot lease
  • EHR (Electronic Health Record)
  • Medical supplies; and
  • Office supplies

… to project the future of your practice.

Though the work may be difficult, Dr. Kemper believes the effort is worthwhile, “With some strategy and the correct knowledge, success is a question of effort.” 

0% for 60 days
Oh yeah, it's also 100% free
Get pre-approved

Pros and Cons of Medical Equipment Financing

As with any type of financing, medical equipment financing comes with both advantages and disadvantages. Weighing them both according to your situation can help you decide if financing is your best option for obtaining the medical equipment you need.

3 Medical Equipment Financing Pros

Some of the pros that come with financing include:
  • Increased patient confidence and better patient experience
  • Ability to stay on the cutting edge of technology
  • Potential tax savings
  • More working capital freed up
  • Ownership of the equipment after the loan is paid off
  • Having equipment to do your job better
  • Helps you stay within your budget
  • Ability to provide better patient care
  • Lower maintenance costs
  • Building a larger customer base

In addition to these many benefits, let’s take a closer look at three more advantages:

  1. Expanding your medical practice
  2. The ability to make smaller payments
  3. Simple application process

#1: It Can Help You Expand Your Medical Practice

When your equipment and tools are limited, you’ll also be restricted in the type of services you can provide. 

With more and better tools, machines, and equipment, you can expand your medical practice by providing more specialized services. And in turn, your profits will increase as well.

For example, if you can provide nonstress tests in your OB/GYN practice because you have the proper equipment, your high-risk pregnancy patients will be able to comfortably get that test done in your office as opposed to having the test done at a hospital. This will save time, money, and the hassle of setting up other appointments in various locations.

#2: You Can Make Small Payments

With the option to finance medical equipment purchases, many medical offices will need to purchase the equipment outright and in full, which can be extremely expensive and impractical for many.

To make such a substantial purchase, medical practices may need to use money that is already allocated in their budget for other items. And this can get tricky and can be risky.

Financing medical equipment can help alleviate the need to disperse large sums of cash all at once. 

Many medical equipment finance companies can create a payment plan with smaller payments, freeing up your capital for other needs. 

And this also makes it easier to keep your budget balanced.

#3: The Application Process Is Simple

Applying for some types of loans can be complicated and time-consuming, but the application process for medical equipment financing is generally simple and straightforward.

This was Dr. Kemper’s experience when he used financing to purchase equipment for his pediatric dental practice.

“When compared to … applying for a bank loan, the process of obtaining a lease is significantly simpler, and the conditions are more accommodating. The application procedure for a bank loan may be time-consuming and drawn out. There is a mountain of documentation that has to be submitted. The clearance procedure may take anything from a few weeks to a full month, and it requires meetings to be held before you can go further.”

Medical Equipment Financing Cons

Some of the cons that are associated with medical equipment financing include:

  • Higher upfront costs 
  • Harder to replace equipment
  • Responsibility for maintenance
  • Rates and terms vary depending on credit and equipment needs
  • Higher rates for lower credit scores
  • Potential to lose money
  • Potential for debt
  • Down payments are required 
  • High-interest rates
  • Renting equipment vs. owning
  • Cost for early termination

Let’s dig a little deeper into the last four disadvantages and how they may affect your financing decisions.

#1: Down Payments Are Required

Though it is possible to find a financing company that will provide financing without a down payment, most companies require a down payment. 

Dr. Hailee Rask experienced this in her orthodontic practice

“When we purchased our largest piece of equipment, a $50,000 x-ray machine, we paid in two payments. The equipment was made to order, so half was required as a down payment to place the order. Once the machine was set up and delivered about three months later, we paid off the remaining balance.”

Having a large down payment on hand – usually 20% of the equipment cost –  can be a challenge for many doctors and medical practices, leaving them with few options for purchasing needed equipment.

With no down payment and 0% interest for 60 days, the Flexbase Card makes medical equipment purchase a possibility. We make the application process easy and painless. 

#2: High-Interest Rates 

In addition to large down payments, you’ll also need to consider the interest rates you’ll be paying on a loan. 

Of course, interest rates will vary depending on the bank and the amount borrowed, but you’ll want to pay close attention to the added costs that interest will bring when deciding whether financing a purchase is the best option for your medical business.

So, what can you expect to pay in interest on medical equipment loans?

In general, you may find financing rates on medical equipment like these:

  • As low as 2% if the contract is made through a dealer
  • Between 6% and 12% through a bank
  • Between 2% and 20% from medical equipment financing companies

As with any loan, you’ll want to pay attention to the small print, especially where interest rates are concerned. Often medical equipment loans are not like your typical bank loan with a 5% APR. Instead, many equipment loans come with yearly interest that can be more pricey.

For example, compare APR and yearly interest on a $50,000 loan for 5 years:

  • With 5% APR - $943.56
  • With 5% yearly - $1,041.67

#3: Renting Equipment vs. Owning

Renting – or leasing – equipment instead of owning comes with added concerns.

The biggest concern is the issue of ownership. Dr. Kemper explains:

“Ownership of the medical equipment is retained by the lessor for the duration of the lease. But if you sign a lease-to-own contract when you first move in, you can avoid this problem. The equipment may be purchased at the conclusion of the lease period for 10% of the original cost, or at fair market value, depending on the terms of the lease-to-own arrangement.” 

On the other hand, Dr. Kemper shares the upside of leasing equipment:

“Leasing medical equipment allows you to get just about whatever you need. You may lease everything from MRI machines to lab equipment to computers to patient monitoring devices and so on. Buying this equipment is far less expensive than buying new, used, refurbished, or remanufactured versions.”

In simple terms:

  • With a loan, you make payments toward the ownership of the equipment. Once the loan is paid off, you own the equipment.
  • Leasing is like renting equipment. The company is allowing you to use the equipment in exchange for your monthly payments. 

#4: Costs for Early Termination

What if you finance a costly piece of equipment for your office and end up not using it as much as you’d like? Are you stuck with the equipment AND the monthly payments?

If you have a loan, that is precisely the situation you’ll find yourself in. But if you are leasing the equipment, you’ll be in a better position to get out of the commitment. 

Again, Dr. Kemper explains when he says, “Leasing medical equipment has this huge drawback, but the good news is that you may get out of your lease early. There will be early termination costs, but they will be less expensive than continuing to pay for unused equipment.” 

He also advises getting a shorter contract if you lease equipment that may become outdated quickly. 

5 Reasons You Should Consider Using the Flexbase Card To Finance Your Medical Equipment

If you want to avoid loans, interest rates, and the possibility of being stuck with an outdated or underused machine, Flexbase offers another solution – the Flexbase card.

#1: Own Your Medical Equipment

Unlike leasing, when you use the Flexbase card to purchase medical equipment you aren’t renting to own. 

You purchase the equipment with the card, and the equipment is all yours, free and clear.

#2: Pay 0% Interest for 60 Days

Paying 0% interest for 60 days is by far the best part of the Flexbase Card. 

When your transaction is paid in full within 60 days, you won’t pay a dime in interest. That’s a lot of savings compared to the traditional loan route.

#3: No Down Payments

If a huge down payment is simply out of your reach, another great perk of the Flexbase card is that down payments are not required. That means you’ll be able to keep more capital in your account for the daily costs of running your practice.

On top of that, the Flexbase card offers 10 times the credit limit compared to other traditional cards, meaning you’ll have enough capital to finance the medical equipment you need. 

#4: No Annual Fees

Some credit cards have fees that range from $35 to $500. Avoid costly annual fees altogether with the Flexbase card.

#5: It’s Easy to Get Pre-Approved

Forget the lengthy and tiresome application process you experience with other loans. Getting pre-approved for the Flexbase card is quick and easy. Click here to get started.

0% for 60 days*
Oh yeah, it's also 100% free
Get pre-approved
Trusted by hundreds of businesses and merchants