Emerging technologies in the medical field open up new ways for doctors and practitioners to treat diseases in more effective ways. Hence, it becomes necessary for doctors to equip themselves with the latest state-of-the-art medical apparatus.
However, upgrading your hospital or clinic with new medical equipment may cost you a significant financial outlay. For instance, a single unit of X-ray machines, MRI machines, life-support ventilators, and CAT scan machines can cost a fortune.
In this case, a medical equipment loan is a viable solution to upgrade your healthcare facility with the latest apparatus. As its name suggests, medical equipment financing allows you to access funds to purchase medical apparatus. You can pay back the loan amount and interest in easy EMIs from future cash inflows in the course of the repayment tenure.
Read on to learn about healthcare equipment finance and how to avail of this lending facility.
You need to have high-grade medical equipment to provide best-in-class medical services to your patients. As mentioned, the upgradation of medical equipment requires a considerable capital outlay, which you can finance with a medical equipment loan.
The following are some notable features of a loan for medical equipment you need to know before applying for it:
You can use the medical equipment loan amount only to purchase the latest state-of-the-art medical devices
Some banks and NBFCs offer customised medical devices loans to help you purchase the kind of equipment you need
Lending institutions provide flexible repayment tenures, ranging from 1 year to 7 years
Due to the involvement of huge investments, financial institutions generally offer these loans at lower interest rates
These loans are generally secured by the medical equipment you purchase
When availing a medical equipment loan, you or your healthcare facility need to fulfil the following eligibility requirements:
Individuals need to be self-employed doctors having a minimum qualification of an MBBS or BDS degree
Self-employed doctors practising Ayurveda, Yoga and Naturopathy, Unani, Siddha, and Homeopathy can also apply for this loan
For a firm to avail such a loan, the promoter of the firm needs to be a doctor with the above-mentioned qualifications
Hospitals, pathological laboratories and diagnostic centres, nursing homes, and clinics are eligible to apply for these loans
If you are a self-employed doctor, you must be within the age bracket of 25 to 65 years
Some financial institutions may require you to have 1-3 years of post-qualification work experience
You may need to have a spotless credit history to get loan approval
Some banks require you to have 3 years of office stability
The following are some documents you need to submit when applying for a loan for medical equipment:
Proof of Identity: Aadhaar card, Voter ID, Passport, or PAN card
Proof of Residence: Aadhaar card, Voter ID, Passport, Utility bills, or Rent agreement
Proof of Business Address: Utility bills or rent agreement
Proof of Income: ITR for the last 2 years or bank statement of the previous 6 months
Proof of Business Address: PAN card, Business address proof, and other registration documents
Proof of Identity of Director, Proprietor, or Partner: Aadhaar card, Voter ID, Passport, or PAN card
As a health equipment loan program is secured against the medical devices you purchase, banks charge lower interest rates on these loans. The interest on this loan may vary depending on the lender, but it usually starts from 8.5% per annum.
With the loan amount, you can purchase different loan equipment and repay the principal and interest across the repayment tenure. Furthermore, banks and NBFCs charge other types of fees as well when you avail a medical equipment loan.
For instance, you need to pay a processing fee of up to 2% (plus taxes) of the loan amount at the time of its disbursal.
On the other hand, if you decide to prepay or foreclose the loan, the bank may charge you 4% (plus taxes) on the remaining amount. However, remember that these charges vary from one lender to another.
The cost of a single medical device unit can go up to lakhs or even a crore. Hence, a medical equipment loan amount can be a huge sum. When you borrow such a large amount as a loan, you need to have financial clarity about the repayment schedule.
In this case, a medical equipment Loan EMI calculator comes in handy. You can use it not only to compare different lenders but also to draw an amortisation schedule. This schedule helps you determine the monthly outflow of EMIs to repay your loan.
By chalking out a clear budget for your loan repayment, you can save yourself from loan default and keep your credit history spotless.
Many banks and NBFCs allow you to apply for a medical equipment loan online. It makes the entire process of availing this loan relatively easy and seamless. To apply for this loan, follow these simple steps:
Step 1: Visit the official website of the bank or NBFC from where you wish to avail this loan
Step 2: Go to the ‘Loans’ section and choose the ‘Medical Equipment Loan’ category
Step 3: Click on the ‘Apply Now’ button to proceed to the application process
Step 4: Fill in the application form with accurate information, like name, date of birth, address, contact, and employment details
Step 5: Submit the form after completing all the details
Step 6: Select the suitable loan amount and repayment tenure
Step 7: Once all these steps are completed, you will receive a confirmation message on your registered contact number
Step 8: The loan amount will be credited to your bank account
The following are some advantages you stand to enjoy when you avail a medical equipment loan:
Larger Amount of Loans: With a medical equipment loan, you can get a loan amount of up to ₹10 Crores. With access to a larger amount of funds, equipping your healthcare facility with the latest apparatus becomes easier.
High LTV: Medical device loans are secured by the equipment you purchase using the loan amount. These loans offer a high loan-to-value (LTV) ratio, ranging up to 85%-90% of the cost of the equipment.
Low-Interest Rates: Since these loans are secured, you also enjoy low-interest rates on your borrowing, translating into higher savings. The interest rate on healthcare equipment finance starts from as low as 8.5% per annum.
Easy Application Process: Most banks and NBFCs offer an online application process, making it easier for you to apply and avail the medical equipment loan. Moreover, this eliminates the need to visit the branch physically.
Flexible Loan Tenures: Most lending institutions offer flexible repayment tenures that can go up to a maximum period of 7 years.
Easy Repayment Options: Many banks and NBFCs offer flexible repayment options. For instance, some lending institutions offer an EMI moratorium of up to 6 months.
To sum up, a medical equipment loan is of paramount importance for the healthcare sector. It allows these facilities to upgrade their equipment and employ more effective ways of treatment.
As these devices can cost lakhs and even a crore, a health equipment loan program provides much-needed financial assistance. In other words, these devices allow healthcare facilities to diagnose diseases and save precious lives.
The maximum loan tenure for a medical equipment loan is 7 years.
Medical equipment financing refers to the amount you can borrow to purchase medical devices for your healthcare facility.
With a medical equipment loan, you can finance devices like X-ray machines, MRI or CT Scan machines, dental or surgical instruments, etc.
Yes, you can prepay or foreclose your medical equipment loan at any point of repayment tenure. However, note that you will have to pay a fee of 4% (plus taxes) of the loan balance, and this amount can vary across lenders.
Although it depends on the bank, some banks offer you a letter of credit, accompanying the healthcare equipment finance.
No, it is not necessary for you to have a guarantor. However, it may depend on the bank’s policies and the loan amount you wish to borrow.
Yes, you need a good credit score to avail a medical equipment loan.
A medical equipment loan covers the cost of medical devices, instruments, and the balance of an existing loan in case of a balance transfer.