Healthcare finance is provided for purchase
of medical equipment, balance transfers of existing term loans, expansion of healthcare
What does a doctor do if he needs to expand
his business or purchase a very expensive medical equipment. Does he take recourse to a
home loan, mortgage loan or personal loan or is there a loan which is tailored to meet his
professional needs. A number of financial institutions now provide healthcare financing.
If you are a doctor or healthcare
professional and looking to expand your business, the article will guide you on the
requirements needed to avail of such a loan.
A new loan product, healthcare finance is
offered by banks and non-banking financial companies to doctors, medical practitioners,
limited companies, private hospitals, eye and diagnostics centres, pathology laboratories,
nursing homes, medical and dental colleges. It is offered against the security of
equipment and personal guarantee. Healthcare financing is also offered to speciality
clients like skin and dental clinics.
Healthcare finance is provided for purchase
of medical equipment, to refinance an existing lien on free medical equipment, balance
transfers of existing term loans and expansion of existing healthcare facilities among
others. The applicant can also avail loan to buy ancillary equipment like air conditioners
and lifts along with medical equipment.
Financial institutions like India Infoline
Finance, Reliance Commercial Finance and HDFC Bank provide such loans.
Who can avail of a loan?
Healthcare finance can be availed by
partnership firms, trusts, societies and private hospitals engaged in the healthcare
services. It can also be availed by a self-employed doctor with minimum experience of
How long does the loan process take?
The applicant has to fill in the loan
application form and provide the necessary documents. The documents required include
professional qualification certificates in the case of doctors, minimum three years of
work experience in the relevant healthcare field, details about the funding
requirement/project report, last three years income tax returns, last six months bank
statements, track record of past loans if availed, proforma invoice of the equipment to be
purchased, and desired know your customer documents.
Anyone availing of a loan will have to
furnish a guarantor as insurance in case of default by the borrower.
If the borrower is an individual promoter,
private limited company or a partnership firm, then the audited balance sheets and profit
and loss account statements of the last three years will have to be attached. A private
limited company needs to attach a copy of the memorandum of association, while a copy of
partnership deed is required for a partnership firm.
The time taken to sanction a loan may vary
depending upon the nature of the loan, quantum of funding and location. It usually takes
four to five working days after submission of the required documents for the loan to get
Loan amount and tenure
The maximum loan amount is usually capped
at 80% of the cost of medical equipment. Some financial institutions may offer up to 90%
of the total loan amount depending upon the financial strength of the customer. Loans are
also offered for the purchase of second-hand equipment. In this case, the equipment is
valued by an independent valuer. Based on the valuer's report, around 65% of the total
loan amount may be provided to the borrower.
The minimum loan amount availed by small
players is Rs. 2 lakh, while the same for large corporates is Rs. 15 crore.
In terms of repayment, the minimum tenure
is about 12 months, whereas the maximum is around 84 months. The average loan tenure is 61
Interest rates and insurance
These loans come with
an average interest rate of 14% per annum. To get a better deal, do not
forget to negotiate the interest rate. You will need to avail of a fire/burglar insurance
to protect the medical equipment against any damage or loss.
The processing fee on such loans is usually
1% of the total amount availed. This fee is paid only once and is non-refundable. Some
financial institutions also levy prepayment charge if you wish to pay the loan before the
tenure of the loan.
To sum up, a borrower needs to consider the rate of
interest, additional charges like processing fee, prepayment penalty charge, late payment
fee etc, documents required, approval time and the loan term before availing a loan.