You’ve found the premises.
The lease works, the location is right and you can finally see what the new practice will look like.
Then the quotes start arriving.
Treatment equipment. Imaging equipment. Sterilisation. Furniture. Computers. Practice software. Signage. Cabinetry. Electrical work. Plumbing. Reception. Building works.
Individually, each item can look manageable.
Together, they can turn a new medical, dental or allied-health practice into a substantial capital project.
For health professionals around Adelaide opening, relocating or expanding a practice, one of the biggest financing mistakes can be concentrating on the major equipment purchase while underestimating everything else required before the first patient walks through the door.
Start With the Complete Project Cost
Suppose you’re opening a dental practice.
You have a quote for $180,000 of dental equipment, so you start investigating finance for $180,000.
But that isn’t necessarily the project.
You may also need cabinetry, sterilisation equipment, imaging technology, computers, furniture, electrical work, plumbing, signage and substantial fit-out work.
Then there is the cash required to operate the business while patient revenue builds.
A $180,000 equipment purchase can form part of a much larger investment.
Before deciding how much finance is required, work out what it will cost to get the entire practice operational.
Separate the Equipment From the Fit-Out
This distinction matters because different parts of the project may need to be financed differently.
A dental chair is an identifiable piece of equipment.
An ultrasound machine is equipment.
An imaging system is equipment.
But walls, plumbing, electrical work, flooring and built-in cabinetry are part of a fit-out.
Depending on the lender and transaction, equipment and fit-out costs may be treated differently.
Don’t assume that because a lender is prepared to finance the medical equipment, every dollar of construction work can automatically be added to the same facility.
Give us the complete cost breakdown so we can see what the project actually contains.
What Medical Equipment Can Potentially Be Financed?
The range can be much broader than people expect.
Depending on the profession, lender and asset, finance may potentially be considered for eligible equipment such as:
dental chairs and treatment units
imaging equipment
ultrasound machines
diagnostic equipment
ophthalmic equipment
sterilisation equipment
medical lasers
laboratory equipment
rehabilitation equipment
physiotherapy equipment
veterinary equipment
specialist medical technology
computers and technology
other eligible practice equipment
The asset itself matters.
So does whether it is new or used, who is supplying it and how it will be used within the practice.
One Supplier Rarely Provides Everything
A practice project can involve many suppliers.
The medical-equipment supplier may provide the major clinical equipment.
A builder completes the fit-out.
Another business supplies cabinetry.
An IT provider installs computers and networking.
A separate supplier provides furniture.
Specialist contractors may handle plumbing, electrical or medical gases.
That means there may be multiple quotes, invoices and payment dates.
Tell us about them early.
The funding plan needs to reflect the actual project rather than assuming one invoice will arrive at the end.
Deposits Can Start Long Before the Practice Opens
Suppliers may require deposits when equipment is ordered.
The builder may require progress payments.
Custom cabinetry could have its own payment schedule.
Some equipment may have long lead times and need to be ordered well before installation.
As a result, cash can start leaving the business months before the practice opens.
Map those payments.
If $100,000 is required over the next three months but the finance is structured as though everything will be paid on opening day, the timing doesn’t match the project.
Don’t Use All Your Savings Before the Doors Open
This is one of the biggest issues I want a new practice owner to consider.
You might have substantial savings available.
Using those funds can reduce the amount borrowed.
But what does the bank account look like afterwards?
A new practice can need cash for:
wages
rent
marketing
consumables
insurance
software
utilities
professional fees
supplier accounts
loan repayments
unexpected costs
Revenue may not immediately reach the level you expect.
If all available cash has gone into the equipment and fit-out, the practice can open with excellent facilities and very little working capital.
That’s not necessarily a comfortable position.
Equipment Finance and Working Capital Solve Different Problems
Imagine the practice needs $300,000 of equipment and $150,000 of cash to cover fit-out gaps, opening costs and early operating expenses.
Those requirements shouldn’t automatically be forced into one loan.
Equipment finance may be considered for eligible identifiable assets.
Business or working-capital finance may potentially address other eligible costs.
The structure depends on the circumstances and lender.
The important thing is that you tell us about the $450,000 project, not just the $300,000 equipment quote.
How Long Until the Practice Produces Normal Revenue?
Opening day doesn’t necessarily mean full revenue.
A practitioner moving an established patient base may have income relatively quickly.
A completely new practice may need time to build appointments.
A specialist practice could have a different referral and revenue cycle again.
Consider how long the business can operate if revenue builds more slowly than forecast.
If your cashflow plan assumes the appointment book will be full from week one, test what happens if it isn’t.
Good finance planning should allow for a realistic ramp-up period.
What If You’re Expanding an Existing Practice?
Expansion creates a different conversation.
Perhaps the current practice is already busy and you’re adding another treatment room.
Maybe you’re bringing in another practitioner.
You might be purchasing additional diagnostic equipment because existing capacity is constrained.
In that case, we can look at the existing business as well as the proposed investment.
Why is the expansion happening?
Is demand already there?
What additional revenue or capacity is the equipment expected to create?
An established practice purchasing another $100,000 of equipment is a different transaction from a brand-new business opening its first location.
Replacing Equipment Before It Fails
Not every equipment purchase is driven by expansion.
Sometimes the existing equipment is reaching the end of its useful life.
Waiting until a critical machine fails can create an urgent finance requirement and potentially interrupt patient services.
If you already know an important piece of equipment will need replacing within the next year, start planning before the breakdown occurs.
Obtain quotes.
Understand lead times.
Consider whether new or used equipment is appropriate.
Then look at the finance options before the purchase becomes an emergency.
Used Medical Equipment Can Reduce the Investment
Some practices consider used or refurbished equipment.
That can reduce the amount of capital required, particularly for expensive specialist assets.
But the purchase needs careful assessment.
Age, condition, remaining useful life, service history, supplier, warranties and support can all matter.
Some technology also becomes obsolete faster than traditional physical equipment.
A ten-year-old piece of machinery may still perform its function perfectly.
A ten-year-old technology platform may present very different issues.
Consider the individual asset rather than assuming used equipment is automatically good or bad.
Software Can Be a Significant Part of the Project
Modern practices depend heavily on technology.
There may be practice-management software, imaging systems, servers, computers, communications technology and other digital infrastructure.
Some costs may be one-off purchases.
Others may be subscriptions or ongoing service agreements.
Understand which is which.
A monthly software subscription isn’t the same type of asset as a $150,000 imaging machine.
Separating recurring operating costs from capital expenditure gives you a clearer view of what actually needs to be financed.
Don’t Forget the Fit-Out at the End of the Lease
A commercial lease can create obligations that extend beyond opening the practice.
Depending on the lease, there may eventually be make-good or other requirements when the premises are vacated.
Your solicitor should advise you about the lease and its obligations before you commit.
From a finance perspective, the important point is that a beautiful $300,000 fit-out doesn’t necessarily have the same recoverable value as portable equipment.
Much of the investment may be specific to those premises.
That makes the lease term and business plan particularly important.
Match Long-Term Finance With Long-Term Assets
A major piece of clinical equipment may be expected to remain productive for many years.
Other items may need replacing much sooner.
When considering finance terms, think about the expected useful life of what you’re buying.
You don’t necessarily want to still be repaying equipment after it has become obsolete or been replaced.
Equally, compressing the finance into an unnecessarily short term can put significant pressure on the practice’s early cashflow.
The repayment needs to be considered alongside both the asset and the business.
What About a Balloon or Residual?
Depending on the asset, finance product and lender, a balloon or residual payment may potentially be available.
This can reduce scheduled repayments during the finance term because an amount remains outstanding at the end.
But that remaining amount still needs to be dealt with.
For technology-heavy equipment, think carefully about expected value at the end of the term.
An asset that becomes obsolete quickly may not provide the same exit options as equipment with a strong second-hand market.
Don’t choose a balloon solely because it produces the smallest repayment today.
What If You’re Buying Into an Existing Practice?
You may be acquiring more than equipment.
A practice acquisition can include goodwill, patient relationships, business assets, equipment and other components.
That’s a different transaction from simply financing a machine.
If you’re buying an existing medical, dental or allied-health practice, tell us at the beginning.
The finance requirement may need to consider the acquisition as a whole rather than treating the equipment invoice in isolation.
Professional Qualifications Don’t Eliminate the Need for a Business Plan
Health professionals can have strong earning capacity, but a practice is still a business.
A new clinic needs patients, systems, employees and cashflow.
When substantial finance is being considered, we want to understand how the practice is expected to operate.
That doesn’t mean every transaction requires a 100-page business plan.
But you should be able to explain what you’re opening, where revenue will come from, what the project costs and how much cash will remain available after opening.
Build a Contingency Into the Project
Fit-outs have a habit of changing.
An electrical requirement appears.
The cabinetry costs more than expected.
A piece of equipment needs a different installation.
Construction is delayed.
Another item becomes essential.
If the entire project only works financially when every quote remains exactly as originally estimated, there’s very little room for reality.
Allow for reasonable contingency.
The objective isn’t to borrow unnecessarily.
It’s to avoid reaching 90% completion and discovering there isn’t enough money left to open.
What Information Should You Prepare?
If you’re planning a new or expanded practice, start gathering the complete project information.
That might include:
equipment quotes
fit-out quotes
lease details
supplier payment schedules
expected opening date
your proposed cash contribution
existing business financials if expanding
forecast information where relevant
professional experience
details of any existing loans
working-capital requirement
The exact lender requirements will depend on the transaction.
But the more clearly we understand the project, the easier it is to investigate appropriate finance structures.
Medical and Professional Equipment Finance in Adelaide
Whether you’re opening a dental clinic, medical practice, allied-health business, veterinary clinic or another professional practice around Adelaide, the equipment is only one part of the investment.
Look at the complete project.
Separate equipment from fit-out and operating costs.
Map when suppliers need to be paid.
Work out how much cash the business needs after opening.
Then decide how much of the project should be funded from your own capital and how much finance should be investigated.
Opening or Expanding a Practice?
Send Thrive Broking your equipment quotes, estimated fit-out cost, expected opening date and approximate cash contribution.
If you’re already operating and expanding, tell us what additional capacity you’re creating and what equipment is required.
We can investigate equipment and business finance options based on the complete project rather than looking at one equipment invoice in isolation.
The objective isn’t simply to finance the equipment that goes into the practice. It’s to make sure there’s still enough capital left to run the business once the doors open.