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Financing the Business
 by Jordan R. Stewart, DPM Timonium Foot and Ankle Center Established July 2006 Timonium, MD Now that you have determined that you want to start your own practice, you have to figure out how to finance it. Unless you are independently wealthy or have a generous trust fund, you will need to get a loan. Regardless of the type of loan, you will need to have a detailed business plan. The plan should include start up costs, a working budget, liabilities, and projected income. I would recommend meeting with your accountant to review basic accounting terminology and record keeping. From day one, keep accurate records and save all receipts. Be sure all transactions are in the businesses name and be sure to use the business tax id. There are several business finance software packages available to help you manage your business--get one. I met with a loan officer and learned about the small business loan programs that are available. You can also visit the U.S. Small Business Administration website at www.sba.gov to learn about the loan programs. The loans I researched at the time had an interest rate equal to the prime interest rate plus an additional 2%. Keep in mind these rates are always changing. In order to qualify for a small business loan, a detailed business plan must be presented. Another riskier option to consider is a personal home equity line of credit. If you have good credit, this loan is easier to qualify for and the interest rate will be lower than a small business loan. Additionally, you do not need a business plan for this type of loan, but you will need such a plan to run an efficient business. Of note, with this type of loan, your personal assets or those of a co-signer are used as collateral. Be sure to consider this when you choose this loan option. When certain areas in a city or county are being developed or revitalized, or the community has a shortage of medical providers, incentives are sometimes offered to attract new businesses. One of these incentives is a low interest rate business loan. Contact your local, state, or federal economic development representative to inquire about this option.
Once approved for a loan, you will need to open a
business bank account. There are various fees associated with these
accounts, so be sure to visit different banks and compare your
options. Try to find a bank that is reputable and, if possible, a
bank that works with lots of small businesses. When you open your
business account, I would recommend opening a personal account with
the same bank. This will allow you to transfer money easily once you
start to take home a paycheck. Be patient because that wireless
transfer from your business account to your personal account is a
long ways away.
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