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Doctor Loans or Medical Factoring: Which is a Better Financing Option?

Medical factoring and doctor loans are two different types of finance which can be applied for by a physician or a doctor. These two have very different meanings, each serving their own purpose. Medical factoring is a product designed to battle the slow paying insurance claims, to provide for cash flow when it’s scanty.

On the other hand, if you’re a medical practitioner and your clinical practice is confronted with financial ups and downs or need money to fund personal goals, you can choose from a variety of doctor loans.

Medical Factoring

Medical factoring is a process by which physicians receive an advance claim on their money in case of slow payment of medical insurance. This helps the physicians maintain a healthy cash flow, which in turn helps them to run their business efficiently.

Doctor Loans

Doctor loans are of four different types, namely- business loans for doctors, personal loans for doctors, home loans for doctors and loans against property for doctors. Based on what you need, the appropriate loan option must be chosen. Business loans and personal loans are collateral-free loans, whereas, on the other hand, home loans and loan against property are secured loans.

Which is the better option?

  • Cash flow:

Both Medical factoring and doctor loans help a physician in case of cash flow problems. Medical factoring specializes in maintaining a healthy cash flow for a physician. On the other hand, Doctor Loan not only helps in cash flow but also helps in many other initiatives. For example education loans, clinic expansion, etc.

  • Higher education:

Some physicians who want to go for higher education and get a degree like an MD or MS, need a lot of money. A doctor loan is the only solution in this regard. Medical factoring has no use in this scenario. An average fee for higher education ranges from 35 lakhs to 40 lakhs and sometimes even more. A very few people have this much cash lying around and getting a loan is the best case scenario.

  • Expansion:

After earning a hefty profit every businessman wants to expand his business. A physician’s aim should not be anything smaller than that. Although using your profits to expand your practice is a foolish idea. By taking a doctor loan, you can expand your practice and at the same time reap the benefits of your profits.

In many places especially in rural areas, there is a lack of medicines and medicines stores. Opening a store in such places will require a lot of money. One would need infrastructure, staff, and certain technology. Even helping humankind has its cost.

A doctor loan can help in this type of investment, especially a flexi loan. In a flexi loan you apply for a certain amount of money and after you are approved you can take the whole amount or take how much you want in certain parts. You only have to pay the interest of the money you have actually taken.

  • Maintenance:

To be on the top of the game and to provide the best care to every patient, the state of the art equipment must be bought and used in every medical store and clinic. Not only that, those equipment must be maintained every day of the week. These equipment are not found in India and hence needs to be imported and hence, you’ll need a lot of money. Thus, you can use a medical equipment loan which is especially for the purpose of financing the purchase of medical equipment for doctors.


Doctor loans are way better than Medical Factoring. Medical factoring has one and only use, that is they help to maintain smooth cash flow. On the other hand, Doctor Loan has multiple benefits and uses. If looked carefully, it is even possible to find cheap doctor loan interest rate.
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