What is Doctor Loan?

Loans available for medical professionals are known as Doctor Loan. As it is clear from the name, the Doctor Loans are offered to medical professionals. The major attraction of Doctor Loan is profession-specific customisation, which means loan eligibility, documentation, the process of approval and the loan amount are customised to meet the needs of a doctor.

There are specialised schemes designed for qualified medical practitioners under any discipline to start independent practice, establish a nursing home or include technology for the existing business.

Purpose of Doctor Loan

Doctor Loan can be utilised for the following purposes:

  • Dentists can use the loan for the purchase of dental implants. For orthopaedists the loan can be utilised for various replacements/implants for shoulder/knee/hip/spine etc.
  • The loan can also be used for the purchase of equipment
  • For setting up a clinic, nursing home, hospital, veterinary hospital, pathology labs, and drug store.
  • For purchase of ready built premises for hospital/clinic or construction of clinic/hospital in own site or for purchase of land for construction of hospital/clinic thereon.
  • If the loan is for purchase of land and construction thereon the value of the land shall not exceed 50% of the project cost.
  • In case of purchase of the ready built building, the age of the building should not exceed 30 years. The residual life of the building should be at least 5 years more than the repayment period.
  • For the purchase of computers, vehicles, ambulance, furniture & fixtures, etc.
  • For expansion/renovation/modernization of existing premises
  • For including state of the art technology for the existing establishment

Secured Doctor Loans

Secured loans for doctors are mortgage loan or Loan Against Property. This can be availed by both salaried and self-employed doctors against the mortgage of residential or commercial property. 

Banks and other financial institutions offer this loan to doctors to set up a clinic, nursing home or buy medical equipment. Equipment loans are available as secured loans which are against the hypothecation of equipment purchased out of the finance.

Some of the equipment that can be purchased with Doctor Loan are:

  • Sonography Machines
  • CT Scanners
  • MRI Machines
  • X-Ray Machines

Key features of Doctor Loan by some of the Banks, to mention a few, are as given below:

SBI Doctor Plus Scheme

This is a specialised scheme to finance qualified medical practitioners

Parameters Features

Nature of facility

Term loan

Target group

Promoters of allopathic hospitals/nursing homes, allopathic doctors, polyclinics, X-ray labs, pathological labs any activity of allopathic discipline

Quantum of loan

For Individuals/Partnership/Corporates: From 10 Lakhs to 5 Crores (in metro/urban/other centres)

Margin

15%

Collateral Security

No collateral security for loans up to 2 Crores. The loan will be covered under CGTSME.

 

For loans beyond 2 Crores and up to 5 Crores, tangible collateral security to the extent of 25% and personal guarantee of promoters.

Repayment

The loan to be repaid within 3 to 7 years inclusive of moratorium period of 6 months. Repayment can be equated or customised as per the cash accruals. During the moratorium period, interest has to be serviced as and when due.

Other conditions

Income generated out of the equipment purchased should necessarily be routed through the account maintained with the bank,

Andhra Bank Doctor Plus Scheme

This is a specialised scheme to finance qualified medical practitioners including physiotherapists, dental surgeons, and radiologists.

Parameters Features

Nature of facility

Term loan and overdraft facility

Quantum of loan

75% of revenue expenditure of previous year as per Profit & loss account certified by a Chartered Account for overdraft facility and 75% of the cost of the project for term loan with a maximum of 20 Lakhs.

Margin

25%

Interest

1 year MCLR + 3.45% = 12.20% (based on current 1-year MCLR of 8.75% as updated on 15.04.2019)

Collateral Security

No collateral security required. The loan will be covered under CGTMSE. CGTMSE premium to be borne by the borrower.

Repayment

Term loan to be repaid within 84 months including moratorium period of 1 year. Moratorium period is for both principal and interest. Loan for working capital in the form of clean overdraft is valid for one year. The working capital facility has to be renewed every year. The renewal is at the discretion of the bank.

Oriental Bank of Commerce MSME Doctor Plus Scheme

This is a customised scheme to cater to the financial requirement of medical practitioners under any discipline.

Parameters Features

Nature of facility

Term loan and overdraft facility

Quantum of loan

The quantum of loan is fixed area wise.

  • In the case of rural areas for the hospital including diagnostic centre, the maximum loan amount is 2 Crores and for clinic the maximum loan amount is 50 Lakhs.
  • In case of semi-urban/urban areas, the maximum loan amount for the hospital including a diagnostic centre is 15 Crores and for dispensary, the maximum loan amount is 1 Crore.
  • In case of Metros the maximum loan amount for the hospital including a diagnostic centre is 25 Crores and for clinic, the maximum loan amount is 2.50 Crores.
  • For individuals/proprietorship firms with less than 2 years' experience including freshers the loan quantum will be 50% of the normal limit area-wise or 2 Crores whichever is less.
  • For borrowers who require only working capital limit the quantum will be fixed at 20% of the normal limit area-wise.

Margin

  • 25% for acquiring premises or expansion/renovation/ modernisation of existing premises.
  • 15% for purchase of equipment/machinery
  • 15% of on road price of the vehicle in case of purchase of ambulance/other vehicles.
  • Nil for working capital limit

Interest

  • 8.75% to 12.50%
  • Penal interest at 2% of the overdue amount for the overdue period will be collected in case of delayed payment.

Collateral Security

  • Primary Security: Assets created out of bank finance
  • Collateral Security: First charge on immovable property, plant and machinery and liquid securities like Bank Depo.

Repayment

  • Repayment period including moratorium period should not exceed 10 years. Maximum moratorium period is 24 months.
  • However, moratorium period up-to 36 months is allowed in case of construction of nursing home/hospital/medical centre provided land is purchased out of the bank finance. Construction should start within 6 months and should be completed within the moratorium period.

Corp Doctor Plus Scheme

This is a customised loan scheme by Corporation Bank to cater to the needs of qualified medical practitioners and physiotherapists.

Parameters Features

Nature of facility

Term Loan and overdraft facility

Age

25 to 60 years

Minimum experience required

12 months

Quantum of loan

  • The maximum loan amount is 5 Crores
  • For purchase of medical equipment, the maximum loan amount is 2.50 Crores.
  • For purchase of physiotherapy equipment for a physiotherapist, the loan amount is restricted to 50 Lakhs.

Margin

  • 35% for purchase/construction of clinic/ hospital
  • 15% for purchase of medical equipment or other items

Interest

  • 10.90% for loans up to 5 Crores
  • 11.65% for loans above 5 Crores

Collateral Security

  • Hypothecation of assets financed by the bank with a suitable third- party guarantee for loans up to 10 Lakhs.
  • Immovable property or other approved securities like bank deposits, LIC policy or NSC to the extent of 50% of the loan amount in addition to hypothecation of assets financed by the bank for loans above 10 Lakhs.

Repayment

  • In case of construction/renovation/repair, the maximum repayment period is 15 years excluding the moratorium period. Moratorium period should not exceed 24 months.
  • In case of purchase of medical equipment maximum repayment period is 84 months excluding the moratorium period of 6 months depending on the durability and useful life of the asset.

Processing fee

0.50% of the sanctioned loan amount (minimum of 1,000)

Pre-payment charge

Nil

The above mentioned are a few of the banks that offer customised loans to Medical Practitioners. There are several other banks and financial institutions that offer customised loans to Medical Practitioners.

Benefits of Doctor Loan

The following are the benefits of Doctor Loan:

  • Low -interest rates as compared to rates offered to other self-employed professionals
  • Fast turnaround and loan approval within hours
  • No guarantors required
  • End-use includes the construction of a clinic, renovation or purchase of medical equipment
  • Flexible loan tenure. Tenure up between 12 months to 96 months.
  • Part-prepayment option is available
  • Minimum documentation and quick approval based on basic KYC, Income Proof and Credit Score.
  • Most financial institutions offer pre-approved loans to doctors

Eligibility for a Doctor Loan

The eligibility criteria to qualify for a Doctor Loan are as follows:

  • The applicant must be a Salaried Doctor
  • Should be a Registered Medical Practitioners/Physiotherapist in the age group between 25 to 65 years with a minimum experience of 2 to 5 years in the field depending upon the bank from where the loan is availed.
  • In case of Partnership firms, 50% of the partners should be doctors
  • In the case of Company, 50% of the share should be owned by doctors
  • Hospitals which are being run by Trusts/Companies/Institutions can also avail the loan
  • Professionals managing Medical Diagnostic Centres and Testing Labs are eligible
  • Where loan amount is up to 10 Lakhs close relatives i.e., spouse, mother, son or daughter with regular income can be co-applicants even if they are not Doctors. However, the number of co-applicants should not exceed two.
  • Applicants should have an IMA (Indian Medical Association) membership number or any registration allowed by Indian Government.
  • Should have a profitable existence for two years
  • A minimum annual income of 1 Lakh as per ITR
  • The applicant's Credit Score should be above 700

*The eligibility factors may vary from bank to bank

Things to Consider While Applying for a Doctor Loan

The following things need to be considered while applying for Doctor Loan:

  • Check credit score: Credit score is one of the primary requirements to qualify for a loan. Check your credit score before applying for the loan. With a low score, there are all probabilities of your loan application being rejected. Having a credit score above 700 is mandatory to qualify for the loan. Check the score before applying for the loan and set right the discrepancies before applying for the loan so that a high score will be maintained.
  • Do market research: There are various players in the market who offer competitive rates and features for the loan. Do thorough research before choosing the loan provider in order to get the best deal.
  • Avoid multiple applications: Approaching different banks and applying for the loan at the same time will not help you obtain a loan faster. It will only reduce the chances of your getting a loan. Every inquiry made at a bank will be listed out in your credit report which will reduce the credit score. Instead of applying for a loan with different banks at the same time, do market research, keep your score good and have all the documents ready before applying for the loan, which will minimise the turnaround time.
  • Business existence: Experience in the field at least for a period of 2 years with a profitable existence is one of the primary requirements to qualify for the loan. If your business is new and you are yet to break-even, then the chances of the loan proposal being accepted are bleak.
  • Maintenance of proper accounts: If you are running a business, then the maintenance of proper accounts and other financial information is very crucial. Your financial statements like the balance sheet and profit and loss accounts are the basis to assess your repayment capacity.

Degrees Required to Apply for Doctor Loan

Following are some of the degrees that are required to apply for a Doctor Loan:

  • MD/DM/MS for Super Specialist Doctors
  • MBBS for Graduate Doctors
  • BDS/MDS for Dentists
  • BHMS/BAMS for Ayurvedic and Homeopathic Doctors
  • DHMS for Homeopathic Doctors

Types of Entities Eligible for Doctor Loan

Multiple categories of doctors can avail the loan from a bank or any other financial institution. The categories are as listed below:

  • Salaried doctors: Medical practitioners with a regular source of income along with 5 years of experience in the field can apply for the loan under this category.
  • Self-employed doctors: Doctors operating as proprietors in a proprietorship firm, as a partner in a partnership firm or LLP and as Directors in Private Limited Companies can apply for loans under this category.
  • Loans for hospitals and nursing homes: Loans are given to set up a new clinic/hospital/nursing home or for renovation/repair of the existing premises under this category.
  • Loans for diagnostic centres: Loans are given to set up to doctors who wish to set up diagnostic centres and pathological laboratories.
  • Loans for specialised clinics: These loans are taken by doctors to set up specialised clinics like Dermatology clinics, Dental clinics, and Ophthalmic Centres.

Documents Required for Doctor Loan

For Salaried employees

  • Duly filled application form for a Doctor Loan
  • Two photographs of the applicant in passport size
  • ITR records from the last two years
  • Proof of identity such as the applicant's Passport/ PAN Card/ Voter ID/ Driving License
  • Proof of Residential Address such as Registered Rent Agreement/ Leave and License/ Utility Bill of at least three months/ Passport.
  • Proof of Income such as last six months' salary slip, Form 16 of two years, Bank statement for at least the last six months that reflects salary being credited or EMI being debited.
  • All the legal, property-related documents like past title chain. For e.g. - conveyance deed, allotment letter, sales deed, latest property tax receipt, possession letter, copy of the approved plan of construction or extension

For Self-Employed

  • Duly filled application form for a Doctor Loan
  • Two photographs of the applicant in passport size
  • Proof of identity such as the applicant's Passport/ PAN Card/ Voter ID/ Driving License
  • Proof of Residential Address such as Registered Rent Agreement/ Leave and License/ Utility Bill of at least three months/ Passport.
  • Proof of Business like GST Returns/ company's incorporation details Address proof of the business, accounts and balance sheets showing profit and loss statements which have been certified by a CA, the proof of the business's existence a copy of the partnership deed and business profile.
  • In case of Companies KYC documents of Directors and in case of partnership firms KYC documents of partners.
  • Proof of qualification: Graduate or Post Graduate qualification certificate, IMA (Indian Medical Association) membership number, or any other registrations allowed by Indian Government.
  • All the legal, property-related documents like past title chain. For e.g. - conveyance deed, allotment letter, sales deed, latest property tax receipt, possession letter, copy of the approved plan of construction or extension.

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