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According to market projections, the estimated US market share for medical equipment rental in 2026 is $11.9 billion and is expected to grow steadily in the next five years, closing at $14 billion in 2030. The industry is also essential to keep the entire healthcare sector of the US working. Seeing the immediate need, many entrepreneurs are entering the market with their own rental businesses but require medical equipment financing to get started.
Medical devices are often expensive because of government regulations, safety norms, advanced medical technology, and strict quality control checks. However, with easy medical equipment rental financing and leasing options, business owners can timely procure new equipment and provide it to hospitals and healthcare facilities to save lives.
What is Medical Equipment Rental Financing?
Multiple operations in the healthcare industry are time sensitive and countless lives depend on them. Because of heavy medical equipment costs, hospitals and medical facilities often prefer to rent it from medical equipment rental companies. Those businesses often need equipment financing to start their rental business or expand operations to new business. With medical equipment rental financing, they can easily procure equipment in time, complete necessary business registrations, and increase supply in the healthcare industry.
Without medical equipment rental companies, it might be difficult to ensure every patient gets the care they deserve. This is why leasing companies may offer lenient application process for medical equipment rental financing.
Benefits of Medical Equipment Rental Financing
For medical equipment rental companies, equipment financing solutions provide several benefits:
Procure Equipment without Huge Upfront Payment
With the help of medical equipment rental financing, small businesses procure healthcare equipment without huge upfront costs. They don't need to invest hundreds of thousands just to purchase medical, instead they can make a small down payment to get started and pay the rest in affordable monthly payments.
Possible Tax Benefits
Working capital obtained on rent is often counted as a tax-deductible, lowering the overall tax liability of the medical equipment rental business. It is always best to consult with a tax professional.
Suitable for all Financing Needs
Small businesses can opt for medical equipment rental financing for all types of medical equipment. Even multiple equipment manufacturers offer financing options for medical and healthcare industry equipment.
Easy Repayment
For a reliable medical equipment rental business with good credit score, any equipment financing company may provide easy and long-term repayment plans. Some lenders even allow you to fix a desired monthly payment and the repayment duration of the medical equipment loan.
Help Provide Better Care
Healthcare professionals require state of the art equipment to effectively diagnose various types of diseases, prepare a treatment plan and offer best-in-class care. With rental medical equipment, it becomes easy for both healthcare providers and patients to obtain lifesaving equipment at low costs and in time.
Types of Equipment You Can Finance with Medical Equipment Rental Financing
Medical equipment rental companies can finance all types of medical equipment to fulfill their business needs. This includes both new and used equipment. As medical equipment loans ensure good cash flow management, rental companies can invest their savings to purchase more medical equipment.
Diagnostic equipment
Like X-ray machines, MRI machines, and ultrasound machines
Monitoring equipment
Like heart rate monitors and oxygen level monitors
Life support equipment
Like ventilators, defibrillators, incubators, dialysis machines and heart-lung machines
Laboratory equipment
Like blood gas analyzers, coagulation analyzers and haematology analyzers
Hard medical equipment
Like beds, wheelchairs, stretchers and oxygen cylinders
Medical treatment equipment
Like nebulizers, medical lasers, and infusion pumps
Types of Medical Equipment Rental Financing
The US healthcare industry benefits from multiple equipment financing solutions. These include but are not limited to:
01 Medical Equipment Loan
These are like term loans but to purchase medical equipment. Instead of bearing heavy upfront costs, rental businesses pay manageable monthly payments. The interest rate and duration of the loan can vary for each equipment financing company. However, lenders do follow a strict credit approval process which considers credit score, income stability, business age, and debt-to-income. Medical equipment loans are highly recommended for rental businesses who want complete ownership of their business equipment.
02 Medical Equipment Leasing
In this type of medical equipment rental financing, equipment manufacturers provide medical equipment on a fixed lease. After the end of the lease, the manufacturer retains the ownership of the equipment. Key benefits of medical equipment leasing include easy application process, no hard credit pull, and no strict credit score requirements. Many times, rental businesses aren't even required to show their balance sheets, making credit approval highly convenient. Medical equipment leasing is highly beneficial for procuring and renting highly specialized or extremely costly medical equipment.
03 SBA Loans
Rental businesses can avail the Small Business Administration (SBA) loans for medical equipment rental financing. The most popular SBA loan options for medical equipment rental companies include SBA 7(a) and SBA 504. The SBA 7(a) loan is beneficial for those rental businesses who are planning to procure medical equipment in bulk, as the loan amount is usually higher. However, it is important to note that SBA doesn't have a specific ‘medical equipment loan', but loan options can be used to purchase medical equipment. On the other hand, SBA 504 loan is beneficial for those rental businesses who have limited medical equipment needs.
04 Line of Credit
Private lenders and even banks provide line of credit to business owners. Rental businesses can use this line of credit towards medical equipment rental financing. Applicants may be pre-qualified for line of credit loans, meaning no strict credit approval checks, competitive interest rates, and low monthly payments. The best part about using line of credit for medical equipment rental funding is that business owners only pay interest on the amount the withdraw, not on the entire credit line.
05 Revenue-Based Financing (RBF)
Revenue-Based financing is another financing solution that rental businesses can avail. In exchange for financing, businesses sign up to share a small portion of their monthly gross revenue in the repayment structure. It keeps the entire repayment process aligned with the company's growth and is highly suitable for medical equipment rental startups. Even top medical equipment rental companies can opt for revenue-based financing to channel business growth. of their monthly gross revenue in the repayment structure. It keeps the entire repayment process aligned with the company's growth and is highly suitable for medical equipment rental startups. Even top medical equipment rental companies can opt for revenue-based financing to channel business growth.
Eligibility Criteria for Medical Equipment Rental Financing
Different lenders follow different eligibility criteria. However, certain aspects remain the same in almost all financing options.
Credit Score
Credit score still remains one of the primary factors to evaluate a business’ overall creditworthiness. According to Experian, anywhere between 670-739 is considered good credit score, between 740-799 is very good score, and between 800-850 is exceptional.
Income Stability
Lenders prefer to finance medical equipment for businesses with very good income stability. For startups, the income stability of the business owner counts. As a proof of income stability, you can show financial statements, such as tax returns and balance sheets.
Age of Business
Startups with 2 years of experience in the healthcare industry have a higher chance of securing medical equipment rental financing than completely new startups. Business age demonstrates your grasp of operations and builds credit worthiness.
Business Model
Rental business model can be of various types. These include pay-per-use rentals, daily rentals, weekly rentals and even monthly rentals. The revenue generation model can also vary in your business plan. Lenders want to see a strong business model that is viable and can generate revenue for a long term.
Debt to Income Ratio
Business owners who have already applied for other types of loan maybe at a slight disadvantage as this automatically increases their debt-to-income ratio. On the other hand, business owners with good debt-to-income ratio have significantly higher chances of securing medical equipment rental funding.
Tips to Select the Right Medical Equipment Rental Financing Option
The healthcare industry has multiple equipment financing solutions provider. This can make selecting the right option highly confusing for medical equipment rental companies. The following tips may help:
Consider Loan Amount
If you require medical equipment rental financing for only a few pieces of equipment, with loan amount up to $50,000, it may be better to opt for SBA 504 or line of credit. If the requirement is on the higher end, medical equipment loan, SBA 7(a) can help.
When Ownership is Not Required
Even for medical equipment rental companies, it does not make sense to own extremely costly specialized equipment that only a single client requires. However, meeting such demands can give your rental business a huge reputation boost.
When Ownership is Required
For medical equipment, such as monitors, beds, wheelchairs, ventilators, X-ray machines, etc. that are rented out on a regular basis, opting for a medical equipment loan is best.
For Used Equipment
Used equipment means shorter lifespan and high-risk profile. For such medical equipment, the interest rate maybe high. If you need medical equipment rental financing to purchase used equipment, consider pre-qualified loans. These usually have a pre-decided interest rate, which would be more suitable for you instead of a fresh application.
For New Equipment
For new equipment, the lifespan is more, and risk-profile is low. Lenders usually offer lower interest rates.
For Credit Score Under 700
If your credit score is under 700, you can still apply for medical equipment loans. Along with credit score, lenders also evaluate other parameters such as income stability and debt-to-income ratio to approve loans. Other option that you have is equipment leasing. As the equipment will be eventually returned to the manufacturer, equipment leasing remains low risk.
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FAQs about Medical Equipment Rental Financing
1. What is medical equipment rental financing?
With the help of medical equipment rental financing, rental businesses and healthcare professionals can purchase medical equipment without heavy upfront costs. It also helps provide a quick, efficient and reliable way to timely fulfill medical equipment shortages and provide quality patient care.
2. What are the multiple medical equipment rental financing options?
As a rental business owner, you can avail for medical equipment loans, medical equipment lease, line of credit, and revenue-based financing (RBF).
3. What types of medical equipment can I get with equipment loans?
Equipment loans can be availed for various types of medical equipment including beds, wheelchairs, stretchers, monitors, X-ray machines, ultrasound machines, MRI machines, ventilators, medical lasers, defibrillators, dialysis machines, heart rate monitors, etc.
4. What options can small medical equipment rental businesses use?
Small business owners can rely on various medical equipment financing options. These include term loans, line of credit and revenue-based financing (RBF).
5. What credit score do I require to be eligible for medical equipment rental funding?
Different lenders have varying eligibility criteria. For a basic idea, a credit score between 639-799 is considered good credit score and increases your chances of approval. However, the approval may also depend on several other parameters such as income stability, business model, and debt-to-income ratio.
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