Refinancing your practice loans: What to know

December 12, 2022

If you were offered a higher interest rate at the time of acquiring your practice loan, refinancing might be a good step towards improving your financial health. Here’s what to consider before you decide if refinancing your practice loan is right for you.

It takes a lot of work to open your own practice. When the dust settles and you’re ready to grow your business, you may be looking for ways to improve the health of your financials. A good option is to revisit the terms of your practice loan. Refinancing your practice loan and existing debt could be a smart move if current interest rates are lower than the rate you were originally offered. In fact, the refinancing process can provide five important benefits for you and your business.

 

1. Lower your practice loan interest rate

One of the most common reasons borrowers refinance any type of loan is take advantage of a rate reduction. Depending on your credit score and the age of your debt, you may qualify for a lower interest rate. Reducing your rate by even a small percentage can translate into saving thousands of dollars over the life of the loan. For example, if you currently have a 10-year, $100,000 practice loan at 8% interest, refinancing the practice loan to a rate of 7% will lower your monthly payment from $1,213 to $1,161, and reduce your total overall interest from $45,593 to $39,330.

 

2. Improve your cash flow

Refinancing your loan can also help with cash flow challenges. If the interest rate on the refinanced loan is lower than that of your original loan, your new monthly payment and your overall expenses will be reduced. You can also extend the term of your loan when you refinance to get a lower payment. While this could result in paying additional interest over time, it can also help make your payment more manageable. By improving your cash flow, you can free up funds for other purchases that can help you grow your business, such as buying new equipment and technology, hiring additional staff members, or launching marketing campaigns that generate new leads.

 

3. Consolidate your debt

If you have more than one practice loan or if you have other forms of debt, such as credit cards or equipment loans, you may be able to consolidate them into a new refinanced practice loan. Debt consolidation can reduce your overall monthly payments, which can benefit your cash flow. It also streamlines your bills into one payment, which can save you time on managing your finances—a helpful benefit when you’re running a busy practice.

 

4. Speed up the practice loan payoff

Refinancing can also help you pay off your existing loan sooner. If you qualify for a better rate, the lower monthly bill could free up funds you can use to make larger or more frequent payments. Or you can also adjust the repayment terms of the loan when you refinance, creating a shorter timeline than your existing loan and ensuring an earlier payoff date.

 

5. Reduce your taxes

Finally, another benefit for refinancing a practice loan is that the associated costs could reduce your practice’s taxes. When you refinance a loan, you may incur expenses, such as origination fees, that may be tax deductible. The amount you might save on your annual return might outweigh the additional costs. Be sure to talk to your tax advisor to make sure this benefit is appropriate for you.

 

Other considerations when refinancing your practice loan

Refinancing practice loans can be a smart move for practitioners, however, it’s important to understand the process, so you can make the best decision for you and your business. Not all banks refinance practice loans, and when you’re starting out, you may have limited lender options. However, banks that do offer practice loans will usually also provide options for refinancing those loans. You may not need to shop around for a new lender; you may just need a new loan with your existing lender.

Another important consideration is the cost to refinance, which can vary depending on your lender and location. When you talk to a banking professional, ask about the expenses associated with refinancing and be sure to read the fine print. Fees can add up fast. Calculate the overall cost of the new loan, and then compare it to what you’ll pay if you keep your existing loan. You don’t want to go through the process of refinancing a loan only to find out you’ll pay more in the long run.

 

U.S. Bank offers financing for veterinary, eye care and dental professionals. Learn more about practice financing and refinancing your practice loan.

Learn about U.S. Bank

Related content

4 ways Request for Payments (RfP) changes consumer bill pay

Evaluating interest rate risk creating risk management strategy

Cashless business pros and cons: Should you make the switch?

Unexpected expenses: 5 small business costs to know and how to finance them

30-day adulting challenge: Financial wellness tasks to complete in a month

For small business growth, consider the international market

Beyond Mars, AeroVironment’s earthly expansion fueled by U.S. Bank

Refinancing your practice loans: What to know

ABL mythbusters: The truth about asset-based lending

What type of loan is right for your business?

10 ways a global custodian can support your growth

Business risk management for owners of small companies

Evaluating interest rate risk creating risk management strategy

Tech tools to keep your restaurant operations running smoothly

A simple guide to set up your online ordering restaurant

ePOS cash register training tips and tricks

Higher education and the cashless society: Latest trends

Digital banking and cloud accounting software: How they work together

Why retail merchandise returns will be a differentiator in 2022

Save time with mobile apps for business finances

What corporate treasurers need to know about Virtual Account Management

How I did it: Grew my business by branching out

Making a ‘workout’ work out as a business

How a bright idea became a successful business (in Charlotte, North Carolina)

Making the leap from employee to owner

Tools that can streamline staffing and employee management

How to identify what technology is needed for your small business

Planning for restaurant startup costs and when to expect them

How to fund your business without using 401(k) savings

How business owners are managing during the supply chain crisis

How small businesses are growing sales with online ordering

How to expand your business: Does a new location make sense?

How small business owners can budget for the holiday season

Why credit cards should be the first choice for business payments

7 uncommon recruiting strategies that you may not have tried yet

How increased supply chain visibility can combat disruptors

6 common financial mistakes made by dentists (and how to avoid them)

Technology strategies to complement your business plan

Business credit card 101

Meet your business credit card support team

How to apply for a business credit card

What kind of credit card does my small business need?

Do I need a credit card for my small business?

How jumbo loans can help home buyers and your builder business

5 tips to help you land a small business loan

5 questions business owners need to consider before taking out a loan

Leverage credit wisely to plug business cash flow gaps

How to establish your business credit score

How to make the most of your business loan

Do you need a business equipment loan?

Break free from cash flow management constraints

5 tips for managing your business cash flow

5 ways a business credit card program can grow your business

How Everyday Funding can improve cash flow

Building a business with a great product and a greater purpose

How running a business that aligns with core values is paying off

Meet the Milwaukee businessman behind Funky Fresh Spring Rolls

Honey Luxury Beauté: growing a side project into an eye-catching beauty business

How Shampoo’ed is transforming hair and inspiring entrepreneurs

The San Francisco bridal shop that’s been making memories for 30 years

How Al’s Breakfast is bringing people together

In a digital world, Liberty Puzzles embraces true connection

Celebrity Cake Studio’s two decades of growth and success

How a travel clothing retailer is staying true to its brand values

Dear Money Mentor: How do I set and track financial goals?

Disclosures

Start of disclosure content

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, Home Equity and Credit products are offered through U.S. Bank National Association. Deposit products are offered through U.S. Bank National Association. Member FDIC.