If you have a dental practice or another type of medical business, the time may come when you need to get a small business loan. Whether it’s to grow your business through the purchase of things like new equipment, fund greater reach through a proven marketing channel or to help with cash flow challenges during a slow season of sales, you may come across a lender that offers short-term loans for medical businesses.

OnDeck is a company that specializes in short-term loans for small businesses. And one of their key areas of focus is on businesses run by dentists and doctors. The most common duration of loans offered by OnDeck is either six or twelve months. While the company has gotten very good at marketing themselves, it’s important to understand the full impact of this type of alternative financing.

The Pros and Cons of Short-Term Small Business Loans

While there are other providers in this space like Kabbage and PayPal Working Capital, since OnDeck actively markets to medical practices, we want to focus on the pros and cons of the loans they offer. The biggest selling point of an OnDeck loan is that their application process is fast and easy.

In many cases, an OnDeck loan application can be submitted in under ten minutes. OnDeck makes it possible to submit an application by phone or online. Not only is their application relatively simple, but it has less stringent requirements than many other lenders. In general, the owner of a small business with at least $100,000 in annual revenue and a personal credit score over 500 will be approved for a short-term loan.

If you’re wondering why OnDeck makes it so easy to get a loan, it’s because they charge a premium for them! The biggest drawback of this type of loan is its total cost. For every dollar that a business borrows from OnDeck, they will have to pay back between $1.18 and $1.38. A presentation to OnDeck investors from the first quarter of 2015 found that the average APR on an OnDeck loan was 49%. In addition to that massive APR, borrowers also have to back their business loan with a personal guarantee.

Make the Right Choice for Your Business

Even if it’s a short-term loan, taking on any kind of financing for your business is a big decision. Since the amount and source of financing that you take will have a significant impact on the future of your business, you need to weigh all of your options before committing.

If want to avoid rushing into a decision that could potentially harm your business, we encourage you to take advantage of our business advisory services. Our team of experienced professionals can help you objectively evaluate and understand the full impact of all available options. To get guidance you can count on, contact us today to schedule a consultation.