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Starting or expanding a medical practice is never inexpensive. There are certain costs and expenses that all doctors face, such as office and exam room furniture, office equipment (phone system, computers, copier), rent, and many other fixed and variable monthly costs.
Over time, a new medical practice builds a loyal following from nearby residents because of its convenience, reputation, the insurance it accepts, and the networks it participates in.
An SBA loan can help get your medical practice off the ground or expand an existing practice. In addition, it can be used to buy new equipment, purchase another medical practice, and many other purposes.
Benefits of owning a medical practice
Along with the high earning potential, the biggest benefit of owning a medical practice is the satisfaction you experience from helping people. Knowing that people put their trust in you because of your years of training and dedication to helping people feel their best is very gratifying.
Owning a medical practice also means you’ll make a nice living. Owning a thriving medical practice will provide financial security (primary care physician’s average earnings are $260,000, $368,000 for specialists) and allow you to get your benefits through your practice (health, life, disability insurance).
How to obtain financing to open, expand, or buy a medical practice
If you’re looking for medical practice financing, consider applying for an SBA loan. The various loan programs offered by the Small Business Administration can help provide the funding you need to set up your business.
The SBA is a government agency that doesn’t lend you the money directly. Instead, it guarantees a significant portion of your loan. That lowers the risk profile for SBA’s lending partners, which include conventional banks and financial institutions, so they’re more willing to approve loan requests.
You also must put significantly less cash or equity down to qualify with an SBA loan. And, with an SBA loan, no covenants or collateral is required.
The most common SBA medical practice loans include the SBA 7(a) and Express loans.
SBA 7(a) loan for starting or buying a medical practice
The 7(a) is the preferred SBA loan for medical practices. You can use the funds made available through this program to purchase equipment, expand your current location, or even buy another doctor’s practice.
If you own an existing medical practice and want to buy out a partner, you can also utilize the funds from an SBA 7(a) loan for that purpose.
The maximum SBA loan for a medical practice is $5 million and is generally repaid with monthly payments that include interest.
The payment stays the same for fixed-rate loans since the interest rate is locked in. However, for variable rate loans, it’s up to the lender to request a different payment amount if the interest rate changes.
SBA Express Loans for medical practices
SBA Express Loans are a part of the agency’s 7(a) loan program. Up to $500,000 can be borrowed under an Express loan. The approval times are typically much faster for these loans.
Express loans over $25,000 have a collateral requirement. The SBA usually responds to Express loan applications within 36 hours.
The lenders ultimately make all eligibility and credit decisions. The market prime rate plus 4.5-6% interest is applied with repayment terms of up to 10 years.
How to apply for an SBA medical practice loan
Access our network of SBA lenders that includes leading nationwide banks, credit unions, and other financial institutions. Our lending partners are experienced in handling applications for medical practices, so they will diligently pursue your opportunity.
There are countless SBA approved lenders that are ready to offer you a medical practice SBA loan. These are just some of the top lenders:
| Rank | Bank | # of Loans | Rate | Term(mos) | Avg Loan |
|---|---|---|---|---|---|
| 1 | JPMorgan Chase Bank | 71 | 8.5% | 125 | $301,635 |
| 2 | Wells Fargo | 64 | 7.5% | 210 | $521,720 |
| 3 | U.S. Bank | 43 | 7.7% | 110 | $235,726 |
| 4 | Stearns Bank | 42 | 8.4% | 115 | $147,724 |
| 5 | First Home Bank | 38 | 8.1% | 125 | $292,605 |
| 6 | Huntington National Bank | 37 | 7.5% | 151 | $248,176 |
| 7 | Citizens Bank | 27 | 7.7% | 130 | $519,504 |
| 8 | Newtek Small Business Finance | 24 | 8.1% | 165 | $978,854 |
| 9 | BBVA USA | 21 | 6.2% | 218 | $1,386,343 |
| 10 | TD Bank | 21 | 9.1% | 119 | $244,433 |
| 11 | First-Citizens Bank & Trust | 18 | 6.6% | 202 | $592,000 |
| 12 | Oriental Bank | 18 | 7.3% | 109 | $165,639 |
| 13 | Bank of the West | 16 | 6.1% | 210 | $515,444 |
| 14 | United Midwest Savings Bank | 16 | 8.0% | 132 | $326,813 |
| 15 | Live Oak | 14 | 6.3% | 279 | $2,089,371 |
| 16 | Spirit of Texas Bank | 14 | 7.6% | 133 | $278,450 |
| 17 | United Community Bank | 14 | 6.9% | 194 | $1,068,929 |
| 18 | BB&T | 13 | 6.5% | 143 | $673,792 |
| 19 | PNC Bank | 12 | 6.8% | 189 | $373,500 |
| 20 | Bank of America | 11 | 5.7% | 260 | $744,891 |
| Year | Type of Doctor | # of Loans | Rate | Term(mos) | Avg Loan |
|---|---|---|---|---|---|
| 2019 | Physicians | 475 | 7.3% | 154 | $576,976 |
| 2018 | Physicians | 566 | 7.2% | 152 | $542,031 |
| 2017 | Physicians | 727 | 6.5% | 141 | $461,578 |
| 2016 | Physicians | 812 | 6.0% | 144 | $511,498 |
| 2019 | Chiropractors | 484 | 7.5% | 130 | $229,699 |
| 2018 | Chiropractors | 484 | 7.2% | 126 | $209,243 |
| 2017 | Chiropractors | 577 | 6.6% | 121 | $185,954 |
| 2016 | Chiropractors | 530 | 6.1% | 108 | $160,870 |
| 2019 | Optometrists | 112 | 7.2% | 158 | $479,017 |
| 2018 | Optometrists | 126 | 6.7% | 161 | $501,875 |
| 2017 | Optometrists | 167 | 6.1% | 140 | $429,347 |
| 2016 | Optometrists | 238 | 5.7% | 146 | $409,804 |
| 2019 | Podiatrists | 49 | 7.7% | 132 | $423,651 |
| 2018 | Podiatrists | 44 | 7.0% | 123 | $261,730 |
| 2017 | Podiatrists | 61 | 6.9% | 114 | $262,992 |
| 2016 | Podiatrists | 54 | 6.1% | 126 | $207,093 |