How do you get a business loan for a medical practice?

How insurance reimbursement DSO shapes medical practice financing

Medical practices face a structural cash-flow challenge unlike most small businesses: the payer and the patient are different entities, and the payer pays on a delay. Medicare reimbursement typically clears in 14–30 days from clean claim submission. Medicaid varies significantly by state — 30–60 days is common, with some state Medicaid programs extending to 90 days. Private payers (Blue Cross, Aetna, UnitedHealth) typically run 30–45 days for in-network claims. The result is a practice with $200,000/month in gross charges that may have only $60,000–$80,000 clearing in any given month's bank statements — a gap that understates actual revenue to a lender reading deposits alone. NAICS 6211 (Offices of Physicians) practices benefit most when they supplement bank statements with an aged accounts receivable report showing total outstanding reimbursement claims by payer.

SBA 7(a) for practice acquisition

Medical practice acquisitions are among the most active SBA 7(a) transaction categories. Established practices carry substantial goodwill — patient panel, payer credentialing, referral networks — and SBA 7(a) loans up to $5 million are specifically designed to finance goodwill-inclusive acquisitions. The SBA's professional practice acquisition framework allows the acquiring physician to include intangible value (patient list, going-concern revenue) in the appraised collateral — a critical feature because medical practice goodwill often exceeds the tangible asset value of equipment and real estate. SBA 7(a) terms run 10 years for working capital and equipment acquisitions. For practices purchasing their own facility, the SBA 504 program provides long-term fixed-rate financing for owner-occupied medical office buildings.

Equipment financing for imaging, diagnostic, and EHR systems

Medical equipment is capital-intensive at every scale. X-ray and digital radiography systems run $50,000–$150,000; ultrasound units $20,000–$100,000; EHR and practice management software implementations $20,000–$80,000 for mid-size practices; examination room buildout per room $15,000–$40,000. Equipment financing structures these as asset-secured term loans at 60–84 month terms. The equipment serves as collateral, keeping the credit threshold lower than for unsecured working capital. IRS Publication 946 Section 179 allows first-year expensing of qualifying medical equipment placed in service during the tax year — a significant deduction for practices upgrading imaging or diagnostic infrastructure before December 31.

Working-capital lines to bridge reimbursement gaps

A revolving working-capital line sized against the practice's annual revenue (typically 10–15%) provides the cash-flow buffer to cover payroll, supply orders, and rent when reimbursement batches lag. Lines price as prime + spread — reference the Federal Reserve H.15 prime rate for the current base. The Federal Reserve Small Business Credit Survey 2024 reports healthcare practices have above-average approval rates at bank lenders, driven by strong revenue documentation and the professional-license security of physician-owned practices. MD or DO personal guarantee is standard for practice financing — the physician's professional income and license are material credit factors.

Qualification benchmarks for medical practices

For equipment and working-capital financing, lenders want 12+ months in business, $20,000+ in monthly deposits or comparable accounts-receivable documentation, and owner FICO 620+. Attaching an aged AR report showing outstanding insurance claims significantly strengthens the deposit picture for reimbursement-heavy practices. For SBA 7(a) acquisition loans, expect 2+ years of the target practice's tax returns, 680+ personal FICO on the acquiring physician, and a transition plan documenting staff and patient panel continuity. The acquiring MD's personal guarantee is required — practice goodwill and tangible assets serve as collateral alongside the guarantee. Apply at Find my match — your file routes to the funding partners best matched to it.