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Independent healthcare practices are becoming more expensive to run.
The number of doctors working in private practice dropped 18 percentage points between 2012 and 2024. More doctors are opting to work at hospital-owned practices, or selling their offices to these groups.
I've spent my career arranging financing for healthcare practices, and I know how tough it can be to run a private practice. You've got to worry about day-to-day business challenges on top of patient care.
Private practice owners often tell me they struggle with cash flow. Insurance reimbursements take a while to land, and bills don't wait.
If this situation sounds familiar, a healthcare practice loan may be a fit. Physicians use these loans to help replace or add medical equipment, add more space to their practice, cover a partner buyout, cover build-out, or smooth cash flow.
Below, I'll cover the types of financing physicians most often reach for to support a private practice.
| Financing type | Typical amount | Term | Rate range | Funding speed | Typically used for |
|---|---|---|---|---|---|
| SBA loans | Up to $5 million | 10 to 25 years | Starting at 6.75% | Two weeks at the very fastest, usually 30 to 90 days | Buying a practice, a partner buy-in, real estate, or a large working capital need |
| Equipment financing | Up to 100% of equipment value | 12 to 72 months | APR starting at 6% | 1 to 5 days | Imaging machines, chairs, lasers, and exam room fit-outs |
| Business line of credit | Up to $5 million | Revolving, 6 to 36 months | APR starting at 6% | As fast as same day | Payroll, supplies, and gaps between reimbursements |
| Short-term business loan | $10,000 up to $5 million | 6 to 36 months | APR starting at 6% | As fast as same day | A one-time cost you want as a lump sum, like a build-out or a new hire |
| HELOC | Up to $750,000 based on your home equity | Up to 30 years, with a draw period up to five years | As low as prime | As quickly as one week | Practice growth or equipment when you've built up home equity |
Types of Financing for Physician Practices
Each type of financing serves a different purpose. Equipment financing lets you upgrade the tools that keep your business afloat, while a business line of credit fills in gaps in the day-to-day.
Let's take a look at some types of physician practice financing.
SBA 7(a)
U.S. Small Business Administration (SBA) loans cover build-outs, equipment, and working capital.
SBA 504
A common option for owner-occupied real estate and major build-outs. Expect to put 10% down.
Commercial real estate loan
A long-term funding option to renovate your practice.
Equipment financing
The equipment serves as collateral. Covers the cost of diagnostic tools and other medical equipment to run your practice.
Business line of credit
A revolving credit line you draw and repay. You only pay interest on what you use.
Short-term business loan
A lump sum of money you borrow for your practice and pay back over a fixed term.
I always tell physicians to consider how soon they need financing. If you need money quickly, consider a fast business loan. Clarify Capital's network of lenders can fund as quickly as same day for short-term business loans and business lines of credit. Equipment financing takes one to five days. SBA loans are the longest, with financing landing as soon as two weeks but typically 30 to 90 days.
Minimum Qualifications
$10,000 in monthly revenue
Your business must earn at least $10K per month in a business bank account.
500+ credit score
You can get approved with any credit score. But the better your credit rating, the better interest rates lenders offer. Your FICO score should be above 500.
Minimum six months in business
Your company should be operational for a minimum of six months. This shows business lenders that your company is sustainable and won't go out of business.
Have a business bank account
Your Clarify advisor will need three or four months of your most recent bank statements to verify income. This is just to see you're actually making $10K+ month in revenue.
A Closer Look at SBA Loans
SBA loans typically require more paperwork, but offer more competitive rates compared to other types of business financing.
SBA 7(a) loans go up to $5 million and cover practice acquisitions, partner buy-ins, working capital, real estate, and equipment. Terms go up to 10 years for most uses and up to 25 years for real estate. No down payment is required through Clarify Capital's lender network, and rates start at 6.75%.
The SBA 504 program is for real estate and heavy equipment. It divides the project financing between a bank, a Certified Development Company, and you.
A lending advisor can tell you early whether the SBA timeline works for your deal.
Using a HELOC To Grow Your Practice
Another option is a home equity line of credit (HELOC). A HELOC is a revolving credit line secured by your home.
Physicians use HELOCs to cover a build-out, pay for costly equipment, and bridge reimbursement gaps.
Lines with Clarify Capital cap at $750,000, with repayment stretching up to 30 years. Rates start as low as prime.
The main trade-off with a HELOC is that your house secures the line. If you default, you could be putting your home at risk.
What Lenders Consider
Each lender weighs these differently, but almost all of them look at the same things.
Revenue and cash flow
Lenders want to see that you can cover the payment and still have room left over.
Personal credit score
Higher personal credit scores typically unlock better interest rates and repayment terms.
Time in operation
Most lenders want to see a consistent operating history. SBA lenders ask for at least two years.
Loan size and down payment
The larger the loan, the more you may be asked to contribute up front. Larger loans may also face additional scrutiny during the approval process.
Collateral
The SBA sometimes requires collateral on 7(a) loans. If you're applying for equipment financing, the equipment serves as collateral.
Overall credit history
Lenders look at your full financial history to get a better sense of your creditworthiness.
Doctors are usually concerned about how their student loan debt looks to a lender. The truth is that it doesn't matter as much as most think. Lenders are used to seeing doctors with six-figure education debt, so they focus underwriting on the practice's cash flow.
That said, student loan debt matters if you're applying for a HELOC. Lenders underwrite HELOCs based on your personal creditworthiness, not the practice's, so a student loan payment counts against your debt-to-income ratio.
What Medical Practice Financing Really Costs
The cost of medical practice financing depends on what you're looking for. Maybe you're a dentist who wants to update a few of your operatories, or maybe you're an optometrist adding a second exam room. I recommend looking up the specifics for your industry to get a better sense of total cost.
Fees To Consider
No matter what type of practice you own, be prepared to cover a few fees.
Interest
The cost of borrowing, charged over the lifetime of the loan. Interest rates through Clarify Capital's network of lenders start at 6%.
Origination fee
A one-time fee lenders sometimes add for underwriting the loan. This is typically 1% to 5% of the loan, but can climb as high as 10%.
SBA guarantee fee
A one-time fee on SBA 7(a) loans. These range from 0% to 3.75% of the guaranteed portion of the loan.
Down payment
This is the cash that you plan to put into the deal. Through Clarify Capital, SBA 7(a) loans don't require a down payment.
Prepayment penalty
A penalty for paying off the loan early. These typically cost between 1% and 5% of the remaining loan balance.
Breaking Down the Cost of Medical Practice Financing
Back to the example I mentioned above: You're a dentist refreshing five operatories.
You're financing five new dental chairs for $135,000 at a 9% APR over five years. The payment is $2,802 per month, and over the full repayment period you'd pay $168,143. If that lender charges an origination fee of 3%, that's another $4,050.
The question is whether your cash flow can handle that $2,802 per month payment and still manage to cover all of your other operating expenses.
Other Ways To Finance a Practice
The funding options I covered above aren't the only ones available for a medical practice. Here are a couple of other ones that could fit, depending on your needs.
Merchant cash advances. Sell a portion of your future patient credit card receipts in return for quick cash. One of the fastest options available, but also the most expensive.
Equipment leasing. You rent the equipment instead of buying it. Leasing works with equipment that needs frequent upgrading and maintenance.
Partner or equity buy-in. Bringing in a partner to the practice who contributes money without debt. In this scenario, you give up a percentage of your ownership permanently.
Manufacturer financing. Equipment manufacturers often provide financing for their machinery. Compare it to an outside quote before you make a decision.
Get Ready To Grow Your Practice
The doctors who use financing successfully pick the medical practice loans that match their needs.
When you're ready to compare rates and terms, apply today. A Clarify Capital lending advisor will go over your options with you. Checking your options won't affect your credit score.
Frequently Asked Questions
Here are the most common questions I get asked about medical practice loans.
What Are Physician Practice Loans and How Do They Work?
These are medical business loans used to buy, run, or expand a healthcare practice. Some are general business loans that medical practices use. Others, like equipment financing, are structured for a specific use.
Where Can You Get a Loan for a Private Practice Buy-In?
A common route for a private practice buy-in is an SBA 7(a) loan. A partial change of ownership is an eligible use for this type of loan. Banks and online lenders also finance buy-ins.
Can You Get a Practice Loan While You're Still Paying Off Student Loans?
Yes, lenders won't disqualify you because of your student debt. Lenders evaluate your eligibility based on your cash flow, since most doctors carry six figures in student loans. Student debt does show up in your personal debt-to-income ratio, so it matters more for an option like a HELOC.
What Financing Works for a Small Practice?
It depends on your specific needs. For a small practice, equipment financing and a business line of credit are typical options to cover the cost of equipment and day-to-day operational costs.
How Much Can a Physician Borrow?
Through Clarify Capital's network of lenders, doctors can borrow up to $5 million. What you qualify for depends on your creditworthiness, revenue, time in operation, and what you're financing.
Is My Information Safe When I Apply?
Yes. Clarify follows SOC 2 security principles when handling your financial information. A U.S.-based lending advisor handles your file directly.
Bryan Gerson
Co-founder, Clarify
Bryan has personally arranged over $900 million in funding for businesses across trucking, restaurants, retail, construction, and healthcare. Since graduating from the University of Arizona in 2011, Bryan has spent his entire career in alternative finance, helping business owners secure capital when traditional banks turn them away. He specializes in bad credit funding, no doc lending, invoice factoring, and working capital solutions. More about the Clarify team →
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