Buying or building a medical or dental practice is one of the most financeable transactions in SBA lending. Healthcare practices have stable, recurring demand and historically low default rates, so lenders treat them favorably — and the 7(a) and 504 programs can fund practice acquisition, equipment, buildout, and the building itself. Jaken Finance Group helps providers get matched to practice SBA financing and can bridge a time-sensitive deal. Request commercial financing or call (833) 264-7776.
Why healthcare is a favored SBA category
Lenders compete for medical and dental practice loans for good reason: patient demand is resilient across economic cycles, established practices carry recurring revenue, and the category’s default rates are historically low. That translates into favorable terms — competitive down payments (sometimes as little as 10%) and long amortization — for a profitable practice with clean collections. Few small-business types finance as smoothly.
What SBA financing covers
- Practice acquisition — buying an existing practice, including its goodwill and patient base (7(a))
- Equipment — chairs, imaging, lab, and clinical equipment
- Office buildout — leasehold improvements for a new or expanded location
- Working capital — to bridge the transition and fund operations
- Real estate — the building you practice from, via 504 or owner-occupied financing
A single 7(a) can wrap the acquisition, equipment, and working capital; add a 504 when you own the property and want a long-term fixed rate.
Underwriting a practice acquisition
Practice deals hinge on the durability of collections and a clean transition:
- Collections and profitability — consistent revenue and reasonable overhead
- Provider production — how much the departing and remaining providers generate
- Patient base and payer mix — the balance of insurance, private-pay, and government payers
- Transition plan — whether the selling provider stays on for a handoff, which materially de-risks the deal
- Buyer background — clinical credentials plus the business capacity to run a practice
A profitable practice with stable collections and a thoughtful transition is among the strongest SBA files a lender will see.
De novo (startup) practices
Opening a new practice from scratch is harder than acquiring one — there’s no collections history to underwrite — but it’s still financeable with a strong plan, relevant experience, and adequate equity. Expect more scrutiny and a larger equity requirement than a practice acquisition. Many providers who intend to own ultimately find that buying an existing practice is both easier to finance and faster to cash flow than building one.
Associate-to-owner and partner buy-ins
A common and highly financeable path is the associate buying into or acquiring the practice where they already work. Because the associate knows the patients, the staff, and the collections firsthand, and the selling provider often stays on through a transition, the deal carries unusually low risk — lenders see continuity of revenue and a smooth handoff. The same logic applies to a partner buyout, where one provider acquires a departing partner’s share of an established group. SBA 7(a) finances both: the buyer’s share of the practice value (including goodwill), any equipment, and working capital, typically with modest equity given the stability of a known, cash-flowing practice. These insider transitions are among the smoothest deals in SBA lending precisely because the buyer isn’t a stranger to the business — the collections history is real, the relationships are intact, and the transition risk is minimal. If you’re an associate or partner with a path to ownership, an SBA-financed buy-in is often the most capital-efficient way to become an owner, and it usually finances faster than an outside acquisition.
Down payment and terms
Practice acquisitions often see about 10% down, with strong deals sometimes lower given the category’s stability; real estate and de novo startups may require more. Terms run up to about 10 years for a practice-and-equipment loan and toward 25 years when real estate is included; 7(a) pricing floats with prime (about 6.75% in Q3 2026) plus a capped markup. Confirm current terms at application.
When a practice sale can’t wait
Retiring providers and competing buyers set the timeline, not the SBA’s 45–90+ day calendar. Jaken Finance Group can bridge the acquisition now and let the SBA loan take out the bridge once approved — the bridge now, SBA later approach. If the suite remodel cannot wait — waiting room, ops buildout, landlord TI — see dental office renovation financing. Chairs and imaging still belong on equipment financing.
How practices are valued
Practice acquisitions are typically priced as a percentage of annual collections. Dental practices often trade in the range of 60%–80% of collections — higher for strong, well-located, well-equipped practices — while medical practices vary more widely by specialty, payer mix, and how much value sits in ancillary services versus provider labor. Lenders confirm the asking price against this benchmark and against the practice’s actual cash flow, and an independent valuation is generally part of a change-of-ownership file. What makes healthcare such a favored SBA category is the combination of resilient demand, recurring patients, and historically low default rates, which supports competitive terms — sometimes notably low equity on a strong practice acquisition. Present clean collections reports, a production breakdown by provider, the payer mix, and a clear transition plan, and a practice deal becomes one of the smoothest and most competitively-priced files an SBA lender will underwrite.
Goodwill on 7(a), the suite on 504
Practice value and the building are different collateral. The 7(a) page allows a complete or partial change of ownership, plus equipment, furniture, supplies, and working capital. The maximum 7(a) loan is $5 million. That is the request that can carry goodwill and the cash needed while patients transfer.
The 504 page is for major fixed assets. The headline says up to $5 million. The program text says the maximum 504 loan is $5.5 million. Eligible uses include buying or renovating buildings and land, and equipment with at least 10 years of useful life remaining. Working capital and inventory are not eligible. A supply closet and the first months of payroll do not belong on the debenture. Speculation and investment in rental real estate are barred as well. A condo you will rent to other providers, with no practice of your own in it, fails that test.
The lender comparison puts most 7(a) terms at 10 years or less, unless the loan finances real estate or long-lived equipment. Real estate can reach 25 years, including extensions. A practice buyout without the building is the shorter loan. The building is the longer one.
Which guaranty band a buy-in lands in
An associate buy-in often prices under $350,000. That size can be 7(a) Small. The lender comparison sets the guaranty at 85% for loans of $150,000 or less, and 75% above $150,000 through the $350,000 cap. SBA lists a 2 to 10 business day turnaround for that band. Loans of $50,000 or less do not require SBA collateral, except International Trade loans. Above that, the lender follows its written policy for similar non-SBA loans, and inadequate collateral alone is not a reason to decline.
A practice-plus-equipment loan above $350,000 is standard 7(a), up to $5 million, if it is not Express or a pilot. The guaranty cap there is 75%. SBA’s listed turnaround is 5 to 10 business days. That is guaranty review, not the time to finish a chart audit and a seller note. SBA Form 1919 is required. Standard 7(a) is not a revolving line. Revolvers are Express, Export Express, or CAPLines.
Illustration: practice cash beside a building
Illustration only. A buyer pays $900,000 for the practice, $220,000 for buildout and long-lived equipment, and $80,000 for working capital. Those uses total $1,200,000. The whole stack fits under the $5 million 7(a) cap. The $80,000 of working capital cannot move onto a 504.
The same buyer also contracts the condo for $2,400,000. Assume a 10% injection on the condo, which is $240,000. The building request is then $2,160,000, under the $5.5 million 504 program maximum and under the $5 million headline as well. Test the practice loan against the 7(a) cap and the building loan against the 504 cap. Do not add the two caps into one borrowing limit.
If the condo is titled in a holding company and the practice is the operating company, 13 CFR 120.111 is the lease statute. Proceeds to the holding company are for acquiring or improving the property it leases to the practice. When the operating company is a co-borrower, proceeds may also cover the operating company’s working capital and other assets, including intangibles. The lease must be written, long enough to match the loan, and subordinate to the SBA lien. Owners of 20% or more of either company guarantee. 13 CFR 120.110(c) still blocks a passive landlord structure outside that path.
When the chairs cannot wait for the SBA note
Clinical equipment is its own timeline. A 504 equipment request needs 10 years of remaining life, so disposable supplies and short-lived devices fail that test. Jaken Finance Group equipment financing is a separate product at 6%–14%, generally closing in 5–10 business days, and it is not the SBA real-estate note. Use it when a chair or imaging unit has a delivery date the 504 file will miss. The practice acquisition itself still belongs on 7(a) or, for the building, on 504.
If the seller’s retirement date is the constraint, a bridge can close the purchase in 7–10 business days at 8.99%–13.5%. Illustration. A $750,000 interest-only bridge at 8.99% costs $67,425 a year, or $5,618.75 a month. At 13.5% it costs $101,250 a year, or $8,437.50 a month. Two months of interest is $11,237.50 at 8.99%, or $16,875 at 13.5%. That carry is the price of holding the practice while SBA underwriting finishes. It is not the permanent rate.
Records that support collections
Bring three years of collections by provider, a payer-mix breakdown, and a production report that separates hygiene or ancillary revenue from the selling doctor’s own chair. Add the purchase agreement, a list of equipment with serial numbers and remaining life, the buildout budget, and a transition plan that says whether the seller stays. If you are buying in as an associate, add your current employment agreement and a draft of the post-closing schedule. Lenders are underwriting continuity. A binder that shows who produces the revenue is stronger than a single-page asking price.
A seller who wants the buyer to retire an old practice note should say so in the uses. The 7(a) page allows refinancing current business debt and a change of ownership, up to $5 million. The 504 page does not fund goodwill, working capital, or inventory. It refinances debt only when that debt meets the qualified-debt conditions the page ties to 13 CFR 120.882. A practice note is usually a 7(a) item. The building, if you are buying it, is the 504 item. Keep those payoffs in different columns so the debenture is not asked to buy goodwill.
Get matched for a practice SBA loan
Acquiring, starting, or expanding a medical or dental practice? We’ll help you pursue the right SBA structure — and bridge it if timing is tight. Request commercial financing or call (833) 264-7776.
Program details: SBA — loan programs. Rates and rules change; verify current terms at application. Jaken Finance Group helps healthcare providers get matched to SBA financing and can bridge time-sensitive practice deals.