Starting a Medical Practice: How to Get SBA Financing

Starting a medical practice from scratch — a "de novo" practice — is harder to finance than an acquisition because there's no track record. But physicians are among the best startup borrowers in the SBA system: high earning potential, licensed professionals, and predictable revenue from day one of seeing patients.

What Startup Medical Practice Loans Cover

SBA 7(a) is the primary vehicle for de novo medical practices. Eligible uses:

Leasehold improvements and buildout — constructing exam rooms, procedure rooms, reception areas; electrical, HVAC, plumbing for medical use

Medical equipment — exam tables, diagnostic equipment, sterilization, EHR systems

Furniture and fixtures — waiting room, staff areas, signage

Working capital — staffing, supplies, billing setup, marketing for first 12 months

Working capital reserve — bridge between seeing patients and receiving insurance payments (typically 45–90 day lag)

The working capital component is critical and often underestimated. A new practice may see 30 patients/week from month one, but insurance payments won't arrive for 60–90 days. SBA 7(a) can fund 6–12 months of operating expenses as a lump sum at closing.

What Lenders Evaluate for De Novo Practices

Without a practice track record, lenders focus entirely on you:

Medical credentials and specialty: Board-certified specialists command more confidence than non-boarded generalists. Your specialty matters — high-procedure specialties (surgery, ophthalmology, dermatology) have more predictable revenue than primary care in underserved areas.

Prior practice history: Even if you're starting your own practice, 3–5 years of hospital or group practice experience is highly relevant. Document your patient volume, your productivity (RVUs if applicable), and your specialty expertise.

Personal credit: 680+ required. Medical school debt is expected and factored in — lenders understand physicians carry significant student loan debt. They look at the ratio of payment obligations to income potential.

Personal liquidity: Cash reserves beyond the down payment. Most de novo lenders want to see 3–6 months of projected operating expenses in personal accounts post-closing.

Location and market analysis: Is there demand in your chosen market? Underserved areas (HPSA-designated) actually strengthen your application — there's documented demand. Saturated markets require a clearer differentiation strategy.

Business plan: See the key components below.

Business Plan Requirements for a De Novo Practice

Executive summary: What you're building, where, your specialty, projected patient volume, and loan amount requested.

Market analysis: Population in your catchment area, existing provider supply, referral sources, and why patients will choose you.

Operations plan: Office location (lease or purchase), staffing model (how many clinical and admin staff from day one), hours, EHR system, billing (in-house or outsourced).

Revenue projections: Monthly for Year 1, quarterly for Years 2–3. Build from the bottom up:

Patients per day × days per week × weeks per year

Average revenue per visit by payer (use Medicare rates as floor)

Payer mix assumptions

Collections efficiency (billing shrinkage)

Expense projections: Staff (largest expense), rent, malpractice insurance, equipment leases/loans, supplies, billing costs.

Break-even analysis: How many patients/month to cover all expenses? What month do you turn profitable?

Realistic Loan Amounts for De Novo Practices

Practice TypeTypical Startup Loan

Primary care (solo)$200K–$500K
Specialty (procedure-heavy)$400K–$1.5M
Imaging center$1M–$5M
Urgent care clinic$300K–$800K
Behavioral health practice$100K–$350K

These ranges include buildout, equipment, and working capital. Real estate (building purchase) adds significantly — use 504 for that component.

Hospital Employment vs. Private Practice: The Financial Case

Many physicians ask whether starting a practice is worth it vs. hospital employment. From a financing standpoint:

A physician earning $350K employed who owns a practice worth $1.5M at retirement has built real wealth

Practice ownership means paying yourself rent (if you own the building), controlling overhead, and capturing the full value of your work

SBA financing makes the capital barrier manageable — $50–150K down for a practice worth multiples of that within 3 years

The conversation has changed since corporate consolidation accelerated. SBA is how independent physicians compete.

Get your de novo practice pre-approved at 3A Lending in 24 hours →