Is an SBA Loan Right for Your Practice?
Securing the right financing is one of the most important steps in building, expanding, or upgrading a healthcare practice. Whether you’re a dentist, dermatologist, chiropractor, or med spa owner, the decision to apply for a loan is a strategic one. Small Business Administration (SBA) loans are one of the most trusted and cost-effective financing options available to medical professionals. But are they the right fit for your practice?
What Is an SBA Loan?
SBA loans are government-backed loans issued by banks and other lending institutions, with partial guarantees from the U.S. Small Business Administration. While the SBA doesn’t lend money directly, its guarantee makes lenders more willing to approve loans for small businesses, including healthcare providers.
The two most common SBA loan programs used in the medical industry are:
- SBA 7(a) Loans: Ideal for a wide range of uses, including practice acquisition, equipment purchases, renovations, and working capital.
- SBA 504 Loans: Typically used for real estate purchases and large fixed assets.
Primary Advantages of SBA Loans for Medical Practices
- Lower Interest Rates: SBA loans often offer lower rates than conventional business loans, helping reduce your total cost of borrowing.
- Longer Repayment Terms: With terms ranging from 10 to 25 years, SBA loans provide more manageable monthly payments.
- Smaller Down Payments: Most SBA loans require only 10% down, allowing you to preserve capital for other areas of your practice.
- Flexible Use of Funds: Whether you’re purchasing a new office, upgrading technology, or consolidating debt, SBA loans are highly versatile.
Is Your Practice Eligible?
Eligibility depends on several factors:
- Strong personal and business credit (typically a 680+ FICO score)
- A sound business plan and financial projections
- Demonstrated ability to repay the loan
- Business must be a for-profit entity operating in the U.S.
If you’re a new practice owner or expanding into new services like urgent care or med spa treatments, SBA loans may be a great fit—especially if you want to minimize initial cash outlay.
When Might SBA Loans Not Be Ideal?
While SBA loans offer many advantages, they may not be the best option in every scenario:
- If you need immediate funding, the SBA process can take longer than traditional loans.
- There are detailed paperwork and underwriting requirements.
- Personal guarantees and collateral are often required.
If you’re a dentist, podiatrist, pain management specialist, or any healthcare provider looking for affordable financing with favorable terms, an SBA loan could be the perfect fit. It’s especially valuable for long-term investments like buying a practice, purchasing equipment, or acquiring real estate.
At ProMed Financial, we specialize in guiding healthcare professionals through the SBA loan process—matching you with lenders who understand your industry. Let us help you determine if an SBA loan is the right path for your practice’s next step.