Health and care practices

Medical Practice Financing

Physician practices, urgent care centers and specialty clinics are written by practice lenders, SBA 7(a) lenders, banks and equipment lenders for startups, acquisitions, buy-ins, equipment and the working capital that bridges the payer cycle.

What lenders weigh in a medical practices, urgent care & clinics file

  • Payer mix across commercial, Medicare, Medicaid and self-pay, because reimbursement rates and timing differ by payer and a single dominant payer concentrates the practice's cash-flow risk.
  • The receivables aging report and net collection rate, which show whether the practice is actually paid for what it bills and how long the money takes to arrive.
  • Provider productivity and dependence on one physician, since a practice whose collections rest on a single provider is a key-person risk the lender will structure around.
  • Overhead as a share of collections against the specialty's benchmarks, which shows whether there is room for the owner's compensation and the new debt service.
  • Credentialing status and payer contracts, because visits billed before contracts are in force age badly and a lapse can stall a practice's cash for months.
  • The physician's own file: license, board status, employment history, personal credit, liquidity and student debt, since the owner's income is the practice's income.

What gets funded

  • Practice startup and expansion loans: Fund a buildout, equipment, staffing and a working-capital reserve for a new practice, a second clinic or an urgent care site, usually with an interest-only period while credentialing and the schedule catch up.
  • Practice acquisition and partner buy-in loans: Finance the purchase of an existing practice on its collections and cash flow, or a share of a group on the new partner's distributions, commonly at a high percentage of the price for a strong file.
  • SBA 7(a) loans: Medical practices are eligible subject to the lender's credit policy. The guaranty lets a non-specialist lender write a startup, a purchase, a buy-in or an expansion at a long term, with an owner equity expectation and personal guaranties.
  • Equipment financing and leasing: Fund imaging, lasers, surgical and exam-room equipment against the asset itself, with vendor programs, independent lenders and banks competing, and Section 179 expensing subject to limits.
  • Lines of credit and medical receivables financing: Bridge the weeks between a visit and the payer's remittance, sized to a month or two of operating cost or advanced against clean claims, so payroll and rent do not wait on the aging report.
  • SBA 504 and commercial real estate loans: Finance the clinic building when the practice buys or builds it, at a long term, underwritten alongside the practice loan so occupancy and debt service are tested together.

Medical Practices, Urgent Care & Clinics funding guides

How MercFinancial places medical practices, urgent care & clinics requests

MercFinancial is a commercial funding brokerage in Houston, not a lender, and it does not hold a medical practice program or promise approval. A medical request starts with the file: the aging report and payer mix, production by provider, overhead, the lease or the building, the project budget, the valuation or the buy-in agreement, and the physician's credentials, credit and liquidity. From there, the funding sources among MercFinancial's more than 160 whose credit policy fits medical practices and the structure in question are identified, one file is placed with all of them, and the offers are compared side by side on financing percentage, term, working capital and total cost.

Whether any product is available depends on the funding source, and when nothing fits yet, you are told that plainly along with what would change the answer. Stephanie, the lending assistant, pre-qualifies a request in a few minutes with a soft credit pull that does not affect your score, and a free call with a funding specialist is booked at the contact page.

Frequently asked questions

What kinds of loans are available for a medical practice?

Practice startup, acquisition, partner buy-in and expansion loans from specialty lenders, SBA 7(a) loans through banks and non-bank SBA lenders, conventional bank term loans for established practices, equipment financing and leasing for imaging and exam-room equipment, lines of credit and medical receivables financing for working capital, and SBA 504 or commercial real estate loans when the practice owns its building.

Can a physician get a practice loan with student debt?

Commonly, yes. Practice lenders expect physicians to carry student loans and test the practice's cash flow after the physician's compensation and personal debt service. What matters is that the payments are current, the credit file is clean and the practice or the plan supports the new debt. Lenders ask for a schedule of student loan payments with the personal financial statement.

What do lenders look for in a medical practice?

Payer mix, the receivables aging report, days in accounts receivable, net collection rate, production and collections by provider, overhead against the specialty's benchmarks, credentialing and payer contract status, and the physician's license, employment history, credit and liquidity. On an acquisition they add the valuation and the seller's transition. On a startup or a new site they add the budget, the lease, the staffing plan and the reserve.

How does a medical practice finance equipment?

Through equipment loans and leases written against the asset by vendor programs, independent equipment lenders, banks and practice lenders, commonly with little money down on a strong file. The lender weighs the asset's resale market, the revenue case for the procedures it enables, the practice's aging report and the physician's credit. Buildouts and software are usually financed inside a practice loan instead.

Can I get an SBA loan to buy into a medical group?

Often, yes. A partner buy-in can be financed with an SBA 7(a) loan through a lender whose policy allows it, or with a term loan from a practice lender secured by the partnership interest. Either way the loan is sized to the new partner's expected share of distributions as shown in the group's returns and the buy-in agreement, and the physician's personal credit carries significant weight.

Financing for this industry

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MercFinancial is a commercial funding brokerage, not a lender. Approval, loan amount, rate, term and funding are decided by the funding source on the strength of the file; nothing on this page is an offer or a commitment to lend.