Medical Practice Funding: Loans, Lines of Credit & SBA Options

By the ShopFunders Team · Updated September 2026

Medical practices have unique funding needs—from startup costs and equipment to hiring clinical staff and managing seasonal patient flow. Here's what actually works for doctors and practice owners looking to grow or stabilize cash flow.

Why Standard Business Loans Often Don't Work for Practices

Banks see medical practices as high-risk borrowers, even though the default rates are actually lower than other businesses. The problem isn't your income—it's that lenders don't understand medical billing cycles, insurance reimbursement delays, and the 60–90 day lag between patient visits and actual cash collection.

A solo dentist or dermatologist might have $200K in monthly billings on the books but only $80K in the bank. A traditional lender looks at your bank statements, sees cash flow gaps, and declines you. They want to see consistent deposits. You're actually profitable; they just don't see it yet.

This is where medical-specific lenders and alternative structures matter. You need a lender who understands accounts receivable (A/R) and the realities of insurance-dependent revenue.

SBA 7(a) Loans: Your Best Shot at Low Rates

SBA loans remain the cheapest money available to established practices, typically 8–11% rates with 10-year terms. The catch: you need 2+ years of tax returns showing profitability, and the lender has to be SBA-approved.

What works: Buying out a retiring partner, building a second location, renovating a clinic, hiring a physician assistant, purchasing imaging equipment. These are concrete uses SBA underwriters understand and approve regularly.

What doesn't work: Using SBA proceeds to pay off credit card debt or cover operating losses. SBA isn't a quick fix for cash flow crunches; it's growth capital for practices that are already stable.

Startups and new practices (under 2 years) typically can't get SBA. Many lenders want to see $250K+ in annual revenue at minimum. Solo practitioners sometimes have an easier time than group practices because there's less complexity.

Asset-Based Lending: Using Equipment & Receivables as Collateral

Medical equipment—ultrasound machines, dental chairs, surgical suites, EHR systems—holds real value. Some lenders will finance 50–70% of that equipment as collateral for a line of credit or term loan, letting you unlock working capital without personal guarantees on the full balance.

Stronger option: accounts receivable financing. If you bill insurance and patients for services, that's an asset. Lenders will advance 70–90% of your documented A/R, which you repay as insurance and patients pay you. It's not factoring (you're not selling the debt); you're borrowing against it. Cost is higher than SBA (12–18%) but approval takes 1–2 weeks, not 2–3 months.

This works for solo practices and new locations especially well because it bypasses the 2-year history requirement. You just need clean billing records and realistic projections of monthly collections.

Business Lines of Credit vs. Term Loans for Practices

A term loan is fixed: you borrow $100K, you repay it over 5–7 years at a set rate. Predictable, but you're paying interest on the full amount whether you use it or not.

A line of credit is flexible: you get approved for $100K but only pay interest on what you draw. Perfect for managing billing cycles and seasonal patient volume (elective procedures drop in summer; urgent care picks up in winter). You draw $30K in a slow month, pay it back when collections accelerate.

For practices, a line of credit usually makes more sense than a term loan. Medical cash flow isn't smooth; a LOC lets you borrow when you need it and pay it down when cash comes in. Rates are typically 1–2 points higher than term loans but the flexibility saves you money over time.

SBA lines of credit exist ($50K–$350K) but move slowly. Non-bank lines through alternative lenders close in 1–3 weeks.

Equipment Financing: Separate the Right Costs

Buying a $200K ultrasound machine? Don't include it in a working capital line of credit. Get equipment financing: 3–5 year term, 70–85% LTV, 8–12% rates. The equipment itself secures the loan, so approval is easier and rates are lower than unsecured borrowing.

This also lets you match the loan term to the equipment's useful life. A dental chair lasts 15 years; a software license lasts 3. Finance each separately so you're not overpaying for expired tools.

Some medical practices ignore this and tap a general line of credit for everything. Bad move. You end up paying unsecured rates (14–18%) on depreciating assets and tying up available credit you need for operating expenses.

What Lenders Actually Want From Medical Practice Applications

Tax returns (2–3 years): Showing stable or growing revenue and net profit. Lenders discount one-time write-offs but want to see the core practice working.

Business bank statements (6–12 months): Proof that money actually moves through your account, not just what's on paper. Low balances hurt your case even if you're profitable.

Accounts receivable aging report: Insurance claims and patient invoices by age. If 60% of your A/R is over 90 days old, red flag. Lenders want to see current collections.

Personal guarantees: Expect to personally guarantee the loan. Lenders want to know the doctor is on the hook if the practice stumbles.

Debt schedule: All existing loans, lines of credit, equipment leases. Lenders calculate your debt-to-income ratio. If you're already leveraged at 1.5x or higher, approval gets tougher.

Frequently asked questions

How much can I borrow as a medical practice?

Depends on your revenue and structure. Solo practitioners typically qualify for $50K–$250K. Group practices and multi-location practices can often borrow $250K–$1M+. SBA loans max out around $5.2M but most medical practices borrow $150K–$500K. Asset-based lenders go higher if you have receivables or equipment to collateralize.

Do I need a personal guarantee?

Almost always, yes—especially under $250K. Lenders want the doctor personally liable as a safety net. For larger loans ($500K+), some lenders will reduce the personal guarantee or eliminate it entirely if the practice has strong financials and you bring in an SBA lender. Non-bank lenders are more flexible than banks.

How long does medical practice funding take?

SBA loans: 6–12 weeks. Traditional bank term loans: 4–8 weeks. Asset-based and receivables lines: 1–3 weeks. If you need cash fast, receivables financing or a non-bank line of credit closes quickest. SBA is slowest because they actually verify everything, but rates are cheapest.

Can I borrow money as a startup practice or new owner?

Yes, but it's harder. You typically can't get SBA (need 2 years history) or traditional bank loans without financials. Asset-based and receivables lenders will work with you if you have projections and pre-signed patient contracts or leases. Some SBA lenders have 'start-up' programs if you're buying an existing practice. Expect higher rates and smaller loan amounts.

ShopFunders is a business-funding marketplace, not a lender. Products and terms vary by qualification.