Physician Practice Loans 2026: Complete Bank Comparison Guide
Starting your own medical practice, buying into a partnership, or expanding an existing practice takes real capital: a few hundred thousand dollars for a lean startup, and far more for an acquisition or a building. Several national banks run dedicated healthcare lending groups for this, and the Small Business Administration guarantees practice loans through its 7(a) program, which caps loans at $5 million.
Healthcare lending groups underwrite on the economics of a medical practice instead of treating you like any other small business. Bank of America, TD Bank, U.S. Bank, and Wells Fargo each say they will finance up to 100% of a project, and U.S. Bank says it lends to early-career physicians who don't yet own a practice. What none of them publishes is a rate, so the only way to learn what the physician label is worth is to put written quotes side by side.
This guide explains how practice loans work, what the lenders we checked actually publish, where SBA financing fits, and how to compare offers before you sign.
1. What Are Physician Practice Loans?
Definition and Core Benefits
A physician practice loan is a business loan from a bank's healthcare lending group, made to a physician (or dentist, optometrist, or veterinarian) who is starting, buying, or expanding a practice. The difference from an ordinary small business loan is the underwriting: the lender sizes the loan on the economics of a medical practice and on your training and income, not only on years of business tax returns. You will still sign a personal guarantee in most cases, so read the collateral terms as carefully as the rate.
Key advantages over traditional business loans:
Better pricing than a generic business loan: Lenders treat medical practices as low-default borrowers, and healthcare lending groups price accordingly. No lender publishes its practice loan rates, so the size of the advantage is something you learn from competing written quotes, not from a table.
Less business history required: Healthcare lenders finance startups with no practice revenue yet. U.S. Bank says it lends to early-career professionals who don't yet own a practice, and Bank of America publishes a list of specialties it will finance as startups. Your training, specialty, and employment record stand in for business financials.
Financing up to 100%: Bank of America, TD Bank, U.S. Bank, and Wells Fargo each say they will finance up to 100% of a project, depending on the type of loan. An SBA 7(a) loan for a startup or a practice purchase, by contrast, requires at least a 10% equity injection from you.
Collateral built around the practice: The practice's own equipment, receivables, and (if you buy it) real estate usually secure the loan. Ask each lender whether it also wants a lien on your home; on SBA 7(a) loans over $350,000, the lender must take available equity in an owner's personal real estate when business assets don't fully secure the loan.
A lender that knows the business: A healthcare group already understands credentialing lags, payer mix, and practice valuations, so you spend less time explaining why a new practice has no revenue in its first month.
Common Use Cases for Practice Loans
- Practice acquisition: Buying an existing practice, often from a retiring physician. The loan size follows the purchase price, which depends on the practice's size, specialty, and patient base.
- Practice startup: Opening a new practice from scratch. Covers build-out, equipment, and working capital to carry you until collections catch up with expenses.
- Partnership buy-in: Purchasing an equity stake in an existing group practice. Amounts vary widely with the practice's profitability and the share you buy.
- Practice expansion: Adding a second location, new service lines, or major equipment upgrades.
- Equipment financing: Purchasing or upgrading major medical equipment (imaging, surgical equipment, EMR systems).
Why Banks Offer Physician-Specific Programs
No bank publishes default data for its practice loans, so treat any precise "physician default rate" you see quoted with suspicion. The reasons banks court physicians are easier to see:
Income stability: Demand for physician services is steady, and a practice's collections are easier to forecast than most small businesses' revenue. That lets a lender underwrite a startup on projections.
Barrier to exit: Medical licenses, specialty board certifications, hospital privileges, and years of training create significant barriers to career change. Physicians are unlikely to abandon their practice and pivot to another industry, making loan repayment highly probable even during difficult periods.
Asset value: Medical practices often retain significant value through patient panels, payer contracts, and established referral relationships. Even in worst-case scenarios, banks can facilitate practice sales to recover loan balances.
Professional reputation: Physicians are highly motivated to maintain clean credit and professional reputations, as financial problems can impact hospital privileges, malpractice insurance rates, and patient trust.
Those factors are why several national banks run dedicated healthcare lending groups. Whether that turns into better terms for you depends on the quotes you collect.
2. Who Lends to Medical Practices, and What They Publish
Two kinds of lender make most practice loans. National banks with a dedicated healthcare group (Bank of America Practice Solutions, Wells Fargo Practice Finance, U.S. Bank Practice Finance, TD Bank’s Healthcare Practice Solutions Group) underwrite on the economics of a medical practice and will often finance 100% of a project. General business lenders and SBA specialists treat your practice like any other small business, which usually means more collateral and a down payment.
We read each lender’s own practice-finance page on September 20, 2026. The table shows only what the bank states. None of them publishes rates, fees, or credit-score minimums, so you won’t find those here.
| Lender | Financing | Maximum loan | Startups | Where |
|---|---|---|---|---|
| Bank of America | Up to 100%, depending on the type of financing | Not published | Yes | Consultation form lists all 50 states and DC |
| TD Bank | 100% financing plus working capital | Up to $12 million | Yes | Maine to Florida: CT, DE, FL, ME, MD, MA, NH, NJ, NY, NC, PA, RI, SC, VT, VA, and DC |
| U.S. Bank | Up to 100% | Not published | Yes | “Over 75 healthcare specialty bankers with a nationwide presence” |
| Wells Fargo | Up to 100% | Not published | Yes | Not published |
| PNC | Not published | Not published | Yes | Only the states in its contact form; PNC says more will be added |
| Live Oak Bank | Not published | Not published | Not published | Nationwide |
| KeyBank | Not published | Not published | Not published | “Financing availability may vary by state” |
| Chase | Not published | Not published | Not published | Not published |
- Financing
- Up to 100%, depending on the type of financing
- Maximum loan
- Not published
- Startups
- Yes
- Where
- Consultation form lists all 50 states and DC
- Financing
- 100% financing plus working capital
- Maximum loan
- Up to $12 million
- Startups
- Yes
- Where
- Maine to Florida: CT, DE, FL, ME, MD, MA, NH, NJ, NY, NC, PA, RI, SC, VT, VA, and DC
- Financing
- Up to 100%
- Maximum loan
- Not published
- Startups
- Yes
- Where
- “Over 75 healthcare specialty bankers with a nationwide presence”
- Financing
- Up to 100%
- Maximum loan
- Not published
- Startups
- Yes
- Where
- Not published
- Financing
- Not published
- Maximum loan
- Not published
- Startups
- Yes
- Where
- Only the states in its contact form; PNC says more will be added
- Financing
- Not published
- Maximum loan
- Not published
- Startups
- Not published
- Where
- Nationwide
- Financing
- Not published
- Maximum loan
- Not published
- Startups
- Not published
- Where
- “Financing availability may vary by state”
- Financing
- Not published
- Maximum loan
- Not published
- Startups
- Not published
- Where
- Not published
Each lender’s own page, read September 20, 2026. “Not published” means the page is silent, not that the lender won’t do it.
The full write-up of each lender, including what Bank of America publishes about startup specialties and fee discounts, TD Bank’s $12 million ceiling and current line-of-credit promotion, and the questions every lender leaves you to ask, is in our comparison of medical practice lenders.
4. How Much Can You Borrow?
Loan Amount Factors
Lenders determine maximum loan amounts based on five core factors:
1. Your personal income and debt-to-income ratio
Lenders look at your personal income and existing debts (student loans, mortgage) alongside the practice's cash flow. None of the practice lenders we checked publishes an income multiple or a debt-to-income cap, so the example below uses an illustrative 50% ceiling.
2. Practice purchase price or startup cost estimates
The healthcare lending groups at Bank of America, TD Bank, U.S. Bank, and Wells Fargo say they finance up to 100% of a project, depending on the loan type; how close to 100% you get is a credit decision. On an SBA 7(a) loan, a startup or a complete change of ownership requires an equity injection of at least 10% of total project costs, and a seller note counts toward it only if it is on full standby for the life of the SBA loan and covers no more than half of the required injection (SBA SOP 50 10).
3. Practice revenue and cash flow projections
Even for acquisitions of existing practices, lenders want to see that practice revenue can comfortably service debt. For SBA 7(a) loans the floor is a 1.15× debt service coverage ratio: at least $1.15 of operating cash flow for every $1 of business debt payments, measured on historical results or, for a startup or purchase, on projections. Conventional lenders set their own cutoffs and don't publish them.
4. Specialty and geographic market
Some specialties command higher loan amounts due to stronger income trajectories and lower practice overhead. Surgical specialties, procedural specialties, and high-demand primary care in underserved markets often qualify for higher loan amounts than competitive specialties in saturated urban markets.
5. Collateral value
If you're purchasing an existing practice, the practice assets (equipment, patient records, accounts receivable) serve as collateral. Real estate purchases provide the strongest collateral and unlock the highest LTVs. Equipment-only financing typically maxes at the equipment's appraised value.
Budgeting the Loan Amount
We don't print "typical" startup budgets. No published survey we can cite breaks physician startup costs into build-out, equipment, EHR, and working capital by specialty, and local construction and lease costs move the total more than specialty does. Build your number from written quotes (contractor, equipment vendors, EHR vendor), add working capital for the months before payer credentialing and collections catch up, then add a contingency. For an acquisition, start from the purchase price in the letter of intent and add working capital; the SBA caps a 7(a) loan for a change of ownership at the business valuation.
How Lenders Size the Loan
No practice lender publishes an income multiple or a formula. Loans are sized on cash flow: for an acquisition, whether the practice’s historical collections cover the new debt payment with room to spare; for a startup, whether your projected ramp does. Two hard limits are public. TD Bank states it lends up to $12 million to healthcare practices, and the SBA caps 7(a) loans at $5 million. Everything else is case by case, which is why a written term sheet from two lenders tells you more than any table.
Reality Check
Just because a lender will finance 100% doesn't mean you should borrow it all. Overleveraging your practice creates cash flow stress and limits your ability to weather slow periods, payer payment delays, or unexpected expenses. A conservative plan borrows what the projections need plus a contingency, and keeps debt service coverage comfortably above the lender's minimum.
5. Practice Loan vs. SBA Loan vs. Conventional Business Loan
Understanding Your Financing Options
Physician Practice Loan (Conventional Bank Product)
Structure: Conventional term loan from bank's commercial lending portfolio, using physician-specific underwriting criteria.
Pros
- • No SBA eligibility review, so usually faster
- • Less documentation required
- • No SBA guarantee fees
- • More flexible terms and structures
- • Simpler ongoing compliance
Cons
- • Rates, fees, and terms aren't published; you learn them only from a quote
- • Only U.S. Bank publishes a term (real estate loans up to 25 years)
- • Collateral and guarantee terms vary by bank
Best for: Established physicians with good credit, straightforward practice acquisitions or startups, those who prioritize speed over absolute lowest cost.
SBA 7(a) Loan
Structure: Government-guaranteed loan made by approved SBA lenders. The Small Business Administration guarantees 85% of loans of $150,000 or less and 75% of larger loans, which lets lenders take on borrowers they otherwise wouldn't. To qualify, the business must be unable to get the credit elsewhere on reasonable terms.
- Maximum: $5,000,000
- Terms: Up to 10 yrs (equipment, working capital, practice purchase), longer for equipment with a longer useful life; up to 25 yrs (real estate)
- Rates: Capped by the SBA at the base rate + 3.0% for loans over $350,000, rising to + 6.5% for loans of $50,000 or less (sba.gov)
- Guarantee fee: 2% to 3.75% of the guaranteed portion, upfront, for loans over 12 months approved in fiscal 2026 (SBA fee notice; SBA resets fees each October)
Pros
- • Interest rate capped by the SBA
- • Can finance up to 90% of a startup or practice purchase (10% minimum equity injection)
- • Longest terms (up to 25 years for RE)
- • Built for borrowers a conventional lender turns down
Cons
- • Slower: SBA's own review of a standard 7(a) loan takes 5-10 business days on top of the lender's underwriting (unless the lender has delegated authority)
- • Extensive documentation required
- • Upfront guarantee fee (2-3.75% of the guaranteed portion)
- • Lien on your home if business assets don't fully secure a loan over $350,000
- • Prepayment fee (5%, 3%, then 1%) if you prepay 25% or more in the first three years of a loan of 15+ years
Best for: Practice real estate purchases that need the 25-year term, and borrowers a conventional underwriter has turned down. Also ask about the SBA 504 program, which offers long-term fixed-rate financing for real estate and major equipment, with 10-, 20-, and 25-year terms.
Practice lenders that state they offer SBA loans: Bank of America, TD Bank (7(a) and 504), and U.S. Bank, an SBA Preferred Lender.Learn more about SBA loans →
Conventional Business Loan (Non-Physician)
Structure: Standard small business term loan without physician-specific underwriting accommodations.
Pros
- • Available from any bank/lender
- • No specialty restrictions
Cons
- • Priced like any small business loan, without a healthcare group's view of your practice
- • Usually wants business tax returns and a track record
- • Lower loan-to-value ratios
- • More restrictive terms & higher down payments
Best for: Physicians who don't qualify for physician-specific programs due to license issues, or established practices that can't access physician programs.
Bottom line: Start with a bank that has a healthcare lending group, and add an SBA quote when you need the longer term or a conventional lender says no. A generic business loan is the fallback, not the first call.
6. Application Process & Requirements
Required Documentation Checklist
Personal Documents
- Complete medical CV (education, residency)
- Copy of active medical license(s)
- DEA certificate & Board certification
- Personal financial statement (assets, liabilities)
- Personal tax returns (last 2-3 years)
- Credit report authorization
- Pay stubs or employment contract
- Student loan statements
Practice Documents (Acquisition)
- Purchase agreement or letter of intent
- Seller's financial statements & tax returns
- Patient count and demographics
- Payer contract details & A/R aging report
- Equipment valuation & lease agreements
Practice Documents (Startup)
- Detailed business plan
- Financial projections (5-year P&L)
- Lease agreement/LOI & Build-out estimates
- Equipment quotes & Marketing plan
Components of a Winning Business Plan
If you're starting a new practice, your business plan is critical. Lenders want to see:
1. Executive Summary (2-3 pages)
Your background, specialty, target market, competitive advantages, and financial highlights (revenue projections, loan amount request).
2. Market Analysis (3-5 pages)
Local demographic data, competitive landscape, referral relationships, payer mix, and why the market needs your practice.
3. Services & Operations (2-3 pages)
Services provided, hours, staffing plan, technology/EMR, and patient flow approach.
4. Marketing & Growth Strategy (2-3 pages)
Patient acquisition plan, professional referrals, online presence, and expected growth trajectory.
5. Financial Projections (5-10 pages)
5-year P&L, cash flow, balance sheet, break-even analysis, and sensitivity analysis (best/worst case).
Application Timeline: What to Expect
No lender we checked publishes approval times, so treat this as a rough sketch of a conventional loan that goes smoothly. An SBA loan adds the SBA's own review (5-10 business days for a standard 7(a) loan when the lender lacks delegated authority), and appraisals or a practice valuation can add weeks.
Week 1: Pre-application
Research lenders, gather documentation, prepare business plan, review credit report.
Week 2: Initial application
Submit application and initial documentation package. Lender reviews and requests additional info.
Week 3-4: Underwriting
Lender analyzes financials, orders appraisal/valuation, and completes underwriting.
Week 4-5: Approval
Final approval, loan terms presented, review and negotiate terms.
Week 5-6: Closing
Sign agreements, funds disbursed, set up accounts.
How to Improve Approval Odds
- 1. Strengthen your credit score: A higher score can only help your pricing, though no practice lender publishes a score-to-rate table. Pay down revolving balances and avoid new credit inquiries.
- 2. Reduce DTI (Debt-to-Income): Pay down credit cards or delay major purchases until after closing.
- 3. Increase down payment: More of your own money in the deal lowers the lender's risk and can improve the terms, even when 100% financing is on offer.
- 4. Professional documentation: Sloppy financials signal poor practice management to lenders. Clean projections improve odds.
- 5. Demonstrate relationships: LOIs from referring physicians or hospitals prove viability.
7. How to Choose the Right Lender
Start From What Lenders Put in Writing
Banks don’t publish practice loan rates, credit-score cutoffs, or approval times, so any guide that sorts lenders by those is guessing. What you can sort by is what each bank states on its own page:
- Starting a practice: Bank of America publishes the specialties it finances as startups and includes working capital. U.S. Bank covers buildouts, equipment, and initial working capital, with interest-only payments available.
- A large acquisition on the East Coast: TD Bank publishes up to $12 million with 100% financing plus working capital, from Maine to Florida.
- A fixed payment: Wells Fargo Practice Finance leads with fixed-rate options; Bank of America offers a rate lock before closing.
- Buying or building your office: Live Oak Bank names real estate and construction as its specialty and lends nationwide; U.S. Bank publishes real estate terms up to 25 years.
- Where you practice: TD and PNC lend only in their footprints. Bank of America, U.S. Bank, and Live Oak describe national coverage.
Each lender’s published terms, and the list of questions none of them answers on the page, are in our comparison of medical practice lenders.
Should You Apply to Multiple Lenders?
Yes, but strategically. Apply to 2-3 lenders to compare final terms, but avoid a shotgun approach.
Best practice:
- Research and narrow to 2-3 best options for your situation
- Submit applications close together. The CFPB's rate-shopping rule of thumb (several credit checks within 45 days count as one inquiry) is written for mortgage lenders, so don't assume business-loan pulls get the same treatment; two or three applications is plenty
- Compare final approved terms, not just initial quotes
- Negotiate by sharing competing offers
When to Choose an SBA Loan Instead
Choose an SBA 7(a) loan over a conventional practice loan when:
- You're purchasing real estate and the conventional quote is shorter than the SBA's 25-year maximum (U.S. Bank publishes conventional real estate terms up to 25 years, so ask)
- A conventional underwriter has turned you down, or wants more collateral than you have. U.S. Bank describes SBA loans as a solution "when traditional financing options have been exhausted," or alongside a conventional loan
- You can accept a longer approval process and the SBA guarantee fee
- The longer term matters more to your cash flow than the rate. SBA rates are capped as a spread over Prime and are often higher than a strong borrower's conventional quote
• $1M at 7% over 20 years = about $7,750/month
• $900k (10% down) at 7% over 25 years = about $6,360/month
The longer term and the down payment lower the payment by about $1,390 a month at the same rate. This is an illustration of term length, not a rate comparison; get both quotes.
Red Flags: When to Walk Away from a Lender
Avoid lenders who:
- • Require you to move all banking relationships to them as a condition of the loan (negotiate it out).
- • Stack junk fees on top of the origination fee (application, processing, and document fees should be itemized and negotiable).
- • Quote a rate well above your other written offers and can't explain why.
- • Pressure you to decide immediately without time to review documents and compare options.
- • Can't clearly explain terms, fees, and prepayment penalties.
- • Show up poorly in reviews for physician lending specifically.
8. Alternative Financing Options
Beyond Traditional Practice Loans
1. SBA Express Loans
Structure: A 7(a) loan the lender approves under its own procedures, in exchange for a smaller SBA guaranty (50% instead of 75-85%).
- Loan amounts: Up to $500,000
- Rates: Subject to the SBA’s rate caps, which allow a higher spread on smaller loans (base rate + 4.5% to + 6.5% at $350,000 and below)
- Terms: Term loans follow 7(a) maturities; revolving lines up to 10 years
- Approval: Made by the lender, with no separate SBA credit review
Best for: Smaller equipment purchases, working capital needs, fast approval needs.
2. Equipment Leasing
Structure: Lease equipment rather than purchasing outright.
- $1 Buyout: Functions like a loan; you own equipment at end for $1.
- Fair Market Value (FMV): Return equipment at end or purchase at fair market value.
- 10% Purchase Option: Purchase at end for 10% of original cost.
- • Preserves cash flow
- • Potential tax benefits (payments may be 100% deductible)
- • Easy upgrades
- • Less documentation
- • Usually costs more over its life than buying with a loan
- • You don't own equipment until lease-end purchase
- • Early termination penalties
Best for: Rapidly advancing technology (EMR systems, imaging), practices with cash flow constraints.
3. Business Line of Credit
Structure: Revolving credit line you can draw on as needed.
- Amounts: Set by the lender; TD Bank's current promotion covers new conventional lines up to $1 million
- Rates: Variable, priced as a spread over Prime. TD's promotion is Prime + 0% on a conventional line and Prime + 3.00% on an SBA-guaranteed line, for applications through October 31, 2026
- Terms: Revolving (interest only on drawn amount)
- • Flexibility to draw only what you need
- • Pay interest only on outstanding balance
- • Useful for seasonal cash flow gaps
- • Variable rate that moves with Prime
- • Often requires annual renewal & personal guarantee
Best for: Working capital, bridging payer payment delays, covering seasonal slowdowns.
4. Practice Acquisition Seller Financing
Structure: Practice seller provides part of financing.
- Seller carries a note for part of the purchase price; a bank finances the rest
- Interest rate and term on the seller note are negotiated between you and the seller
- May include earn-out provisions tied to revenue retention
- On an SBA loan, a seller note counts toward your 10% equity injection only if it is on full standby for the life of the SBA loan, and only up to half of the injection
- • Easier qualification
- • Seller has skin in the game (supports transition)
- • More flexible terms than banks
- • Seller may require personal guarantee
- • Complicates relationship if practice underperforms
Best for: Practices where seller is motivated but bank won't finance 100%, revenue retention risks.
5. Retirement Account Loans
Structure: Borrow from your own 401(k) or 403(b), if the plan offers loans (IRS rules).
- Amounts: The lesser of $50,000 or 50% of your vested balance (a plan may allow up to $10,000 if half your balance is less)
- Rates: Set by the plan; the interest goes back into your own account
- Terms: Must repay within 5 years, at least quarterly
- • No credit check
- • Fast access
- • Pay interest to yourself
- • Opportunity cost (money not invested)
- • If you leave your job, the plan can offset the unpaid balance; you have until your tax-filing deadline (with extensions) to roll that amount over
- • Default = taxable distribution, plus a 10% additional tax if you're under 59½
6. Physician Recruitment Loans/Sign-On Bonuses
Structure: A hospital pays recruitment assistance to bring you into its service area and onto its medical staff. Under the Stark law’s physician recruitment exception, the arrangement must be in writing, can't be conditioned on referring patients to the hospital, and must leave you free to hold privileges elsewhere.
- Loan or income guarantee for a practice startup, which the agreement may forgive if you stay in the area for a set period
- Income guarantee during ramp-up
- Signing bonus to cover startup costs
- Shared services or office space at below-market rates
- • Can be forgivable if you stay
- • A hospital that wants you busy in its community
- • Lower risk than pure private practice
- • Requires you to move your practice into the hospital's service area; read the repayment terms if you leave early
- • If you join a group, it can't impose practice restrictions that unreasonably limit you in the hospital's area, but read any non-compete closely
- • Creates dependency on hospital relationship
9. Common Mistakes to Avoid
1. Borrowing Too Much (or Too Little)
The mistake: New practice owners either overborrow (creating cash flow stress) or underborrow (running out of working capital 6 months in).
The right approach: Build detailed cash flow projections with conservative revenue assumptions (75% of your optimistic projections) and include 6-9 months working capital, a 10-15% contingency buffer, equipment reserves, and payer credentialing delays.
2. Choosing Variable Rate in Rising Rate Environment
The mistake: Selecting variable rate because it starts 0.5-1% lower than fixed, then watching rates increase 2-3% over loan life.
- Fixed rates make sense when: Rates are historically low or rising, you value payment certainty, loan term is 7+ years
- Variable rates make sense when: Rates are historically high or falling, you plan to pay off loan early (within 3-5 years)
3. Ignoring Prepayment Penalties
The mistake: Signing a loan with a prepayment penalty, then wanting to refinance or sell early. On SBA 7(a) loans of 15 years or longer, prepaying 25% or more in the first three years costs 5%, 3%, then 1% of the amount prepaid; on a $1 million prepayment in year one, that's $50,000. Conventional lenders set their own terms.
The right approach: Negotiate prepayment penalty removal or ensure it's limited to the first 2-3 years maximum.
4. Not Comparing Multiple Lenders
The mistake: Accepting first offer without shopping around, leaving thousands on the table.
The math: On a $500,000 loan over 10 years, the difference between a 7% and an 8% rate is about $31,000 in total interest. A few hours of shopping pays for itself if it moves the rate even a fraction of that.
The right approach: Apply to at least 2-3 lenders, use competing offers to negotiate better terms.
5. Neglecting to Negotiate Terms
The mistake: Treating loan offers as non-negotiable.
6. Mixing Personal and Business Finances
The mistake: Using practice loan proceeds to pay personal expenses or commingling bank accounts.
The right approach: Maintain completely separate business and personal bank accounts, pay yourself a regular salary, and use a business credit card for all practice purchases.
7. Underestimating Time to Revenue
The mistake: Assuming revenue starts immediately, then running out of cash while payer enrollment and credentialing are still in progress.
The right approach: Budget for 6-9 months of working capital.
8. Skipping Professional Advisors
The mistake: Saving a few thousand dollars on attorneys and consultants, then signing a practice structure or loan terms that cost far more.
The right approach: Assemble a professional team before borrowing (Healthcare attorney, Healthcare CPA, Practice consultant).
10. Tax Implications of Practice Loans
Deductibility and Tax Strategy
How you structure your loan has significant tax consequences. Always consult a healthcare CPA, but understand these core principles:
1. Interest is Fully Deductible
Interest on a loan used for the practice is generally deductible as a business expense (the section 163(j) interest limit applies only to businesses averaging more than $32 million a year in gross receipts for 2026). Principal payments are not deductible (though the assets you buy with the principal may be depreciated).
2. Section 179 Expensing
If you use loan proceeds to buy equipment, furniture, or off-the-shelf software, you can often deduct the entire purchase price in the year you place it in service using Section 179. For 2026 the limit is $2,560,000, reduced dollar for dollar once qualifying purchases for the year pass $4,090,000 (IRS Rev. Proc. 2025-32).
3. Practice Acquisition Goodwill
When buying a practice, much of the purchase price is often allocated to "goodwill" (patient lists, reputation). Under Internal Revenue Code section 197, goodwill is amortized (deducted) straight-line over 15 years, regardless of your loan term. If your loan is 7 years, your cash outflow will be faster than your tax deduction.
4. Loan Fees & Costs
Origination fees and closing costs cannot be deducted immediately. They must be amortized over the life of the loan.
Conclusion & Next Steps
Physician practice loans offer incredible leverage that isn't available to standard business owners. Whether you're starting from scratch or buying a multi-million dollar practice, the key to success lies in preparation, shopping around, and borrowing the right amount.
Your Next 3 Steps:
Assemble your team
Hire a healthcare attorney and specialized CPA before you start talking to lenders or signing letters of intent.
Build your projections
Working with your CPA, build detailed, conservative month-by-month cash flow projections for your first 24 months.
Contact 3 specialized lenders
Contact two or three lenders with a dedicated healthcare practice group and ask each for a written term sheet. Our comparison of medical practice lenders shows what each one publishes.
Sources & Methodology
Lender terms come from each bank's own practice-finance page; SBA rules from sba.gov and SBA's lending SOP; tax figures from the IRS and the U.S. Code. Loan-payment examples are our own arithmetic.
- 7(a) loans, U.S. Small Business Administration. Accessed September 27, 2026. Supports the $5 million 7(a) maximum and the SBA's interest-rate caps by loan size.
- Terms, conditions, and eligibility, U.S. Small Business Administration. Accessed September 27, 2026. Guaranty percentages (85%/75%, 50% for SBA Express), maturities, SBA Express terms, SBA review times, and the 5%/3%/1% prepayment fee.
- Information Notice 5000-872051: 7(a) Fees Effective October 1, 2025 for Fiscal Year 2026, U.S. Small Business Administration. Accessed September 27, 2026. The 2%, 3%, and 3.5%/3.75% upfront guaranty fees.
- SOP 50 10: Lender and Development Company Loan Programs (version 8, effective June 1, 2025; version 8.1, effective October 1, 2026, keeps the 10% minimum for startups and acquisitions), U.S. Small Business Administration. Accessed September 27, 2026. The 10% equity injection, seller-note standby rule, 1.15× debt service coverage, personal real estate collateral, and the valuation cap on change-of-ownership loans.
- 504 loans, U.S. Small Business Administration. Accessed September 27, 2026.
- Practice-finance pages of Bank of America, TD Bank, U.S. Bank, and Wells Fargo. Accessed September 27, 2026. Up to 100% financing, TD's $12 million ceiling and line-of-credit promotion, and U.S. Bank's 25-year real estate terms. Our lender comparison covers each page in detail.
- 42 CFR 411.357(e), physician recruitment exception, Electronic Code of Federal Regulations. Accessed September 27, 2026.
- Retirement plans FAQs regarding loans, Internal Revenue Service. Accessed September 27, 2026.
- Revenue Procedure 2025-32, Internal Revenue Service. Accessed September 27, 2026. 2026 section 179 limits and the $32 million gross receipts test.
- 26 U.S.C. § 197, amortization of goodwill and certain other intangibles, Office of the Law Revision Counsel. Accessed September 27, 2026.
- What exactly happens when a mortgage lender checks my credit?, Consumer Financial Protection Bureau. Accessed September 27, 2026.
Joshua Dunigan, DO
•Family Medicine Resident & FounderI'm a family medicine resident physician at Broadlawns Medical Center in Des Moines, Iowa (class of 2027) and a 2024 graduate of Des Moines University College of Osteopathic Medicine. I founded MedMoneyGuide to give physicians the specialty-specific financial guidance I wanted when starting my own career: how to read a contract, pay down debt, and build wealth.
Frequently Asked Questions
What types of loans are available for physicians starting a practice?
What credit score do I need for a physician practice loan?
How much can physicians borrow for a practice acquisition?
Do physicians need a down payment for a practice loan?
What is the difference between an SBA loan and a conventional practice loan?
How long does it take to get a physician practice loan?
Joshua Dunigan, DO
•Family Medicine Resident & FounderI'm a family medicine resident physician at Broadlawns Medical Center in Des Moines, Iowa (class of 2027) and a 2024 graduate of Des Moines University College of Osteopathic Medicine. I founded MedMoneyGuide to give physicians the specialty-specific financial guidance I wanted when starting my own career: how to read a contract, pay down debt, and build wealth.