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Medical Practice Loans

Date published: December 19, 2022
Medical practice loans can help you receive funding to start or grow your medical practice. Keep reading to learn more about the terms, conditions, and requirements of a medical practice loan.
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Medical practice loans are designed to offer healthcare professionals the funding they need to start or grow their medical practice. They can also help finance the acquisition or purchase of an existing business. For example, general or family physicians and specialized doctors, such as dermatologists and pediatricians, can use medical business loans. That’s why they are often referred to as loans for doctors or loans for physicians. Medical practitioners can also use the loan to cover staff salaries, medical equipment, cash flow fluctuations, and office renovations.

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Most medical practice loans are designed for medical professionals already practicing or are licensed and preparing to start a practice. The total amount that healthcare professionals can borrow for startup medical practice loans varies from one lender to another. However, the amount may range between $25,000 and $5 million. Also, the loan may be secured or unsecured depending on the lender.

What Are the Requirements?

The requirements for medical practice financing may vary by the issuing lender. Nonetheless, most medical practice loan lenders ask for the following to evaluate your situation:

  • Funding for equipment can be up to $5 million or 100% of the total equipment value. Since the equipment will be used as collateral, the lender may not want to fund more than the value.
  • Equipment financing interest rates vary between 7.5% and 45%. Loan providers typically base interest rates on the perceived risk of the borrower.
  • Your funding term could be anywhere from 12 months to 72 months.

What Can You Use It For?

Loans for medical professionals can be used for a variety of purposes. These may include covering the startup costs for your new business, acquiring an existing medical practice, advertising, and marketing, purchasing inventory and equipment, covering the costs associated with hiring and paying employees, business debt refinancing, and office upgrades or renovations.

doctor shaking patient's hand and smiling

Startup Costs

Starting a new practice requires a lot of work and capital. When founding your business, your major expenses include buying or leasing your office space, paying for utilities, medical equipment, supplies, office furniture, hiring and training staff, and marketing and advertising costs.

Acquire Existing Medical Practice

If you don’t want to start your business from scratch, you can always acquire an existing medical practice. The loan is designed to purchase an existing business, including its equipment and inventory. In addition, you may find retired medical professionals willing to sell their practice. However, purchasing an already existing business may be a bit more expensive, especially if it is a reputable establishment with loyal customers.

Advertising and Marketing

Advertising and marketing are essential to get patients to visit your medical practice. To inform your target customers about your business, you will need to invest in social media campaigns, Google Ads, and Search Engine Optimization (SEO).

Purchasing Inventory and Equipment

Another use for medical business loans is purchasing inventory necessary for treating patients. In addition, equipment such as exam tables, x-ray imaging machines, or an ambulatory vehicle can be one of the most significant expenses you will have to cover when running your medical practice. Nonetheless, you may finance all your medical equipment with medical practice loans.

Salary for New Hires

A physician practice loan can help you cover the costs of hiring and paying employees. As your business grows, you may be unable to keep up with all the tasks of running a medical practice yourself. Consequently, you may need a medical practice loan to cover the costs of hiring medical professionals and office employees to assist you.

Business Debt Refinancing

You can consider getting a medical practice loan to refinance existing business debt. Refinancing a loan to get more favorable conditions, such as a lower interest rate and more manageable payment, may help you save money and pay off debt faster.

Office Upgrades and Renovations

If your office needs repairs or upgrades, medical practice loans can give you the flexibility to make the necessary changes to your business space and continue to provide excellent service.

Types of Medical Practice Loans

The most common medical practice loans are term loans and business lines of credit. Nonetheless, other medical practice financing options include equipment financing and SBA loans. So, let’s take a closer at the different funding options to help you select the right fit.

doctor smiling while performing checkup on young child

Term Loans

Term loans provide a lump sum of capital, which must be paid back over regular installments, including interest. The length of the loan depends on the amount borrowed and the lender. They can be short-term loans ranging from less than a year or long-term loans up to 25 years. The funding amounts and the interest rate vary on your financial eligibility and the lender. You may use the money however you see fit in your medical practice. Term loans are excellent if you know exactly how much money you need to borrow.

Business Lines of Credit

Business lines of credit are similar to credit cards. The only difference is that lines of credit may carry higher funding amounts and lower interest rates. A business line of credit is very flexible. You will be granted a credit limit from which you can borrow as needed. Then, you will only pay interest on the amount you have borrowed. As you pay down your balance, funds will become available again. A business line of credit is ideal if you are unsure about the amount of money you need.

Equipment Financing

You may consider getting equipment financing if you need a loan to buy medical equipment for your practice. Moreover, equipment financing is a secured loan because the equipment serves as collateral. The lending company may ask for a down payment or give you total financing. This type of loan is designed to offer repayment terms that fit the lifespan of the equipment. For example, if your medical equipment is expected to last five years, the repayment term may also be five years.

Small Business Administration Loans

The Small Business Administration (SBA) aims to accelerate the U.S. economy by helping small business owners access capital. It offers a variety of financial resources issued by partner banks, credit unions, and other financial institutions. In addition, the SBA guarantees a portion of the loan to the loan companies, encouraging them to make funding available to eligible businesses. Qualified borrowers can receive up to $5 million in funding through the 7(a)-loan program with low-interest rates and extended repayment terms. However, SBA 7(a) loans are designed for established businesses, and fresh graduates planning to start their practice may not qualify.


There are many options when applying for loans for your medical practice. Whether you need funding to start your own business, buy medical equipment, or renovate your office, using a network of lending partners may be the helping hand you need.

Frequently Asked Questions

Who Can Apply for Medical Practice Loans?

Medical practitioners such as physicians, plastic surgeons, psychologists, psychiatrists, chiropractors, optometrists, ophthalmologists, nurse practitioners, pediatricians, dermatologists, chiropractors, and reiki professionals may apply for medical practice loans.

Are There Restrictions on Medical Practice Loans?

If the lender approves your medical practice loan, you may use the loan to fund a wide variety of medical business expenses. However, the loan provider may impose restrictions if you try to use the money to fund non-business-related expenses.

Does My Credit Score Matter?

Most lenders and financing companies conduct a credit check. However, you may still qualify for a loan if you don’t have a perfect credit score. Moreover, if you prove that your business can generate enough capital to make timely payments, you may increase your chances of qualifying for a loan.

How Long Should I Be in Business to Qualify for a Medical Practice Loan?

Most of the time, lenders require that you have been in business for at least one year. Nonetheless, you may find some loan providers willing to work with people who are still in residency or planning to open their first practice.

Do I Need to Secure My Medical Practice Loan with Collateral?

Whether you need to secure your medical practice loan with collateral depends on your loan provider. Some may require a lien on your business assets and a personal guaranty. Collateral can include equipment, inventory, accounts receivable, and vehicles. However, remember that the lending company can legally repossess your collateral if you default on your loan.

Ethan James   Lead Writer
Ethan James is an experienced Financial Writer at Lendza with over a decade of experience.