How Doctors Finance Buying a Medical Practice

The two main loan types

Conventional practice loans

Several national banks and specialty lenders run practice-finance programs for physicians, dentists and other clinicians. Their websites advertise up to 100% financing for qualified buyers, often with working capital included and sometimes with interest-only months at the start. Terms and approval depend on your credit and the practice. Rates and limits are often not published, so expect to apply to compare.

SBA 7(a) loans

SBA loans are offered through many banks under rules set by the U.S. Small Business Administration. Under SBA SOP 50 10 8.1, Appendix 15, effective October 1, 2026, an initial acquisition (the SBA's term for a purchase in which a buyer who is not already an owner becomes the majority or largest owner) must meet these rules:

• You must put in equity of at least 10% of the total project cost, and the SBA says it "cannot be reduced or eliminated." A seller note counts toward it only if it is subordinated to the lender and on full standby (no principal or interest payments) for the entire term of the SBA loan, and seller debt and other limited sources together can supply no more than half of the required amount.
• The practice must show a debt service coverage ratio of at least 1.25: historical EBITDA (last fiscal year, or the average of the last two) divided by all debt payments after the purchase. The lender may not rely on projections to meet it.
• Purchases above $350,000 need an independent business valuation by an accredited appraiser, prepared for the lender. The lender cannot use a valuation prepared for the buyer or the seller.
• A quality of earnings review is also required when the purchase price is $3 million or more.
• The lender verifies the financials behind the valuation against the seller's IRS tax transcripts.

What every lender underwrites

• Practice cash flow. Verified earnings must cover the new loan payments with room to spare.
• Your personal debts. Lenders look at student loans and your mortgage alongside the practice loan. One lender says the practice's cash flow "should be able to cover the practice debt needs as well as the doctors personal debt needs."
• Collections as a cap. Some lenders limit the loan relative to the practice's annual collections, for example below 85% to 90%.
• Your credit and experience, including time practicing in the specialty.

Documents to have ready

1. Three years of the practice's tax returns and financial statements.
2. A current year-to-date P&L and accounts receivable aging.
3. Your personal tax returns and a personal financial statement.
4. The letter of intent or purchase agreement.
5. Your CV, licenses and board certification.

Why financing shapes the price

For a physician buyer, the price a lender will finance is often the price that can be paid. If the practice's cash flow cannot support the loan and a market salary, the deal stalls in underwriting no matter what the seller expects. That is one reason the same practice can draw different prices from an individual physician and from a platform buyer that does not rely on a practice loan.

Next: the full cost of buying a practice and what to check in due diligence.

Common questions

Related reading

• How much it costs to buy a medical practice
• Medical practice due diligence checklist
• Join the Medical Exit Group buyer list
• All medical practice M&A guides