Medical & dental practice financing
Medical and dental are the most lendable small business category. The four products that work, why specialty lenders dominate, and how practice acquisitions actually structure.
Medical and dental practices are the most lendable small business category. Low failure rates (under 2% annually for established practices), predictable revenue, strong collateral (equipment plus accounts receivable), and professional borrowers with good credit profiles combine to create an environment where capital is abundant and rates are competitive.
This page covers the financing tools that actually work for solo practitioners, group practices, and practice acquisition.
Most common use cases
Practice acquisition
Buying into an existing practice or acquiring a retiring doctor's/dentist's practice. The biggest financing event in most practitioners' careers.
Typical deal: $400K-$3MDe novo startup
Opening a new practice from scratch. Build-out, equipment, working capital for first 12 months.
Typical deal: $300K-$1MMajor equipment purchase
CBCT scanner, CAD/CAM system, imaging equipment, chairs. Largest-ticket equipment in medicine/dentistry.
Typical deal: $50K-$500KReal estate (own your office)
Buying the practice's building rather than leasing. Wealth-building play for practice owners.
Typical deal: $500K-$3MPractice expansion
Adding operatories/exam rooms, second location, adding a partner or associate.
Typical deal: $100K-$500KPartner buyout
Buying out a retiring partner. Structurally similar to acquisition but only for a share.
Typical deal: $200K-$1.5MThe 4 financing products that work best for medical and dental
1. SBA 7(a) (for practice acquisition and major expansion)
The gold-standard loan for dental and medical practice acquisitions. SBA 7(a) offers 10-year amortizations at Prime + 2.25–4.75%, with specialty lenders who understand practice economics.
Live Oak Bank is the #1 SBA lender for dental practices nationally. They (and Huntington, Celtic, and others) have dedicated practice-finance teams that know how to underwrite:
- Collections per chair (dental) or wRVU production (medical)
- Patient retention rates through ownership transitions
- Insurance contract value and stability
- Goodwill vs. hard asset allocation in practice valuations
Typical dental acquisition structure: 10% buyer equity injection, 90% SBA 7(a), 10-year term at Prime + 2.75%. Partner/seller note on 2-year standby can reduce equity injection to 5%.
For practice real estate, SBA 504 is often better: 25-year term at lower rates than 7(a), with 10% down. Full SBA guide →
2. SBA 504 (for real estate and major equipment)
When buying the practice real estate alongside (or after) acquiring the practice, SBA 504 is typically the answer:
- Up to $5.5M loan size (combined 504 + bank)
- 25-year amortization on real estate portion
- Lower blended rate than straight 7(a)
- 10% down payment typical
Common structure for dental/medical: 7(a) for practice (goodwill + equipment) + 504 for the building = full package with optimized rate and term.
3. Specialty equipment financing (for large-ticket equipment)
Equipment-specific lenders (Henry Schein Financial, Patterson Dental Financing, TD Auto Finance for medical, specialty-vertical shops like MedOne Capital) compete on dental and medical equipment because default rates are extremely low.
Typical terms for established practices:
- Rate: 4.99–8% APR on new equipment
- Term: 5–7 years (matches useful life)
- Down payment: 0% for qualified borrowers
- Close: 3–7 days
Combined with Section 179 ($2.56M max deduction in 2026), equipment financing delivers exceptional year-one tax efficiency. Section 179 guide →
4. Business line of credit (for cash flow and receivables)
Most practices experience insurance-receivables lag of 30–60 days. An LOC ($100K–$500K) smooths payroll, supplies, and operating expenses during collection gaps.
Banks are comfortable with medical/dental practice LOCs, often offering prime + 1.5–3% rates to established practices with strong cash flow. LOC comparison →
Medical/dental-specific qualification factors
What specialty underwriters look at
- License status — active, in good standing, no state board actions in past 5 years. Non-negotiable.
- Collections/production ratio — typically 95%+ for healthy practices. Below 90% signals collection issues.
- Payor mix — percentage of private insurance vs. Medicaid vs. cash-pay. More balanced = more fundable.
- Practice age — 3+ years for established operations. Newer practices need stronger compensating factors.
- Owner/operator's post-close involvement — for acquisitions, sellers are typically required to stay 6–12 months for patient transition. Deals without this transition raise underwriter concerns.
- Goodwill allocation — in practice acquisitions, the portion attributed to goodwill matters for SBA structuring. Over 50% goodwill allocation can trigger additional equity requirements.
Why medical/dental loans are uniquely easy to get
- Professional borrowers — typically 700+ FICO, multiple years of income history
- Predictable revenue — recurring patient visits, insurance reimbursement schedules
- Strong collateral — equipment holds value; AR is bankable
- Low default rate — medical/dental practices rarely close
- Specialty lender competition — multiple lenders actively pursue this business, which keeps rates competitive
Composite case: first-time dental acquisition
The situation: Associate dentist (5 years post-graduation) acquiring a retiring solo practitioner's practice. Practice: $1.1M collections, 18% net, 4 operatories, 12-year operating history. Asking price: $850K including equipment, $35K receivables.
The structure: SBA 7(a) for $722K (10% buyer equity, $85K from personal savings). Seller held $43K note on 2-year standby, allowing buyer to reduce equity from 15% to 10%. 10-year term at Prime + 2.75%. Close: 82 days.
Why this worked: Buyer's strong personal credit (745 FICO), 5 years chairside experience, seller's willingness to mentor through 6-month transition, documented patient retention plan, and the practice's clean payor mix (70% private insurance).
Medical and dental practice financing FAQ
What's the down payment on a dental practice acquisition?
Typically 10% for SBA 7(a) acquisitions, reducible to 5% if the seller holds a portion on 2-year standby. Conventional (non-SBA) bank practice loans often require 15–20%. The strongest buyers with established income sometimes qualify for 100% financing via specialty dental lenders like Live Oak, Huntington, or Bank of America Practice Solutions.
Can I get a medical/dental loan right out of residency or dental school?
Yes, but differently. New-grad practice acquisition loans exist from specialty lenders (Bank of America Practice Solutions, Live Oak, Wells Fargo Practice Finance) with terms designed for graduates with strong future earnings but limited current assets. Typically 10–15% down and slightly higher rates, but real capital is available. De novo startups for new grads are harder and usually require stronger personal financials or cosigner.
What documents do I need for a practice acquisition loan?
For SBA 7(a) dental/medical acquisition: personal financial statement, 3 years of personal tax returns, 3 years of practice tax returns (for the seller), profit and loss statements through the most recent month, production reports by provider, aged receivables report, list of equipment with serial numbers, lease or real estate documents, and the purchase agreement. Most specialty lenders have standardized checklists that make this process smooth.
Should I buy the practice real estate along with the practice?
Often yes, if the seller owns the building. Owning your office is one of the strongest wealth-building moves practice owners make. The typical structure: SBA 7(a) for the practice, SBA 504 for the building. Total close time is similar to 7(a) alone. Over 20+ years, practice owners who owned their real estate typically build $500K-$2M+ in additional equity vs. lease-only.
How long does a dental practice acquisition loan take to close?
75-90 days for complete applications with specialty lenders. Longer if documentation is incomplete or if the practice has complexity (multi-owner partnerships, embedded real estate, stock vs. asset purchase decisions). Start conversations with lenders early — 4-6 months before target close is reasonable.
Financing for practice acquisition, expansion, or equipment
We work with Live Oak, Huntington, Celtic, and other specialty practice lenders. Find out which is the best fit for your deal in 24 hours.
Get Pre-Qualified →