Practice loans run larger than most small business loans
A line of credit usually costs less than a short-term advance for that gap. Practices borrow more because practices cost more. In the SBA's public loan file, New Jersey dental offices took 82 SBA loans worth $53.3 million from October 2023 through June 2026, with a middle loan of $358,900 [1]. Physician offices took 69 loans worth $23.9 million, middle loan $248,000 [1]. Compare that with a typical New Jersey salon loan in the same file, which is a fraction of the size.
There are a lot of practices to finance. The Census counted 7,335 physician offices and 4,511 dentist offices in New Jersey in 2023 [2]. Physician offices alone employed 79,349 people [2].
Most of these SBA loans went to practices more than two years old: 55 of the dental loans and 48 of the physician loans [1]. But 25 went to new practices opening their doors [1]. A first office is a normal SBA purpose.
Buying or building a practice
An SBA 7(a) loan is the usual tool for a practice purchase. SBA lists complete or partial changes of ownership, real estate, equipment and working capital as eligible uses, up to $5 million [3]. That covers a partner buyout as well as a full purchase.
If you are buying the building, look at the SBA 504 loan. It gives long-term, fixed rate financing for major fixed assets, with 10, 20 and 25 year terms, and the maximum 504 loan is $5.5 million [4]. Few New Jersey practices used it in our count, three in total [1], so ask lenders directly whether it fits.
What the lender will ask for
Collections by payer, not just billed charges. Accounts receivable aging. The purchase agreement and a valuation if you are buying. Your license, DEA registration where it applies, and credentialing status with the main payers.
Imaging, chairs and the rest of the equipment
Equipment financing fits clinical equipment because the equipment secures it. NerdWallet puts the range at roughly 4% to 45% APR, depending on lender type, credit and the equipment's expected useful life [7]. Strong practices sit near the low end.
- Match the term to the useful life. Imaging that lasts ten years can carry a longer term than software you replace in three.
- Ask whether the lender finances soft costs like delivery and installation. Some do, on top of the full price [7].
- Read whether it is a loan or a lease, and what the buyout is at the end of a lease.
Bridging the insurance pay gap
The prompt pay clock tells you the size of the gap. For plans covered by New Jersey's rules, clean claims are due within 30 days filed electronically and 40 days on paper [6]. When part of a claim is disputed, the carrier must still pay the uncontested part on that clock [6].
Know what the clock does not cover. The New Jersey rules do not apply to Medicare, workers' compensation, State Health Benefits, PIP, self-insurance or federal employee plans [6]. A practice heavy in those payers may wait on a different schedule.
A line of credit fits this gap best: draw when payroll lands before collections, repay when the claims pay. Some funders also buy medical receivables, which works like invoice factoring. Ask what share of the claim they advance and what they charge per 30 days.
When a fast offer shows up
Practices with steady card and deposit flow get merchant cash advance offers too. An MCA is a purchase of future receivables, collected by a split of sales or a fixed debit, subject to reconciliation. Its effective APR can run from 40% to 350% [8]. For a practice that can qualify for a bank loan averaging 6.37% to 10.98% [5], that is a large gap.
If an advance is your only offer, price it first. The offer comparer puts it next to a loan in dollars.
Five mistakes practices make with funding
- Sizing a loan to billed charges instead of what payers actually collect. Lenders underwrite collections, and so should you.
- Paying for a long-lived asset, like a build-out, with short money that has to be repaid in months.
- Financing software or small devices over a term longer than you will use them.
- Signing a personal guarantee without reading what it covers, especially in a group practice with several owners.
- Accepting the first offer without a second one to compare. Even one more quote shows whether the first was fair.
If you are a partner in a group, agree inside the group who signs and who guarantees before any lender asks. It is a harder talk to have with a closing date on the calendar.
Getting to an answer
The quiz takes a few minutes and starts with your industry filled in. It shows which products fit a practice like yours, with cost ranges, before you share contact details. If you ask for offers, your request goes only to Batch Capital, our own funding service.