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Physician practice SBA loans have a 0.68% charge-off rate, half the SBA average. Practice acquisition dominates the use cases, with specialty type and hospital-affiliation status materially affecting underwriting.
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SBA 7(a) loans to offices of physicians (except mental health specialists) (NAICS 621111), fiscal years 2020 through December 2025. Pulled from SBA FOIA 7(a) dataset.
SBA 7(a) handles most physician practice acquisitions and expansion needs. SBA 504 adds long-term fixed rates when real estate is part of the deal. Equipment financing is the non-SBA alternative for speed.
Right for: practice acquisitions (the dominant use), buildouts, partnership buy-in under the May 2023 partial-purchase rule.
Right for: buying the practice real estate. Fixed long-term rates.
Right for: equipment upgrades, technology investments, working capital under $500K.
Right for: medical equipment with shorter lifecycle. Faster than SBA and often better rate/term match to equipment lifecycle.
Physician practice SBA underwriting sits between general medical and dental practice profiles. The 0.68% charge-off rate is half the SBA average but meaningfully higher than dental (0.27%) or veterinary (0.18%) — reflecting more specialty variance, greater reimbursement complexity, and more hospital-affiliation dynamics than the pure-independent professional practice categories.
Primary care, specialty practices (cardiology, orthopedics, dermatology, etc.), and surgical practices underwrite differently. Primary care practices have predictable visit volumes and steady cash flow but thinner margins. Procedural specialties (dermatology with cosmetic, orthopedics with surgery) have higher margins but more revenue concentration in specific procedures and insurance contracts. Lenders want to see at least three years of financials and a clear picture of the revenue mix.
Commercial insurance, Medicare, Medicaid, and self-pay each have different collection economics. Medicare-heavy practices have predictable rates but narrow margins. Commercial-heavy practices have stronger margins but are exposed to payer contract renegotiations. Lenders look at payer concentration — a practice with 40%+ of revenue from one insurance carrier faces meaningful contract risk that underwriting has to address.
Physicians affiliated with a hospital system through admitting privileges or employed-physician arrangements underwrite differently than pure independents. Hospital affiliation can stabilize referral patterns but also creates non-compete exposure if the physician leaves the system. Independent practices take on all patient acquisition but keep full revenue control. Both paths close with the right SBA lender — it’s a conversation about the specific transition, not a gate.
Physician practice acquisitions almost always include a non-compete agreement with the selling physician to prevent the seller from re-entering the local market. SBA lenders want to see non-competes with reasonable geographic and duration scope — state rules vary, and overly broad non-competes can be unenforceable, which degrades the transition value the lender is funding.
Franchise arrangements are rare in physician practices — the 2.21% franchise rate reflects a handful of retail-health and urgent-care franchise concepts. The vast majority of physician practice SBA loans fund independent practice acquisitions or partnership buy-ins. Typical structure: younger physician buying into or fully acquiring the practice from a retiring or transitioning senior physician.
Partnership buy-ins (buying into a multi-physician practice) are common and handled through SBA 7(a) when the buy-in amount is sufficient. The SBA’s May 2023 rule update clarified that partial business purchases — buying into rather than fully acquiring an existing business — qualify for 7(a) financing. This meaningfully expanded the available structures for physician practice transitions.
Specialty type affects lender enthusiasm. High-margin procedural specialties (dermatology with cosmetic, ophthalmology with refractive surgery, orthopedics) tend to attract more lender competition and better pricing. Primary care and pediatrics are more rate-sensitive and lender choice matters more given thinner margins.
Physician practice charge-offs run at 0.68%%, compared to the SBA average of 1.36%% — a 0.50x ratio. The favorable performance reflects the same structural features as dental: recurring patient relationships, licensed-professional barriers to entry, and insurance-paid revenue stability. Physicians see slightly more variance than dentists because of specialty mix and reimbursement complexity, but the industry category still outperforms the SBA portfolio average meaningfully.
What predicts the failure cases: payer concentration (one carrier representing 40%+ of revenue), misjudged post-acquisition physician departures (key associate leaves, taking patient base), and misjudged non-competes (seller physician re-enters the market). Lenders who specialize in physician practice deals underwrite specifically around these risks, which is why specialist lender match matters even in an industry with favorable aggregate performance.
The +11% YoY growth in SBA lending to physician practices reflects the same transition cycle as dentistry: older physicians selling to younger physicians, with corporate consolidators (PE-backed medical groups, health-system acquirers) competing for the same deals and pushing valuations up. SBA 7(a) is the dominant path for individual physician buyers competing against corporate bidders.
The ten banks that have approved the most SBA 7(a) physician practice loans FY2020-2025. Pulled directly from SBA FOIA data. Loan count alone doesn’t capture lender fit for your specific deal — volume leaders and specialist fit can differ.
Top 10 lenders account for approximately 40.1% of all physician practice SBA 7(a) volume.
The eight states leading in physician practice SBA 7(a) approvals FY2020-2025. CA leads the next-largest state (TX) by roughly 1.24× on loan count; top 8 states account for roughly half of all national physician practice SBA volume.
Adjacent SBA lending pages with shared underwriting mechanics or audience overlap for physician practice borrowers.
Physician practice SBA is a narrow specialty. The top ten lenders above handle a meaningful share of all physician practice 7(a) volume — matching there vs. a generalist branch is the difference between a clean 60-day close and a stalled file. See the broader SBA loans hub or SBA acquisition mechanics.
Match with physician practice SBA lenders →MMM does not originate SBA loans. Applications are processed through SBA-authorized lenders. Statistics above are sourced from the SBA FOIA 7(a) dataset, fiscal years 2020 through December 2025.