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May 1, 2024   /   West Town Bank & Trust

In the evolving landscape of healthcare, independent practice owners face an increasingly uphill battle in maintaining their autonomy. Private equity’s growing influence and a trend toward consolidation in the healthcare industry have made it vital for independent practice owners to find innovative financial solutions to stay afloat. Small Business Administration (SBA) financing offers a solution for private practice owners who wish to not only survive but thrive in this competitive environment.

SBA loans are tailor-made for independent medical practices and American small business owners. The SBA financing programs offer the financial muscle necessary to expand, improve operations, or even buy out a partner. With extended repayment terms, government-backed security, and a focus on community benefit, SBA financing is an attractive option for many private medical practice owners.

This comprehensive guide dives into what SBA financing means for independently owned medical practices, eligibility criteria, and strategies for leveraging these loans to bolster your independent healthcare practice.

Understanding the Competitive Financial Landscape Private Practice Owners Face

Large health systems and corporate entities currently wield considerable power in the healthcare space, often outspending, outmaneuvering, and acquiring the smaller, independent practices that serve dedicated communities.

To remain competitive, independent medical practice owners must find creative ways to access capital that fuel their own growth strategies without crippling their cash flow. SBA loans can serve as a crucial tool, enabling independent practices to invest in their future without sacrificing their autonomy.

Why SBA Financing Is an Ideal Fit for Healthcare Practices

A dedicated financial instrument like SBA loans can empower independent practice owners with the affordable capital needed to growth and retain market share, positioning a private practice for success in the competitive landscape.

Advantages of SBA Loans for Healthcare Practices

The numerous advantages of SBA financing, such as:

  • Up to 100% financing (dependent on loan size and use)
  • fully amortizing, extended repayment terms
  • competitive interest rates

SBA financing for private physicians can make a significant difference in the ability of a medical practice to meet its financial goals. These benefits, combined with the specific needs of healthcare practices, make SBA loans more critical and advantageous than traditional commercial loans.

Read More on the Pros and Cons of SBA Financing >>

Leveraging SBA Loans for Growth and Innovation

SBA financing programs operate with a shared focus of many private practice owners: to foster healthy, thriving communities. Many private practice owners believe in this same mission, dedicating their business to the health and wellness of the communities where they live and work.

Whether it’s to modernize and specialize your medical equipment for patient care, expand into a new location, or invest in personnel and training, SBA loans can be the catalyst that propels a medical practice forward. By strategically using these funds, independent physicians can enhance patient care, expand their service offerings, and ultimately increase their bottom line while retaining their ownership stake in the practice.

Basic uses for SBA 7(a) loans include the following:

• Working capital

• The purchase of specialized medical equipment, machinery, furniture, fixtures, supplies or materials

• The purchase of real estate, which includes both land and buildings

• The construction of a new building or renovation of an existing building for specialized medical practice needs

• Opening a new doctor’s office location or a second practice location

• Buying a business (You can learn more about using an SBA loan to buy a business with our article.)

• Refinancing existing business debt (under certain conditions)

At a Glance: Use Cases for Independent Physicians Utilizing SBA Financing

Working Capital for Growth Initiatives

Expand into a new market with the help of SBA financing. By providing fully amortizing capital at critical moments, SBA loans fuel the growth and resilience of private healthcare practices.

Partner Buyout and Practice Transition

In the complex world of healthcare partnerships, SBA loans can facilitate smooth transitions and buyouts. Transition private practice ownership while retaining all your equity in the business.

Equipment Financing for Private Practice

Use SBA loans to finance equipment purchases for your private practice, allowing your office to specialize and stay competitive as an independent physician group.

Qualifying for SBA Financing in the Healthcare Sector

To qualify for an SBA loan, you must meet specific criteria, including operating as a for-profit business, demonstrating an investment of personal equity, and exhausting all other financing options.

SBA loan eligibility is determined by your business size, model, business operations, intended project or use of the loan, and your ability to find funding elsewhere. To be eligible for the SBA 7(a) loan, you must:

• Be considered a small business by the SBA. You can check your own business’ eligibility using this tool.

• Operate for profit

• Use the funds for an eligible use

• Do business in the United States or its territories

• Prove alternative financial resources are not available before pursuing an SBA loan

Private practice owners and partners may check their eligibility by filling out the form on this page.>>

Preparing Your Documentation for a Smooth SBA Loan Application Process

The SBA loan application process can be a complex process, but with the right approach and preparation, applicants may streamline their timeline maximum efficiency.

An organized and well-prepared loan application is vital for success. This includes carefully collecting and presenting the necessary documentation, such as financial statements, business plans, and a robust proposal that clearly articulates how the loan will be utilized to benefit the practice. Plan to submit the following documents with your SBA loan application.

SBA Loan Application Document Checklist for Private Practice Physicians

  • 3 Years of Business and Personal Tax Returns
  • Business Interim Financials (within 120 days)
  • Organizational Documents (ex. Operating Agreements, Bylaws, etc)
  • Business valuations
  • Appraisals on properties
  • Life insurance documents
  • Escrow documents
  • SBA form 1919
  • Title work

A Long Term Financing Solution for the Health of Independent Physician Offices Nationwide

SBA financing offers independent healthcare practitioners a powerful means to solidify and grow their practices. By understanding the unique advantages and requirements of SBA loans, and by leveraging them strategically, private practice owners can secure their independence and continue to provide exceptional care to their communities. The road to obtaining and repaying an SBA loan may have its challenges, but the rewards for a well-managed financing strategy are well worth the effort.

Prequalify for Private Practice Financing

Use the form below to begin the SBA financing application at West Town Bank & Trust.

Step 1 of 7

How will you use the funds?(Required)