Get a practice loan

Goal: the right debt, sized to include working capital, from a lender who knows practices. Context: practices are among the most bankable small businesses. Default rates are historically very low, so lenders compete for you. Get multiple term sheets, always.

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What you’re financing

Build-out, equipment, technology, deposits, and the line everyone undersizes: working capital. Between opening and steady insurance cash flow sits the credentialing gap plus A/R lag. Six months of operating expenses including your own draw is the prudent floor. Build the number with the startup cost worksheet. Acquisitions instead finance the purchase price against existing cash flow: see Buy a practice.

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The three lender types

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What lenders underwrite

Startups: your production as an associate, credit, liquidity, and realistic projections. Acquisitions: the target’s cash flow and coverage after debt service. Every practice loan carries a personal guarantee.

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Term-sheet reading list

Compare beyond rate:

• Prepayment penalties. Practices refinance and sell; a step-down penalty is an exit cost.
• Collateral. Business assets vs. your house.
• Covenants. Liquidity or coverage ratios, and what tripping one triggers.
• Rate structure and fees. Fixed vs. floating, origination, guaranty, packaging.
• Banking ties. Lenders often require holding your operating accounts. That binds your payer EFT enrollments to that bank, and unwinding it costs. It’s negotiable more often than borrowers assume. At minimum, price the trade.

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Process

Two or three term sheets (costs two weeks, not two months). CPA sanity-checks projections first; a credible conservative model beats a hockey stick. Match draws to the build schedule instead of taking a lump sum.