> ## Documentation Index
> Fetch the complete documentation index at: https://www.practiceownersguide.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Get a practice loan

> The right debt, sized to include working capital, from a lender who knows practices — and why you should always get multiple term sheets.

**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.

## 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](/guides/get-credentialed) 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](/reference/startup-costs). Acquisitions instead finance the purchase price against existing cash flow: see [Buy a practice](/guides/buy-a-practice).

## The three lender types

| Type                                                                                     | Strengths                                                                    | Watch for                                                 |
| ---------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | --------------------------------------------------------- |
| **SBA 7(a)** ([program](https://www.sba.gov/funding-programs/loans/7a-loans))            | Long terms, low down payment, works for thinner files                        | Guaranty fees, slower closes, liens (sometimes your home) |
| **Bank practice-finance divisions** (BofA Practice Solutions, Huntington, US Bank, etc.) | Conventional 100% financing, fast closes, competitive rates for strong files | Deposit-relationship requirements                         |
| **Specialty / fintech lenders**                                                          | Speed, flexibility, revenue-based products                                   | Price. Read effective APR, not factor rates               |

## 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.

## 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](/guides/enroll-eft-era) to that bank, and [unwinding it costs](/guides/switch-banks). It's negotiable more often than borrowers assume. At minimum, price the trade.

## 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.