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Can You Get an SBA 7(a) Loan for a Medical Center?
Private medical centers play an important role in the American healthcare system. Find out how an SBA 7(a) loan can give your business an advantage.
- How to Get an SBA 7(a) Loan for a Medical Center or Medical Imaging Center
- Purchasing Medical Equipment
- Building a New Medical Center
- Refinancing Business Debt
- Buying or Expanding a Medical Center
- Buying Out a Partner
- SBA 504 Loans May Be A Better Option for Larger Medical Centers
- Case Study: Buying Out a Partner
- Find the Right Business Loan for You
- Related Questions
- Get Financing
Small, private medical centers occupy an important niche in the American healthcare market.
If you own (or want to own) an independent outpatient medical center, a small surgery clinic, or an ultrasound/MRI center, an SBA 7(a) loan could be a great way to get the financing you need to start, maintain, and grow your business.
How to Get an SBA 7(a) Loan for a Medical Center or Medical Imaging Center
SBA 7(a) loans aren’t just offered by banks; they’re also offered by credit unions, online and alternative lenders, which gives borrowers a wide variety of choices during the loan application process.
Medical center 7(a) loans can be used for a variety of purposes, such as buying medical equipment, funding the purchase of owner-occupied commercial real estate, and funding a medical center’s working capital reserves.
Medical centers can use SBA 7(a) loans for a variety of purposes.
Purchasing Medical Equipment
Medical equipment can be one of the largest costs for medical centers (especially medical imaging center); for example, some MRI machines can cost up to $3 million, state-of-the-art ultrasound machines can easily cost over $100,000, and new X-ray machines often cost between $125,000 and $235,000.
Building a New Medical Center
SBA 7(a) loans can finance nearly all new construction costs— including furniture, lighting, security systems, and even landscaping.
Refinancing Business Debt
If you own a medical center with SBA-eligible business debt that’s currently being offered to you on unreasonable terms, you may be able to refinance it with an SBA 7(a) loan.
Buying or Expanding a Medical Center
If you want to purchase a medical center, or expand one that you currently own, an SBA 7(a) loan could be a smart way to do so.
Buying Out a Partner
In addition to purchasing a new medical center or expanding a current one, you can use an SBA 7(a) loan to buy out a business partner.
SBA 504 Loans May Be A Better Option for Larger Medical Centers
While the 7(a) loan is a great choice for many medical centers, borrowers primarily looking for commercial real estate financing for their business may find that the SBA 504 loan is a superior fit for their needs. While the SBA 504 program does not allow for working capital or equipment financing, it does offer somewhat lower interest rates than SBA 7(a) loans and a slightly larger maximum loan amount, at $5.5 million.
Case Study: Buying Out a Partner
Roger and his business partner, Lois, had successfully run a medical imaging center together in Tacoma, Washington, for several years. Their center had become an essential part of the community, offering state-of-the-art imaging services such as MRIs, CT scans, and ultrasounds. However, Lois had reached retirement age and expressed a desire to sell her share of the business. Roger, who still had a passion for the healthcare industry, saw this as an opportunity to become the sole owner and continue to grow the business.
To buy out Lois's share, Roger needed to secure financing. After conducting some research, he discovered the SBA 7(a) loan program, which seemed like the perfect solution to help him achieve his goal. Roger decided to apply for a loan of $600,000, which would cover the cost of Lois's share and provide some additional working capital for the business's ongoing operations.
This is a fictional case study provided for illustrative purposes.
Find the Right Business Loan for You
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Related Questions
What are the requirements for an SBA 7(a) loan for a medical center?
The requirements for an SBA 7(a) loan for a medical center are the same as for any other business. The borrower must be a for-profit business, have a good credit score, and have a sound business plan. The loan must also be used for a business purpose, such as purchasing medical equipment, building a new medical center, refinancing business debt, buying or expanding a medical center, or buying out a partner. The maximum loan amount is $5 million, and the interest rate is typically between 6-9%. For more information, please see https://www.sba.gov/funding-programs/loans/sba-loan-programs/7a-loan-program.
What are the advantages of an SBA 7(a) loan for a medical center?
The SBA 7(a) loan is a great choice for many medical centers, as it can be used for a variety of purposes, such as purchasing medical equipment, building a new medical center, refinancing business debt, buying or expanding a medical center, and buying out a partner. The SBA 7(a) loan also offers a wide variety of choices during the loan application process, as it is offered by banks, credit unions, online and alternative lenders.
The SBA 7(a) loan also offers somewhat lower interest rates than other loan products, and a maximum loan amount of up to $5 million.
Sources:
What are the disadvantages of an SBA 7(a) loan for a medical center?
The main disadvantage of an SBA 7(a) loan for a medical center is that the interest rates are typically higher than those of an SBA 504 loan. Additionally, the maximum loan amount for an SBA 7(a) loan is $5 million, while the maximum loan amount for an SBA 504 loan is $5.5 million.
For more information, please see the following sources:
What are the eligibility criteria for an SBA 7(a) loan for a medical center?
In order to be eligible for an SBA 7(a) loan for a medical center, the business must meet the following criteria:
- The business must be a for-profit business.
- The business must be located in the United States.
- The business must have a net worth of less than $15 million.
- The business must have an average net income of less than $5 million over the past two years.
- The business must have a tangible net worth of less than $5 million.
- The business must have been in operation for at least two years.
- The business must have a good credit history.
For more information, please visit the SBA website.
How long does it take to get an SBA 7(a) loan for a medical center?
The time it takes to get an SBA 7(a) loan for a medical center depends on the lender and the complexity of the loan. Generally, it takes between 30 and 90 days to get approved for an SBA 7(a) loan. The SBA 7(a) loan application process includes the following steps:
- Submitting a loan application to the lender
- Gathering and submitting the required documents
- Underwriting and credit review
- Approval and closing
The lender will also need to submit the loan application to the SBA for final approval. This process can take up to 90 days. For more information, please visit https://www.sba7a.loans/sba-7a-loans-small-business-blog/how-long-does-it-take-to-approve-an-sba-7a-loan/.