Practice acquisition loans

Yes. Practice acquisition loans let physicians and dentists finance the majority of a practice purchase at rates tied to credit score and the practice's profitability. Qualification takes 30–90 days when you have 2+ years of personal and business tax returns and a minimum 640 credit score. Check your rate and qualification in under 5 minutes.

The specifics

A practice acquisition loan is a term loan engineered to finance the purchase of an existing medical, dental, or veterinary practice. Unlike equipment financing or working capital loans, acquisition loans are sized to match the practice's valuation and structured around its ongoing revenue, profitability, and cash-service ability.

According to Bank of America's practice financing program, a typical acquisition loan in 2026 carries these parameters:

Loan structure:

• Loan-to-value (LTV): 75–85% of the agreed purchase price
• Down payment: 15–25% (you bring capital; lender covers the rest)
• Loan term: 5–10 years for conventional loans; up to 25 years for SBA 7(a) acquisitions
• Interest rate: 9–15% APR on conventional loans; Prime + 2.75–4.75% on SBA 7(a) loans

Debt-service qualification:

Lenders verify that the practice's monthly profit can sustain the loan payment. The standard threshold is a debt-service coverage ratio (DSCR) of at least 1.25x—meaning the practice must generate $1.25 in profit for every $1.00 of annual loan payments. Your monthly payment should not exceed 8–12% of the practice's gross monthly revenue. According to the SBA, this ceiling ensures the practice retains working capital for payroll, supplies, and operating expenses after the loan payment clears.

Credit and income requirements:

• Minimum credit score: 640 FICO (SBA 7(a) standard)
• Good credit (740+ FICO): Qualify for the best rates and fastest approval
• Fair credit (620–679 FICO): Qualify but pay 3–5% higher APR; may require a co-signer
• Debt-to-income ceiling: Total monthly debt (personal + business) should not exceed 40% of your gross monthly income

Documentation required:

• 2–3 years of your personal tax returns (Form 1040)
• 2–3 years of the target practice's business tax returns
• Current profit-and-loss statement and balance sheet for the practice
• A signed purchase agreement showing the negotiated valuation
• Proof of professional licensure (state medical license, dental license, DEA registration)
• Personal financial statement listing assets, liabilities, and net worth
• Optional: Business management experience or prior practice ownership (strengthens application)

According to Fora Financial's 2026 medical practice financing report, lenders also verify that you have no outstanding regulatory violations, material malpractice judgments, or compliance issues that would elevate liability or operational risk. This underwriting layer adds 2–3 weeks to the approval timeline but is standard for healthcare lending.

Qualification and edge cases

Most licensed healthcare professionals with established credit, provable income, and professional licensure qualify. However, approval terms shift significantly in these scenarios.

Fair-credit borrowers (620–679 FICO):

You will qualify, but expect rates 3–5% higher than prime applicants. Lenders may also require a co-signer (spouse, business mentor, or partner with stronger credit and personal income), additional collateral (personal guarantees, accounts receivable pledges, or a blanket lien on practice assets), or proof of business continuity insurance. Some lenders impose a mandatory 25% down payment instead of 15–20%.

Practices with declining or flat revenue:

If the target practice's revenue has fallen year-over-year or remained stagnant, lenders will ask you to submit a written turnaround plan (staffing changes, new service lines, enhanced marketing, payer contracting) and evidence of business management capability. Declining-revenue practices often qualify only at a lower LTV—meaning you bring 25–30% down instead of 15–20%, and rates may increase 1–2%. Some lenders decline these deals outright unless you have 3+ years of prior practice ownership or management.

Specialty or niche practices in new geographic markets:

Lenders may request a market demand analysis, competitive landscape report, or referral letters from established practitioners in the area demonstrating patient demand. This reduces perceived risk that patient volume will drop after acquisition. Approval timelines lengthen by 2–4 weeks in these cases.

Recent graduates or first-time buyers:

If you have fewer than 2 years of post-residency experience, lenders often require a mentor co-signer (established physician or dentist in your field with personal income above $150K) or proof of an employment contract with a hospital or DSO guaranteeing your income for 12+ months. Some programs skip the co-signer if your personal credit is 740+, your student loan payments are on-time, and the target practice has strong financials.

Multiple practice acquisitions:

If you already own one practice and are buying a second, lenders will stress-test both practices' cash flow. Your total debt service (all practice loans + personal debt) must not exceed 45–50% of combined gross income. A second practice typically requires SBA 7(a) financing due to larger loan amounts.

How practice acquisition loans work

Unlike personal loans or revolving credit, practice acquisition financing is a secured term loan. The practice itself—its assets, patient roster, revenue stream, and goodwill—serves as collateral. If you default, the lender can seize the practice, pursue a personal guarantee on your assets, or force a sale.

The acquisition process:

1. Find a practice. You identify a target practice and negotiate a purchase price with the seller.
2. Get a purchase agreement signed. This agreement spells out the valuation, contingencies (financing, regulatory approval), and closing timeline.
3. Apply for financing. You submit tax returns, financials, and personal documents to the lender. A soft credit pull occurs; no credit-score impact.
4. Lender reviews and underwriting. The lender's underwriter digs into the practice's financials, reviews the purchase agreement, and verifies your credentials. This takes 2–4 weeks.
5. Appraisal or valuation. Many lenders appraise the practice independently to confirm the purchase price is reasonable. Appraisals cost $500–$2,500 and take 1–2 weeks.
6. Loan approval. If underwriting passes, the lender issues a formal commitment letter spelling out rate, term, LTV, and conditions (e.g., malpractice insurance proof, proof of license).
7. Closing. You and the seller sign closing documents, the lender wires funds, and you take ownership. Closing typically happens within 5–10 business days of approval.

SBA 7(a) loans vs. conventional acquisition loans:

According to MedMoneyGuide's 2026 physician practice loan comparison, SBA 7(a) loans are best for larger acquisitions ($250K+) or when you need the longest repayment term. They carry a government guarantee (the SBA backs 75–85% of the loan risk), so lenders price them lower: Prime + 2.75–4.75% APR over 10–25 years. Approval takes 30–90 days; there's a 2% SBA guarantee fee baked into the rate or paid upfront.

Conventional acquisition loans are faster (30–45 days approval) and have no government guarantee, but rates run 9–15% APR over 5–10 years. These work well for buyouts under $500K or when speed matters more than rate.

Timeline from application to funding:

• Pre-qualification (soft credit pull, rough qualification): 24 hours
• Full application and document submission: 3–7 days
• Underwriting review: 7–14 days
• Appraisal (if required): 7–14 days
• Final approval and commitment letter: 5–7 days
• Closing and wire: 5–10 business days
• Total: 30–90 days, depending on completeness of your application and the lender's queue

Bottom line

Practice acquisition loans are the standard financing vehicle for physicians, dentists, and veterinarians buying established practices. Qualification hinges on credit score (640+), 2+ years of tax returns, and the target practice's profitability. Get a pre-qualification in under 5 minutes to see your rate and terms.

Sources

• Bank of America Practice Solutions - Medical Practice Loans
• SBA 7(a) Loans - U.S. Small Business Administration
• Medical Practice Financing Trends 2026 - Fora Financial
• Physician Practice Loans 2026: Complete Bank Comparison Guide - MedMoneyGuide
• Complete 2026 Guide to Healthcare Practice Financing Options - Flychain
• Healthcare Practice Loans - Live Oak Bank

Disclosures

This content is for educational purposes only and is not financial advice. treated.finance may receive compensation from partner lenders, which may influence which products are featured. Rates, terms, and availability vary by lender and applicant qualifications.