SBA 504 Loans for Medical Offices
The medical industry is one of the fastest-growing in the nation when taken as a whole, which means that now is an excellent time to build your own medical office. The industry is expected to grow by 2.4% in 2018, with total revenue of $284.4 billion. An SBA 504 loan can allow you to break groundStart Your Application and Unlock the Power of Choice$5.6M offered by a Bank at 6.1%$1.2M offered by a Bank at 6.0%$2M offered by an Agency at 5.6%$1.4M offered by an SBA Lender at 9%Click Here to Get Quotes!
Can You Use an SBA 504 Loan for a Medical Office?
The medical industry is one of the fastest-growing in the nation when taken as a whole, which means that now is an excellent time to build your own medical office. The industry is expected to grow by 2.4% in 2018, with total revenue of $284.4 billion. An SBA 504 loan can allow you to break ground on your new office and begin serving patients.
An SBA 504 loan can be used for a wide range of needs. For instance, you can purchase real estate, either with an existing facility on it already, or with the goal of building your own facility. You can also use the funds from an SBA 504 loan to offset the single most expensive part of creating a new clinic – the equipment. X-ray machines can cost hundreds of thousands of dollars. Drug testing equipment can cost a great deal. CT machines, ultrasound machines, and other equipment can cost millions more.
However, understand that a 504 loan cannot be used as working capital, so if you need funding to keep the business running, you’ll also need to consider options like an SBA 7(a) loan.
We’re here to help you get the commercial financing you need. Simply fill out the form below for a risk-free consultation and a free SBA loan quote!
What are the eligibility requirements for an SBA 504 loan for a medical office?
The eligibility requirements for an SBA 504 loan for a medical office include a minimum credit score of 660, additional collateral, and extensive documentation. Documentation includes a year-to-date balance sheet, business tax returns for the last two years, business licenses, personal tax returns and resumes for 20%+ owners, and projected financial statements for 1-3 years. The loan size can range from $30,000 to $5 million, and the loan can be used for financing commercial real estate, equipment, and working capital. Loan terms for real estate are up to 25 years, for equipment up to 10 years, and for working capital up to 10 years.
What are the benefits of an SBA 504 loan for a medical office?
An SBA 504 loan can provide a number of benefits for medical offices. It can be used to purchase real estate, either with an existing facility on it already, or with the goal of building your own facility. It can also be used to offset the cost of expensive medical equipment, such as X-ray machines, drug testing equipment, CT machines, and ultrasound machines. Additionally, it can be used to pay for improvements to the land, such as drainage, paving, and parking areas.
However, it is important to note that an SBA 504 loan cannot be used as working capital, so if you need funding to keep the business running, you may need to consider other options, such as an SBA 7(a) loan.
What are the maximum loan amounts for an SBA 504 loan for a medical office?
The SBA 504 maximum loan amount is currently set at $5 million in lifetime dollars. However, if your business is a medical office, you can borrow up to $5.5 million in lifetime dollars. Additionally, if you decide to embark on energy-related projects that fall under the “go green” heading, you can borrow up to $16.5 million in lifetime dollars. Note that the SBA does not limit the amount you can borrow from a conventional lender. Banks and other lenders are free to contribute as much as you qualify to borrow. However, the SBA/CDC’s contribution is limited to the aforementioned amounts. In most situations, this comes to 40% of the loan’s value (up to the contribution cap that applies to your situation).
What are the interest rates for an SBA 504 loan for a medical office?
The interest rates for an SBA 504 loan for a medical office can vary depending on the lender. Generally speaking, the CDC lender can charge anywhere from 2.5% to 3% APR on the loan. However, the bank may offer more variable rates or related fees, which may range anywhere from 4% to 10%. It’s important to note that, while the rates from a traditional bank may be higher than expected, these commercial real estate loan rates are still considered better than those you will see elsewhere. It is also taken with the CDC loan, which is treated as a traditional property mortgage payment, with a fixed rate that can last 10, 20, or 25 years.
For more information, please visit SBA 504 Loans for Medical Offices and SBA 504 Loans and Commercial Real Estate: What You Need to Know.
What documents are required to apply for an SBA 504 loan for a medical office?
When applying for an SBA 504 loan for a medical office, you will need to provide the CDC and your lender with a wide range of documentation. The most commonly required documents include:
- Business tax returns for the previous three years
- Personal tax returns for the previous three years
- Personal history statement
- Personal financial statement
- Personal budget analysis
- Business financial statements for the previous three years
- Business debt schedule
- If you are applying for a loan for a hotel or motel, you will need:
- Revenue and expenses breakdown for the past year (month to month)
- Occupancy percentage and average daily rate information for the previous year (month to month)
- Occupancy percentage and average daily rate for the area
- Your hotel projection worksheet
- Interim financial statement (signed and dated, and including balance sheet and income statement dated within the previous two months)
- Accounts receivable aging (dated within the previous two months)
- Accounts payable aging (dated within the previous two months)
- Complete business plan
- One year of financial projections with assumptions
- Purchase agreement
- Written estimate from a contractor if the loan is for construction
- If this is a franchise, you will need a letter of intent from the franchisor and a FUOC and franchise agreement
- If you are buying another business, also include:
- The business owner’s tax returns for the previous three years
- Interim finance statement dated within the last 60 days
- Signed purchase agreement with cost breakdown, amendments, etc.
- If you are using gift funds, you will need to provide a gift letter
- Previous government financing schedule
- Environmental impact questionnaire
- Application certification an authorization
- Documents pertaining to the ownership of other businesses and their finances (if applicable)
- Copy of loan agreement and SBA authorization if you have another SBA loan
- If you are refinancing a loan, you will need:
- Copy of the original debt documentation
- Your original purchase agreement, including settlement sheet,
For more information, please refer to this page.