How Do I Finance a Medical Practice With $1.5M in Revenue?

A medical practice with $1.5M in annual revenue qualifies for three kinds of financing, and the amounts come from three different places. Revenue-based working capital and term loans size at roughly 10 to 15 percent of annual gross, so $150K to $225K, underwritten on four to six months of practice bank statements and funded in days. Equipment is financed on the equipment: a $150K laser or a $400K imaging unit gets its own loan with the device as collateral, usually around 10 percent down, in five to ten days. And a practice acquisition is sized to the buying doctor's collections, not the seller's tax returns, stacked across a term loan, equipment financing, and working capital; a $1.5M practice with clean deposits can carry a $1M to $2M acquisition that way in two to four weeks.

The number that decides all three is deposits. Not the physician's W-2 history, not the student loan balance, not the FICO alone. A practice depositing $125K a month with no overdrafts and a steady 12-month trend is a fundable practice, and a lender that reads it that way says yes in a week. A bank that reads the owner instead of the practice is where the 60-to-90-day timelines and the surprise declines come from.

What $1.5M in Revenue Gets You, by Use

Operating cash: $150K–$225K, in days. Reimbursement gaps, a hiring push, a payroll month that lands before the insurer pays. A working capital line or short term loan sized off deposits, underwritten on the statements, funded in one to three days. This is the layer most practices use first and most often.

Equipment: the price of the equipment, on the equipment. A $150K laser system, a $400K CBCT, four operatories at $450K. Equipment financing puts the device up as collateral, so the practice's revenue isn't the limit. Around 10 percent down, five to ten days, and the Section 179 deduction can cover most of the purchase in the year it's placed in service. A dermatologist in Scottsdale financed a $150K laser that added $30K a month in treatment revenue; the machine paid for itself in five months.

Acquisition: sized to the buyer, stacked across products. A dentist doing $1.5M buying a $1.8M two-location group doesn't get one loan. The structure that funded exactly that in eight days was a $1.15M practice-acquisition term loan on the buyer's collections, $450K of equipment financing on four operatories, and $200K of working capital for the 90-day transition. Three lenders, each pricing the piece it writes every day. The full file is here. The buyer's revenue qualified the structure; the seller's tax returns never came up.

The building: owner-occupied, on the practice. If the suite you've leased for six years comes up for sale, owner-occupied commercial real estate financing is sized to the building and to the practice already running in it, so the practice's payment history on the lease and its deposits carry the file. It's the slowest of the four and always a separate track from everything above, which is why it never shows up in an acquisition stack.

What the Bank Sees, and What a Revenue-Based Lender Sees

A bank underwrites the borrower: personal debt-to-income, the student loans, the tax return after the CPA has done its job of minimizing taxable income. A dentist earning $200K with $320K in student debt and a practice depositing $60K a month looks, on that read, like a risk. That's not a red flag. That's a dentist.

A revenue-based lender underwrites the practice: deposits, consistency, the trend, how the account behaves. Student debt is expected in healthcare and sits outside the file. Taxable income doesn't matter because the lender isn't reading the tax return. What matters is whether the practice has been putting the same money in the same account, month after month.

Two things make a practice look bad on that read, and both are fixable before you apply. Commingled accounts: if insurance reimbursements and personal spending run through one account, the lender can't see the practice, so run every dollar of practice revenue through a dedicated business account starting now. And a thin statement history: six months is the floor, twelve is better, and a practice under six months old is an equipment-and-personal-guarantee file, not a revenue file yet.

See how a practice at your revenue structures.

The Capital Stack on a $1.5M Practice Buying a $2.5M Group

Say a physician with a $1.5M solo practice is buying a $2.5M group practice, and the seller has 35 days. A single acquisition loan at a bank runs 60 to 90 days, so the bank is out on the calendar alone. The structure that fits the deadline:

Each lender is comfortable because it's only carrying the piece it understands. The term lender prices practice revenue. The equipment lender prices equipment. The working-capital provider prices deposits. No one is carrying all three at once, which is how the full number gets reached on the seller's clock. That's capital stacking, and it's how most practice acquisitions over $1M get done when speed matters.

A bank-backed government loan can be the cheapest money on a practice acquisition if the seller will wait 60 to 90 days. Most sellers with a corporate buyer in the wings won't, and that's the whole reason this structure exists.

What Your Specialty Changes

Lenders who do healthcare know the margins by specialty and read the deposits against them. Dental runs 18 to 25 percent net; veterinary 20 to 28; optometry 15 to 20; primary care 12 to 18 but with the most predictable revenue of any of them; dermatology and surgical specialties higher but more concentrated. A $1.5M dental practice and a $1.5M primary-care practice qualify for similar working capital and very different acquisition structures, because the cash left after expenses is what carries a term loan.

Payer mix matters the same way. A practice that's 80 percent insurance reimbursement has a 45-to-90-day lag built into every month, and a lender who knows healthcare prices a working-capital line to bridge it. A practice that's mostly cash-pay (med spa, elective dental, concierge) has the cleaner deposit curve and usually the faster file. The same read applies whether the practice is in Texas or Florida.

Frequently Asked Questions

How much can a medical practice with $1.5M in revenue borrow?

For revenue-based working capital or a term loan, roughly $150K to $225K, sized at 10 to 15 percent of annual gross and underwritten on bank statements. Equipment is financed separately on the equipment's value. An acquisition is sized to the buying doctor's collections and stacked across products, which is how a $1.5M practice can carry a $1M to $2M purchase.

Does student loan debt disqualify me from a practice loan?

No. Revenue-based lenders read the practice's deposits, not the owner's personal debt-to-income. A dentist with $320K in student loans and a practice depositing $60K a month is a normal file in healthcare lending.

How fast can a medical practice acquisition fund?

A revenue-based capital stack funds in two to four weeks from a complete file; the $1.8M dental acquisition above funded in eight days. A single bank acquisition loan runs 60 to 90 days. What slows a transaction is almost never the lender; it's assembling statements and production reports after the seller's clock has started.

What do I need to have ready?

Four to six months of practice bank statements (twelve is better), a production or collections report, and for an acquisition, the signed letter of intent and the seller's practice financials. A dedicated business account with no commingled personal spending is the single thing that most improves how the file reads.

What credit score do I need?

Revenue-based structures read the practice first. Strong deposits with a 650 score get funded; weak deposits with a 750 may not. Equipment financing can work from the low 600s when the device is the collateral. The practice's revenue and consistency carry more weight than the owner's score.

Bobby's Take

Here's what I've watched happen for twenty years. A doctor spends six weeks assembling a bank package, gets a conditional approval that depends on a valuation of someone else's practice, and loses the acquisition to a corporate buyer who could close in the time the seller named. The doctor's practice was fine. The file was pointed at the wrong lender.

If your practice deposits $125K a month and the account is clean, you are fundable this week for operating cash, in ten days for equipment, and in a month for an acquisition. Start the financing conversation before you need it, with the statements already in hand. The practices that beat the corporate buyers aren't the ones with the best credit. They're the ones that had the file ready.