Medical Office Feasibility Study

Questions buyers ask

Who prepares a feasibility study for a medical office or physician practice loan?

Loan Analytics does, and every study carries the signature of Daniel Smith, MAI, who stands behind its conclusion. We write to the program financing the project: an SBA 7(a) loan for a practice purchase, a partner's buy-in, equipment or working capital; an SBA 504 loan for the office a physician group will own; a guaranteed loan under USDA's Business and Industry program; or conventional bank credit. Each study sets the request inside the SBA record printed here, 20,552 7(a) loans for $8.01 billion and 5,934 504 loans for $4.08 billion across the full record, by state, metro area, lender and loan size, and adds what no loan file holds: the service area's patients, the physicians and payers behind the projection, and the building's value to other medical users.

Does a bank financing a physician practice insist on a feasibility study?

That call belongs to the lender, made under its own credit policy and its program's rules, and nothing on this page decides it for a given file. Loan Analytics' 2026 survey of feasibility fees, on this site, notes that SBA may call for a study at its discretion, when the agency needs to understand a physician practice of this kind and the market around its site, so a study is not automatic. The record here shows why physician office files draw the question: cancellation floors of 16.2% for 504 and 13.6% for 7(a) approvals of FY2017 to FY2024, plus at least 3.7% charged off among 7(a) loans that funded in FY2017 to FY2021. A building planned around one group, or a practice resting on a few physicians, is the kind of file where independent evidence carries the most weight.

What will a feasibility study for a medical office project cost?

The fee survey we published on this site for 2026 gathers the fees that study providers post. The survey's first band covers one SBA site with a standard special-purpose asset, and it has a floor of $5,000 and a top of $12,500. Its complex band, illustrated by projects built in phases, multi-site concepts and unusual concepts, runs between $10,000 and $25,000. For a physician practice financed with USDA's guarantee, a study to 7 CFR Part 5001 is priced from $7,500, and the survey shows fees past $18,750. The survey names no medical office example; it records that SBA itself fixes no fee and sets no ceiling, and that the fee normally travels inside the loan's sources and uses. A study for a single practice purchase belongs nearer the first band than one for a new multi-tenant medical building, and your project's fee arrives with our answer to your scope request.

How much time does a medical office study need?

The schedule is ours to set once we know the lender's date, and we state it alongside the scope instead of quoting a stock figure. Most of the calendar in a physician office study is spent gathering proof that lives outside the practice's ledgers: the commitment of each physician, collections by payer over recent years, referral and hospital relationships, bids or estimates for the build-out, and letters of interest from practices that might lease surplus space. A group with those papers ready shortens the work. A group still settling its partnership terms should start early, because in this class an approval that falls apart before closing is common: the 504 cancellation floor is 16.2%.

What does a medical office feasibility study test for the lender?

Demand comes first: the population of the service area by age, the physicians already practicing the specialty there, and the referral sources and hospital ties the practice depends on. Then revenue as collected, by payer, rather than as billed, and how much of it rests on any one physician. Expenses include market pay for every physician-owner before debt service is measured, because an owner's draw can quietly absorb the cash that services the loan. For a building, the study prices the medical build-out, tests whether space the group does not need can be let to other practices and at what rent, and values the property for any medical occupant. The coverage test runs past the fifth year, since the 7(a) charge-off floor rises from 2.5% within 5 years to 3.7% to date.

How many SBA loans have gone to medical offices and physician practices?

Across the measurable record, which becomes continuous in FY1999, SBA lenders approved 20,552 7(a) loans for $8.01 billion and 5,934 504 loans for $4.08 billion to physician offices. For FY2017 to FY2026 alone, 7(a) accounts for 6,346 loans and $3.68 billion, and 504 for 1,477 loans and $1.47 billion. The busiest 7(a) year by count was FY2011, with 1,126 loans, and the largest by dollars was FY2021, with $483.7 million. The 504 high came in FY2010, with 470 loans for $281.3 million. Counts from years with incomplete industry coding are floors, so the true numbers can be higher.

Is SBA lending to physician practices rising or falling?

It depends on the program. 7(a) lending recovered from a low of 493 loans in FY2019 to 779 in FY2024 and 865 in FY2025, then eased to 638 loans for $390.8 million in FY2026. 504 lending has run far below its FY2010 high of 470 loans since FY2014, with 136 loans in FY2025 and 122 in FY2026, but 504 loans have grown larger: FY2022's 191 loans carried $224.4 million, more than the 382 of FY2007. A building request today therefore meets a lender with fewer recent 504 files of this kind to compare against, so more of the local evidence must come from the study itself.

Should a physician group use SBA 7(a) or 504?

The purpose decides it in this class, and the record shows the split. A 7(a) loan is the usual vehicle for buying into or out of a practice, for equipment and for working capital; a 504 loan is the usual vehicle for buying or building the office the doctors will occupy. The sizes follow the purpose: the 7(a) median is $251,250 and its upper quartile $669,875, while the 504 median is $673,000 and its upper quartile $1.3 million. The study is written to whichever structure the lender approves, and for a 504 building it adds the tests a lender applies to real estate: the build-out cost, the leasing of surplus space and a value that holds for other medical tenants.

How big is a typical SBA loan to a medical practice?

For 7(a), the quartiles are $100,000, $251,250 and $669,875, and the largest group of loans, 2,476, falls at $150,000 or less. For 504 the quartiles are $379,000, $673,000 and $1.3 million, and the busiest band holds 637 loans. By state the median runs from Nevada's $611,000 and California's $577,500 down to Ohio's $135,000 and Rhode Island's $126,000; by metro area, from Reno's $983,500 down to $100,000 in Boston-Cambridge-Newton and Cleveland. A request well above its own market's median is likely to draw closer reading, and the study should explain why the project needs that size.

What is the default rate on SBA medical office loans?

The SBA files support floors, not exact rates. Take the physician office loans disbursed between FY2017 and FY2021: at least 3.7% of the 7(a) ones and at least 0.46% of the 504 ones have been charged off so far, and counting only losses inside the first 5 years, the floors are 2.5% and 0.15%. By state, North Carolina (6.8%), Pennsylvania (5.7%) and Indiana (5.1%) print the highest floors, and Utah and Minnesota print 0.00%; by metro area, Houston prints 8.3% and Los Angeles 2.2%. A rate is printed only when its cohort reaches 30 loans, and a withheld rate is not a zero: it is simply not published.

Why are so many medical office loan approvals cancelled before closing?

In FY2017 to FY2024, at least 16.2% of 504 approvals and 13.6% of 7(a) approvals to physician offices never closed. SBA's loan-level data marks a physician office approval as cancelled without giving a reason, but the nature of a physician group explains much of the risk: partners arrive and depart, a hospital system can bid for the practice, and a building designed around one roster may not suit the group that exists at closing. The state floors run as high as 25.0% in Kansas and 23.3% in Alabama. A study protects the approval by documenting the group's agreements, each physician's commitment and the fit of the building to the practice before the lender's committee meets.

Which states have the most SBA medical office loans?

With 1,360 loans for $1.26 billion, California leaves every other state well behind; Florida (858 loans, $627.7 million), Texas (819, $616.4 million) and New York (475, $292.6 million) follow. Puerto Rico, outside the ranked state table, records 391 loans for $74.3 million. Georgia (298), Arizona (288), Michigan (239), Ohio (183) and Nevada (177) come next among the states. Hawaii and New Hampshire hold 29 loans each, and the smallest states, from Nebraska's 24 down to South Dakota's 7, have too few loans to support a median or any rate. A study in a thinly lent state cannot rest on a state rate and draws instead on the national floors and the nearest larger markets.

Which metro areas see the most medical office lending?

Los Angeles-Long Beach-Anaheim leads with 611 loans for $634.6 million; next come New York-Newark-Jersey City (516 loans, $321.6 million), Dallas-Fort Worth-Arlington and Miami-Fort Lauderdale-West Palm Beach (311 each), San Juan-Bayamón-Caguas (274), Houston-Pasadena-The Woodlands (255), Atlanta-Sandy Springs-Roswell (230) and Phoenix-Mesa-Chandler (226). The metro table on this page ranks every area down to 25 loans. A lender in one of the leading markets has a deep local file to compare a new request against, and the study should place the subject within it, by loan size and by the local loss record where one is printed.

Which lenders have the deepest SBA books in physician office loans?

The Huntington National Bank tops the count at 433 loans ($188.5 million), and Wells Fargo Bank National Association tops the dollars at $303.1 million from 403 loans. JPMorgan Chase Bank, National Association (374 loans, $136.0 million) and Newtek Bank, National Association (311 loans, $167.6 million) follow on count, and Live Oak Banking Company ranks second on dollars, $228.9 million, with only 139 loans. Development corporations rank high on dollars too: California Statewide Certified Development Corporation holds 112 loans for $155.1 million, and The Mortgage Capital Development Corporation 115 for $149.7 million. Banco Popular de Puerto Rico (199 loans for $29.3 million) and Manufacturers and Traders Trust Company (129 for $15.4 million) carry large books of small loans. The lender table on this page runs from 433 loans down to 25.

Does this loan data cover investor-owned medical office buildings?

No. The class counts the physicians' own operating businesses and the offices they occupy. When an investor or developer holds a medical building and rents it to practices, SBA's industry coding files that borrower under lessors of nonresidential property, so the loan sits outside this page. That changes what a study rests on: for an owner-occupied office it is one practice's collections and the physicians behind them, while for an investor's building it is the tenant roster, the lease terms and the rollover. The tables here describe the owner-occupied kind, including the 1,477 504 loans for $1.47 billion made in FY2017 to FY2026.

If USDA's Business and Industry program guarantees the clinic loan, can the study serve it?

Yes. Loan Analytics writes medical office studies for USDA Business and Industry loans alongside SBA and conventional bank work. Our 2026 fee survey on this site records that a study written to USDA's standard at 7 CFR Part 5001 follows an enumerated list of components and factors, with posted fees for that kind of study running from $7,500 to beyond $18,750. The tables on this page count SBA loans only, so a USDA study for a rural practice builds its market case from the service area itself, using the SBA record by state and metro area as a reference for what lenders have financed.

Besides the study, what reports will a physician office loan file need, and at what price?

Each price below is a posted provider range from our 2026 fee survey on this site, and none is specific to physician offices. An appraisal: $2,500 to $7,500 for the medical building in the standard case, $5,000 to $15,000 in the survey's going-concern special-purpose case. A business valuation when a practice changes hands: $1,800 to $7,000. The environmental questionnaire with its records search and risk assessment: $300 to $1,500 for the office site, and a Phase I, where the screen escalates, $2,000 to $5,000. Title, survey and recording: again $2,000 to $5,000. And for a practice acquisition priced at $3 million or more, SOP 50 10 8.1 has required since October 2026 a quality of earnings report, which lender summaries cost at $10,000 to $30,000. None of these replaces the feasibility study.

Does buying into a practice need a different study than building a medical office?

Yes, and the SBA record separates the two by program. A practice purchase or partner buy-in, commonly financed under 7(a) at a median of $251,250, is judged on the collections history the practice already has: its payer mix, the physicians who generate the revenue and whether they stay after the sale, and coverage after market pay for the buyer. A new or purchased building, commonly financed under 504 at a median of $673,000, is judged on what the practice will need and pay as occupant, the space beyond that need and who would lease it, the build-out cost, and a value for medical users other than the borrower. A 504 approval is more exposed to cancellation, at a floor of 16.2%, and a 7(a) loan to charge-off, at 3.7%, and the study weights its tests to match.

What do you need from our practice to scope the study?

The program and the lender, the state and metro area, and whether the loan buys a practice, a partner's share, equipment or a building; then the number of physicians and their specialties, the payer mix as collected, any hospital affiliation, and when the lender expects the study. For a building, add the plans, the build-out budget and any space meant for other tenants. Back comes a proposal with scope, schedule and fee, and the study then places the project against this page's record: for a Florida practice, for instance, 858 loans, a median of $422,500 and a cancellation floor of 15.7%.