Medical Office Feasibility Study in California

The median SBA loan to a California physician's office is $577,500, which is 1.69x the national median for the class, and that median is the measure on which this cell separates from both California lending as a whole and medical offices nationally. No state has more physician office loans: California is 1 of 53, with 1,360 approvals and $1.26 billion from FY2017 to FY2026. Physicians' offices sit 5 of 39 among California classes; with a location quotient of 1.37x they take a larger share of California SBA lending than they do nationally.

The 504 count tells the story

SBA 504 carries 454 of the approvals and SBA 7(a) 906. A 504 loan finances owner-occupied real estate or long-lived equipment, so a large 504 count means many California practices are buying their buildings or office condominiums rather than leasing. California Statewide Certified Development Corporation holds 100 of the 504 loans, worth $140.0 million; Business Finance Capital holds 75 and The Mortgage Capital Development Corporation 68 worth $107.3 million. On the 7(a) side, Wells Fargo Bank National Association holds 105, U.S. Bank, National Association 97 and JPMorgan Chase Bank, National Association 95. SBA credits each physician loan to whichever lender holds it at present. Franchise units are 1.3% of loans.

Low losses, but a wide cancellation band

The charge-off floor is 2.6% across 581 loans disbursed in FY2017 to FY2021, with 2.1% charged off within five years. Cancellation is where the friction sits: a floor of 12.7% that rises to a ceiling of 15.8% when undisbursed loans count, which is consistent with construction and tenant improvement loans waiting on draws. The middle half of loans runs from $250,000 to $1.3 million.

What a California medical office study must test

Demand testing for a practice is about patients and payers, not square footage: the study has to show the specialty's referral base and payer mix in the service area. The busiest counties are Los Angeles with 420 approvals, Orange with 191, San Diego with 121, Riverside with 87 and San Bernardino with 83. Cost testing must price tenant improvements to medical standards. Debt service coverage should be run on collections after staff and malpractice costs, and for an acquisition it should allow for patient attrition at transfer. When the practice buys its building, the appraisal needs medical office comparables and must carry the property's value if the practice leaves. Lending peaked at $164.6 million in FY2022 and stood at 172 approvals in FY2025. Physicians' offices carry no coding caveat in our map.