Medical Office Feasibility Study in New York

New York medical offices and SBA 504

New York's medical office lending includes a sizeable SBA 504 share. Of 475 loans approved from FY2017 to FY2026, worth $292.6 million, 96 were SBA 504 and 379 were 7(a), and Empire State Certified Development Corporation alone holds 75 of the 504 loans for $78.7 million, with Trenton Business Assistance Corporation adding 14 for $12.9 million. On share and size the cell is close to the national pattern: the location quotient is 0.99x and the median loan of $300,000 is 0.88x the national median for physician offices. Among states, New York is 4 of 53 for physician office lending; among New York's classes, medical offices are 9 of 39.

Half of the loans sit between $100,000 and $764,400. JPMorgan Chase Bank, National Association holds 60 of the 7(a) loans for $15.9 million, TD Bank, National Association 46 for $24.3 million, Manufacturers and Traders Trust Company 45 for $5.2 million, Santander Bank, National Association 20 for $13.5 million and Newtek Bank, National Association 12. Franchise brands appear in 1.5% of loans.

A high cancellation ceiling

Cancellation is the soft spot. The floor is 17.4% of FY2017 to FY2024 approvals, and once undisbursed loans are counted the ceiling reaches 20.1%. Charge-offs are moderate: 3.1% to date in the cohort of 196 disbursed during FY2017 to FY2021, and 1.5% within five years. A borrower should plan around the cancellation floor, the larger of the two outcome numbers. Annual volume was highest at 55 loans and $49.5 million in FY2021 and 47 loans and $46.3 million in FY2022, then fell to 35 loans and $17.0 million in FY2023.

What a New York medical office study needs

With New York County at 88 loans, Kings at 71, Queens at 70, Nassau at 51 and Suffolk at 49, most of this lending sits in these five counties. A study for a practice or a medical office purchase should test patient demand by specialty in the draw area, the referral sources and hospital affiliations the practice depends on, and the payer mix behind its collections. Cost should include the fit-out that medical use requires. Coverage must rest on collections after the transition, not on the selling physician's peak year. Where the loan buys space, the appraisal needs medical office sales or leases, and the study should show the space can be re-let to another practice if needed.