Physical Therapy Clinic Feasibility Study

The measured series begins in FY2001

SBA's files code too few therapy clinic loans before FY2001 to measure the class, so FY1991 to FY2000 print as not measured in both programs, and the long totals of 7,285 7(a) loans for $1.67 billion and 1,247 504 loans for $578.7 million are in practice the record from FY2001 on. Inside that record the last decade weighs more in dollars than in loans. FY2017 to FY2026 holds 3,063 of the 7,285 7(a) loans but $951.7 million of the $1.67 billion, and 522 of the 1,247 504 loans but $299.8 million of the $578.7 million: fewer than half the approvals in each program and the larger part of the money. The practical point for the study follows from that. A comparable set drawn from the 2000s would describe loans smaller than the ones lenders now make to therapy clinics, so the debt the study tests should be benchmarked against the recent decade, the period every other table on this page also covers.

Similar peak counts, much larger loans

The 7(a) count climbed from 134 in FY2001 to 344 in FY2005, a level it nearly matched with 342 in FY2016 and did not pass until FY2024 brought 408 and FY2025 brought 478. The dollars tell a different story. FY2005's 344 loans carried $49.0 million; FY2016's 342 carried $79.5 million; FY2025's 478 carried $141.8 million. Between those peak years the number of therapy clinics borrowing moved far less than the money each one borrowed. A lender reviewing a therapy request today therefore sees more debt per clinic than its predecessors did, on practices whose revenue still arrives one patient visit at a time. A study for a current request has to show that the visits available at the proposed site, priced at what each payer actually pays, cover a payment sized to this decade's loans rather than to the smaller tickets of the FY2005 peak.

FY2009 and FY2020: fewer loans, not less money

The series dips sharply in FY2009 and again in FY2020, and each time the money held up better than the count. 7(a) approvals fell from 257 in FY2008 to 194 in FY2009, yet dollars rose from $36.0 million to $38.9 million. In FY2020 the count dropped to 160 from 266 the year before, the fewest of any measured year after FY2001, while the $55.3 million approved exceeded every year from FY2001 through FY2013. FY2021 then approved 250 loans for $124.2 million, a dollar total far above anything earlier in the table. Approvals measure credit, not patient visits, and the table cannot say why lenders pulled back. It does show that the loans closing in those thin years were larger, on average, than the ones before them. A study prepared in a slow lending year should expect the credit officer to ask more of a large request, not less, and its downside case should carry the clinic through a stretch of lost visits as well as a slow ramp.

The 504 side: a revival after FY2020

504 therapy lending is a smaller and lumpier series. It began at 15 loans and $6.7 million in FY2001, reached 66 loans and $30.3 million in FY2006 and 69 loans in FY2010, then sank to 32 in FY2016 and 34 in FY2017. FY2021 reversed that slide with 84 loans and $42.6 million, the highest 504 count in the table; FY2022's 67 loans carried $45.8 million, the highest 504 dollar total; and FY2026 came back to 75 loans and $45.3 million after 47 in FY2024 and 53 in FY2025. A clinic seeking 504 financing now applies in one of the busiest 504 stretches on record. Where the project includes the clinic's own building, the property comes into the study: the purchase or construction budget, how much of the building the clinic actually needs, and what the space would be worth to another occupant if the practice closed, a question the 0.00% 504 charge-off floor has not yet had to answer.

FY2026 against FY2025

The two latest years split the programs. Under 7(a) the count fell from 478 to 384 while the dollars edged up from $141.8 million to $142.3 million, so FY2026 approved fewer therapy loans than FY2025 but put more money into them, and its $142.3 million is the highest 7(a) total of any year shown. Under 504 both measures rose, from 53 loans and $37.4 million to 75 loans and $45.3 million. A lender holding a request now compares it with these newest approvals, in a year when fewer 7(a) loans carried more money and the 504 side grew on both counts. Whether a clinic's request sits at the decade's $140,000 7(a) median or well above it, the study needs to explain its size: the build-out and equipment budget, any price paid for an existing practice, and the working capital consumed before visits reach the level the payment requires.

What the class counts, and what it leaves out

A loan joins this record when the borrower classified its business under the industry code for therapy offices, so the series follows freestanding rehabilitation and therapy practices. Therapy delivered by a hospital outpatient department, or by therapists on a physician group's payroll, is coded to those businesses and is missing from every figure here. That matters for the study in two ways. The comparable loans are the right ones for an independent clinic, which is what the lender is weighing. But the competition is wider than the loan record: hospital outpatient therapy and in-house physician therapy chase the same referrals without appearing in the counts, so the study must locate and map them directly. The source note adds a caution about the early years. In any year where SBA's records leave more than one loan in a hundred uncoded or unplaceable, the class figure is a floor, so those years may understate therapy lending rather than overstate it.

New York-Newark: a metro deeper than most states

New York-Newark-Jersey City is the deepest metro market for therapy clinic loans by a wide margin: 312 loans and $114.1 million. Only California, at 349, counts more loans; Texas at 305, Florida at 291 and New York State at 285 all count fewer. Its $150,000 median sits above both the New York state median of $120,000 and New Jersey's $102,500. Because the metro spans parts of both states, the smaller loans in each must lie largely outside it, and the table shows one place where very small loans gather: Philadelphia-Camden-Wilmington, a metro that reaches into New Jersey, has the lowest median of any metro, $50,000, on 52 loans and $7.0 million. For a clinic inside the New York metro the comparable record is local and large, and so is the competition. The study cannot stop at noting that therapy clinics borrow there; it has to place the site among the clinics already financed and operating within the patients' reach, and show why referrals will come to this one.

California's metros, from San Diego to San Francisco

California's metros spread from the middle of the table to its top. Los Angeles-Long Beach-Anaheim has 120 loans and $56.9 million at a $222,500 median, below the California median of $252,700. Riverside-San Bernardino-Ontario has only 42 loans but $26.2 million at $325,000, and San Diego-Chula Vista-Carlsbad has 38 loans and $13.6 million at $185,500. San Francisco-Oakland-Fremont has the highest median of any metro listed, $485,900, on 35 loans and $20.7 million, a figure above even the national 504 median of $423,500. A California request should be benchmarked against its metro rather than its state: a loan at the Los Angeles median is ordinary there, while the same amount in San Francisco would be small. In San Francisco and Riverside the study should expect, and test, a larger fit-out or property budget; in Los Angeles, where 120 clinics have borrowed at a lower median, competition for referrals is the harder test.

Dallas, Houston, Phoenix and Las Vegas: the high-median metros

Dallas-Fort Worth-Arlington's 91 loans carry $51.5 million at a $316,000 median, more money than Arizona's statewide $49.1 million. Houston-Pasadena-The Woodlands has 81 loans and $43.5 million at $306,400, Phoenix-Mesa-Chandler 59 loans and $36.7 million at $306,900, and Las Vegas-Henderson-North Las Vegas 36 loans and $20.3 million at $300,000. With Riverside at $325,000 and San Francisco at $485,900, these are the metros where a typical therapy loan sits at or above $300,000. Within Texas the metros differ: Dallas and Houston sit above the state's $243,000, San Antonio-New Braunfels is at $267,000 on 34 loans, and Austin-Round Rock-San Marcos is lower at $172,000 on 28 loans and $7.0 million. Where medians run this high the lender is underwriting a sizeable project rather than an equipment purchase, and the study must justify the size: the floor area, the fit-out, and the number of treatment rooms and therapists the plan needs before visits cover the payment.

Miami, Orlando, Atlanta and Washington

Miami-Fort Lauderdale-West Palm Beach has 119 loans and $48.8 million at a $150,000 median, nearly as many loans as Los Angeles. Orlando-Kissimmee-Sanford has 46 loans and $14.9 million at $250,000, and Tampa-St. Petersburg-Clearwater 33 loans and $10.6 million at $211,000. Florida's state charge-off floor of 9.3% cannot be traced to any of these metros, because no metro on the page prints a floor. Atlanta-Sandy Springs-Roswell accounts for 85 of Georgia's 105 loans, with $35.7 million at a $220,500 median, so a Georgia therapy request is in most cases an Atlanta request. Washington-Arlington-Alexandria, a metro spread across Virginia, Maryland, the District and West Virginia, has 76 loans and $18.1 million at $150,000, and Charlotte-Concord-Gastonia 29 loans and $12.1 million at $250,000. In Miami, with a median well below Orlando's, the study's attention goes to how many small clinics already compete for the same referrals; in Orlando and Charlotte, to whether a larger project fits the market it serves.

Chicago, Boston, Detroit and Minneapolis: modest tickets

Chicago-Naperville-Elgin has 103 loans and $35.6 million at a $150,000 median, more loans than Illinois's 97, because the metro takes in part of Indiana. Boston-Cambridge-Newton has 84 loans and $14.1 million at $100,000, Detroit-Warren-Dearborn 69 loans and $21.6 million at $150,000, and Minneapolis-St. Paul-Bloomington 48 loans and $14.2 million at $90,000, below Minnesota's own $120,000. Providence-Warwick's 32 loans exceed Rhode Island's 23 because that metro reaches into Massachusetts. Indianapolis-Carmel-Greenwood has 31 loans at $100,000, Baltimore-Columbia-Towson 25 at $125,000, Kansas City 25 at $135,000 and Denver-Aurora-Centennial 30 at $174,850. Seattle-Tacoma-Bellevue, with 65 loans and $31.7 million at $230,000, has a higher median than any of them. In Boston or Minneapolis a clinic plan built on a large fit-out would stand out against the loans already made, and the study must show why this clinic needs more than its neighbours borrowed and how its visit volume carries the difference.

San Juan, Boise and the metro floors that are not printed

San Juan-Bayamón-Caguas has 67 loans and $9.3 million at a $60,600 median, the lowest in the table after Philadelphia, and Boise City has 28 loans and $6.8 million at $150,000, against Idaho's 76 loans statewide. No metro on the page prints a charge-off floor: the rate is withheld for most and unreported for Washington-Arlington-Alexandria, San Juan-Bayamón-Caguas and Boise City, where fewer than 30 loans sit in the cohort. Withheld does not mean zero, and the study will not treat it as zero. What the metro table gives a lender is the depth of the local record and the typical loan size, with nothing on losses below the state level. The local loss question therefore falls to the study: how many therapy clinics serve the trade area, which have opened or closed recently, how many therapists practise near the site, and where the physicians who refer patients send them today.

Two programs, two loan sizes

The 7(a) therapy loan runs from a $50,000 lower quartile through a $140,000 median to a $330,000 upper quartile. The 504 loan runs from $236,000 through $423,500 to $707,250. The two ranges barely meet: 504's lower quartile of $236,000 already exceeds the $140,000 median of 7(a), while the $330,000 upper quartile of 7(a) falls short of 504's $423,500 median. Put plainly, the typical 504 therapy loan is larger than a 7(a) loan at the upper quartile. The study's first task is to say which kind of project the request is, because a lender reads a request at the 7(a) median and one at the 504 median against different evidence. At the larger sizes both programs appear in the record, 7(a) more often than 504, so the study should state plainly why the request uses the program it does.

1,760 small 7(a) loans hold $124.1 million

Counted by loans, 7(a) therapy lending is mostly small: 1,760 of the 3,063 7(a) loans are $150,000 or less, and together they hold $124.1 million. The next band up holds 651 loans and $167.4 million, and the band after it 454 loans and $271.1 million, the most money of any 7(a) band. The count then thins to 127 loans and $180.6 million, and the 71 loans of the top populated band carry $208.5 million, more than the 1,760 smallest loans together. The band above that holds 0 loans and $0 in both programs. Most 7(a) therapy borrowers take small loans, while much of the 7(a) money rests on the upper bands. A lender's exposure to the class is set by those larger loans, so a therapy request that lands in the upper bands gets the closest reading of the study's evidence on visit volume, payer rates and staffing.

504 loans gather in the third band

The 504 distribution has another shape. The third band is the largest by both measures, 229 loans and $136.7 million; the second holds 176 loans and $42.9 million, the fourth 59 loans and $77.8 million, and only 45 loans and $5.1 million sit at $150,000 or less. The highest populated band holds 13 504 loans and $37.3 million, against 71 7(a) loans and $208.5 million in the same band. The largest therapy projects in the record were financed more often under 7(a) than under 504. A 7(a) loan in the upper bands may carry little real estate behind it, and it is the request most exposed to the losses this class records under 7(a), so its study must be as complete as one for a building: market depth, the competing clinics, the ramp, the budget and a coverage test that survives the loss of a therapist.

Losses that arrive after year five

For the FY2017 to FY2021 disbursement cohort of 7(a) therapy loans, the charged-off share is at least 4.1% to date and at least 2.4% within five years, so some charge-offs landed after a loan's fifth year. Under 504 both measures are 0.00%. The cancellation floors sit within a whisker of each other, 7(a) at 10.5% and 504 at 10.9%. For a therapy clinic, late losses fit the risks the study is built around: a lease that comes up for renewal, a senior therapist who leaves after several years, a payer that reprices its contract, a hospital or physician group that starts its own therapy service nearby. The coverage test therefore has to run across the life of the loan rather than only its first years, and the study names the events that would break it and how much margin the clinic holds against each.

Where a request falls, and what follows

Set against these distributions, a request finds its place quickly. A 7(a) request above $330,000 is in the top quarter of 7(a) therapy loans; a 504 request above $707,250 is in the top quarter of its program. A Nevada request near that state's $282,700 median is ordinary there and large in Ohio, where the median is $80,000. A request at the San Francisco-Oakland-Fremont median of $485,900 is bigger than the typical 504 therapy loan. Each placement changes what the lender asks. A small loan near the 7(a) median needs proof of cash flow from visits; a loan in the top quarter needs that cash flow, the budget and the depth of the market; a project with premises needs all of those and the property's value to an occupant other than a therapy practice. We set out that placement before we quote the scope, so the fee follows the work the lender will actually require.