SBA 504 Medical Office Feasibility Study

Medical office: a deep 504 record

SBA approved $1.47 billion in 504 loans for medical offices from FY2017 through FY2026, across 1,477 loans. With a record this deep, nothing in it strays from the 504 program's norms or from medical office lending overall by enough to clear our distinctness margin, and a lender can treat the cell as a reliable baseline. The median loan is $673,000 and half the loans sit between $379,000 and $1.3 million, so the typical project is a practice building or an owned suite, not a large medical office development. Franchise share is 0.00%.

Approvals ran from 116 in FY2019 to a peak of 254 in FY2021, when dollars reached $232.2 million, and have held between 110 and 136 a year since FY2023, with $169.0 million in FY2025 and $132.9 million in FY2026. California Statewide Certified Development Corporation and The Mortgage Capital Development Corporation tie on count with 112 loans each, for $155.1 million and $149.2 million. Florida Business Development Corporation follows with 106 and $96.6 million, Florida First Capital Finance Corporation, Inc. with 88 and $67.7 million, and Empire State Certified Development Corporation with 83 and $89.1 million. California holds 454 loans, Florida 198, Texas 99, New York 96 and Nevada 74.

Floors on a large cohort

The cancellation floor is 16.2% for loans approved in FY2017 to FY2024, with a ceiling of 20.7%. Losses are small but not zero: 0.46% of the 659 loans that funded in FY2017 to FY2021 ended in charge-off, and 0.15% within five years of approval. For a lender, that is a low loss record on a cohort large enough to trust; for a borrower, the cancellation floor is the more relevant number, because it measures how often an approved building purchase or construction loan never reached funding.

What a medical office study must test

No limitation line applies. A feasibility study for a 504 medical office project has to test demand by specialty: the practice's own patient volume and referral sources and, for any space leased to other providers, the depth of the local tenant market; cost, since medical finish work, plumbing and accessibility requirements run above general office; debt service coverage from the practice's collections after physician pay; and the appraisal, which should value the building on its appeal to other medical users and on any lease income from space the borrower does not occupy.