SBA 504 Medical Office Feasibility Study in Michigan

Oakland County and two corporations

Michigan medical offices under SBA 504 total $20.2 million across 25 approvals from FY2017 to FY2026. At $652,000 the Michigan median reaches 0.97x of the medical benchmark in other 504 states, close to parity, and half the loans run from $412,000 to $1.1 million. Oakland County leads with 6 loans, then Kent with 4, Macomb and Wayne with 3 each, and Grand Traverse and Livingston with 2. Michigan is 11 among states, and medical offices hold 9 of 39 within the state. No franchises appear, at 0.00%.

The lender table

Michigan Certified Development Corporation holds 14 loans worth $11.0 million, and Great Lakes Commercial Finance holds 8 worth $7.9 million, so the second averages a larger loan. Annual counts reached 9 in FY2021 with $5.3 million, dropped to none in FY2022, and were 3 loans in FY2024 for $5.1 million, then 1 in FY2025.

What is missing

Michigan's medical building loans lack any cancellation percentage and any charge-off percentage, the early groups being small, so they offer volume, size and lender facts but no default record. A lender should ask the borrower for the practice's own history in place of the class's.

What a Michigan medical office study must test

Under 504, a physician group buys or builds a medical building, so the plan should present the building as an investment in property as well as a practice. It should state the specialties, the physicians committed and the patients they will see, then compare the cost of ownership with leasing comparable medical space nearby. Michigan's hospital systems are large and often employ physicians, so the study should explain referral relationships and the competition from system-owned clinics. Payer mix, especially Medicare, Medicaid and commercial insurance, sets revenue per visit. The building must meet medical needs, such as accessible entrances, exam room plumbing and parking, and construction bids should be attached. If part of the space will be leased to other providers, the study should show lease terms and the credit of the tenants. Payments must be covered even if one physician departs, and the valuation will test the market for medical space, since a lender will want collateral that another practice could occupy.