SBA 504 Medical Office Feasibility Study in Texas

Real estate for physicians across a big state

In SBA 504 lending to physician practices, Texas holds 3rd place nationally, with 99 loans and $98.2 million approved in gross dollars; physician offices are also the 4 of 39 class inside Texas. Since 504 pays for fixed assets like buildings and land, these are medical practices buying or building the space they occupy. Nothing about the loan size is unusual: the median of $706,000 is 1.05x the national 504 median for the class, and the band covering the middle of the book runs from $400,000 to $1.2 million. The franchise share is 0.00%, as expected for physicians.

Capital Certified Development Corporation holds 23 loans, LiftFund, Inc. holds 21 and Greater East Texas Certified Development Company 20. Texas Certified Development Company, Inc. has 10 and North Texas Certified Development Corporation 9. Counts like these are SBA's record of current holders; they do not describe any company's judgment. The spread is geographic. Bexar County leads with 15 loans, Harris has 10, Collin and Tarrant 9 each and Travis 7, while Dallas, El Paso and Lubbock each show 5. Texas lending here follows many metros instead of a single financial center.

Cancellations and a clean cohort

At least 10.1% of approvals through FY2024 were cancelled, and 11.4% when loans awaiting disbursement are tallied as cancelled. Out of 46 funded loans, none shows a charge-off at the floor today or at the five-year mark (0.00% on both). A floor like that records the absence of charge-offs to date, not a guarantee. Volume was uneven: 18 loans and $18.7 million in FY2021, only 4 loans in FY2023, then 13 loans and $21.7 million in FY2025. Neither cancellation nor loss separated the cell from Texas generally or from physician offices nationally.

Testing the practice and the property

Because the building secures the loan, the study should test the real estate on its own: purchase or construction cost against appraised value, and whether a different medical user could take the space if the practice closed. The operating side needs patient volume, payer mix and provider productivity, plus the time a new physician takes to build a panel. Check the submarket's competition from hospital systems and group practices. Debt service coverage must reflect both parts of a 504 loan together, and a weak first year belongs in the model.