SBA 504 Physical Therapy Clinic Feasibility Study

Therapy clinics that own their space

The 504 program funded 522 physical therapy clinic projects in FY2017 through FY2026, for $299.8 million. What sets the cell apart is its median, $423,500. That is far above the therapy clinic median across both SBA programs, where small 7(a) practice loans dominate, and the distinctness check separates it, too, from the median 504 loan across every asset. Half of these clinic loans fall between $236,000 and $707,250, the range of a clinic buying its suite or a small freestanding building. Only 1.3% of the borrowers are franchisees; nearly all are independent practices.

A quiet outcome record

Physical therapy approvals under 504 rarely fall through: the cancellation floor for FY2017 to FY2024 clinic approvals is 10.9%, among the lowest in the 504 record, and the ceiling is 12.2%. Funded clinics have not failed. The 200 clinic loans disbursed in FY2017 to FY2021 carry 0.00% charge-offs at the floor and 0.00% at five years, which says SBA had recorded no therapy clinic charge-off in the group by the data date, not that none will occur. Florida Business Development Corporation holds 28 clinic loans worth $25.2 million. The Mortgage Capital Development Corporation has 24 worth $19.1 million, and Empire State Certified Development Corporation also 24, worth $9.6 million, followed by Granite State Economic Development Corporation with 20 and Florida First Capital Finance Corporation, Inc. with 19. California leads with 73, then Florida with 49 and Texas with 35; New York has 24, and Idaho and Washington 23 each. Approvals jumped to 84 in FY2021, and FY2026 recorded 75 loans and $45.3 million.

Testing a clinic purchase under 504

For a practice moving from rented space into its own, the feasibility question is whether the clinic's visits and reimbursement can carry a mortgage plus the costs of ownership. A study should start with the practice's own volume: visits per therapist, referral sources among physicians and surgeons, payer mix across Medicare, commercial insurance and workers' compensation, and the trend in reimbursement per visit. Demand for a new location means the referring physicians nearby and the clinics already serving them. Cost covers the purchase or build, the gym floor, treatment rooms and accessibility work. The clinic's two 504 payments, bank and CDC, should still be covered at a lower reimbursement rate and with a therapist gone. The appraisal should benefit from the fact that clinic space can be re-let to other medical users, and the study should show that market so the lender sees the exit. The class carries no coding caveat in our map.