SBA 7(a) Medical Office Feasibility Study

Smaller loans than medical office lending overall

Medical office borrowers took 6,346 SBA 7(a) loans and $3.68 billion in FY2017 to FY2026. The distinctive figure is the median loan, $251,250, which sits well under the medical office median once 504 building loans are counted and apart from the 7(a) program's own typical loan. Half of all 7(a) medical office loans fall from $100,000 to $669,875. The gap with 504 tells the story: 7(a) here funds practices, equipment, working capital and partner buyouts, while larger building purchases lean toward 504.

By count, The Huntington National Bank comes first with 433 loans and $188.5 million, but Wells Fargo Bank National Association, with 403 loans, leads on dollars at $303.1 million. JPMorgan Chase Bank, National Association has 374 loans for $136.0 million, Newtek Bank, National Association 311 for $167.6 million and U.S. Bank, National Association 212 for $134.2 million. California leads with 906 loans, then Texas with 720 and Florida with 660; New York has 379 and Puerto Rico a notable 352. Counts bottomed at 493 in FY2019, dollars topped out at $483.7 million in FY2021, and FY2025 brought the most loans, 865, for $455.5 million. Franchise share is 1.8%.

Floors for practice lending

Cancellation runs 13.6% at the floor and 14.9% at the ceiling. The charge-off floor is 3.7% for the 2,561 medical office loans paid out in FY2017 to FY2021, with 2.5% inside five years, so most of the losses came early. For a lender, early losses on practice loans often trace to a practice that could not keep its providers or its referral flow; for a borrower, they are a reason to show both before the loan, not after.

What a medical practice study tests

The class carries no limitation, so the study can go straight to the practice. For a 7(a) medical office loan it has to test demand by specialty and payer: patient volume, referral sources and the local supply of the same specialty; the cost of the build-out or acquisition against verified collections; debt service coverage after provider compensation, with a case for losing a key physician; and, where a building or condominium secures the loan, an appraisal that measures its appeal to other medical users. Puerto Rico's large count in this class is a reminder that the national median hides very different markets.