SBA 7(a) Medical Office Feasibility Study in California

Larger loans than physicians borrow elsewhere

In California, physicians' offices financed under SBA 7(a) borrow noticeably more than their national peers. The median loan of $400,000 is 1.59x what such practices borrow nationally under 7(a), and half of loans run from $150,000 to $1.1 million. SBA's files for FY2017 to FY2026 hold 906 such loans, worth $715.5 million gross, which puts California first in the country for the program and class. Within California the class sits at 9 of 39 among asset classes. The data show the size of the loans, not why they are larger.

Banks and counties

The lender table is led by Wells Fargo Bank National Association. Wells Fargo Bank National Association holds 105 loans worth $97.7 million, U.S. Bank, National Association 97 worth $94.5 million, JPMorgan Chase Bank, National Association 95 worth $36.5 million, Newtek Bank, National Association 36 worth $20.1 million and Bank of America, National Association 29 worth $24.5 million. SBA lists the current holder of each loan; the page makes no claim about any lending policy. Los Angeles County has 281 loans and Orange County 128, with San Diego County at 95, Riverside County 58, San Bernardino County 56, Sacramento and Santa Clara counties 27 each, Contra Costa County 23, Fresno County 21 and San Francisco County 20. Franchise share is 1.9%, so practices are overwhelmingly independent.

Timing, cancellations and losses

Yearly approvals fell from 144 in FY2017 to 55 in FY2019, then climbed to 126 in FY2025, and the full year FY2026 recorded 92. The cancellation floor is 12.8%, or 14.2% when undisbursed loans are counted as cancelled. Among 391 funded loans from FY2017 to FY2021, 3.6% are charged off so far and 2.8% inside five years. Each is a floor, as open loans can yet fail, and neither the cancellation nor the charge-off measure sets the cell apart.

What a California medical office study has to test

A medical office study turns on the practice, not only the building. It should test the patient base within the trade area, payer mix, referral relationships and the number of competing practices and groups, then check whether the physician or group can credibly reach the visit volumes the plan assumes. Cost deserves careful treatment: tenant improvements for exam rooms, imaging or procedure space can be large, and the study should compare the budget with a median near $400,000 and say how much is real estate and how much is practice purchase or equipment. Debt service coverage has to hold through credentialing delays and a slower ramp. An appraiser will value an owner-occupied medical building on income and comparable sales, so the study should supply realistic rents and occupancy for the submarket.