SBA 7(a) Medical Office Feasibility Study in Georgia

Physician offices rank 9 of 39 among Georgia asset classes and Georgia places sixth on 7(a) volume for the class. Across FY2017 to FY2026 SBA approved 254 loans worth $188.9 million. A $394,000 median reaches 1.57x the nationwide 7(a) benchmark for medical offices, while $189,250 to $918,500 covers the middle half. Just 0.79% of loans are franchised. In other words, Georgia doctors borrow more than doctors elsewhere under this program, and they borrow as independent practices.

Lenders and places

United Community Bank holds 18 loans worth $11.2 million, Wells Fargo Bank National Association 17 at $5.4 million, Truist Bank 15 at $8.6 million, Newtek Bank, National Association 15 worth $7.1 million, and Live Oak Banking Company 11 loans totalling $12.3 million, the highest per loan. SBA's figures record loans held and say nothing about how any institution lends. FULTON County has 62 loans, GWINNETT 34, COBB 22, DEKALB 21 and CLAYTON 13, so metro Atlanta dominates, while CHATHAM has 8.

A dip and a recovery

Counts fell from 28 loans in FY2018 to 14 in FY2021 and 11 in FY2022, then rose to 38 loans and $27.5 million in FY2024. Georgia cancellations took 10.3% at least of FY2017 to FY2024 approvals, and 10.8% when undisbursed loans count. In the FY2017 to FY2021 cohort of 103 funded loans, charge-offs are 3.9% at a minimum, with 1.9% by the fifth year. Both are floors.

Testing a Georgia physician practice

A study should begin with the referral and payer base: the number of physicians in the specialty already serving the area, the insurance mix, and how many daily visits a practice needs to break even. It must test staffing, since a practice cannot grow without clinicians and support staff, and the cost of build-out, medical equipment and electronic records. Georgia's larger median invites a clear split between real estate, if purchased, and practice working capital. Debt service coverage should be run with slow patient ramp and with the departure of a partner, and an appraiser will value the building apart from the practice's goodwill. For Georgia practices, SBA is the place to read program rules. The study should also say how many exam rooms the plan needs and how soon each can be staffed.