SBA 7(a) Medical Office Feasibility Study in North Carolina

Larger than the national ticket, with a steady loss floor

North Carolina physician offices borrow more than the national norm: the median of $300,000 is 1.19x of the nationwide figure for the class. The decade brought 105 approvals under 7(a), worth $63.9 million. The inner half of approvals is bracketed by $125,000 and $735,400. North Carolina is 17 among states for the class, though medical offices rank only 13 of 39 within the state, so physician offices are a middling part of the state's own lending. Franchise flags mark 3.8% of loans.

Counties and holders

Wake County has 16 loans and Mecklenburg 13, with Union at 10, Pitt at 7 and Buncombe at 5. The holder list is notably flat: Two names tie with 8 loans each: First-Citizens Bank & Trust Company, carrying $2.7 million, and Wells Fargo Bank National Association, carrying $3.3 million. Newtek Bank, National Association has 6 loans and $1.7 million, Live Oak Banking Company 5 and $6.5 million, and Truist Bank 5 and $3.3 million. Live Oak's dollars per loan stand well above the rest. This is SBA's description of current holders, not a view of any bank's policy.

Cancellation, charge-off and the five-year point

Cancellations reached at least 9.1% among the early approvals, and the ceiling is identical. Within the 44-loan early cohort a floor of 6.8% is charged off, and the five-year share is the same 6.8%, so every loss arrived inside five years. A small base and open loans mean these minimums can still climb.

Testing a physician practice loan

Analysis of a practice should start with the physician: the specialty, the panel of patients the doctor brings, and the referral relationships the practice relies on. Payer mix drives revenue, so the study needs a view of insurance contracts, expected reimbursement per visit and the time collections take. Staffing, malpractice cover and electronic records are real costs, and a loan above the national median calls for a clear case for build-out and equipment costs. Because the early loss floor is high, a lender should expect a downside case in which patient volume ramps slowly, the physician is absent for a stretch, or a payer cuts rates. If the borrowing includes the building, appraisal of the real estate has to be kept separate from the practice itself. Finally, the study should identify what happens to the loan if the physician leaves, retires or sells, since the practice's earnings often depend on one licensed professional.