SBA 7(a) Medical Office Feasibility Study in Pennsylvania

Small physician loans, with early losses

Physicians' offices financed through SBA 7(a) in Pennsylvania borrow little. The median loan is $150,000, only 0.60x the typical physician-office loan nationally under 7(a); the middle half spans $57,500 to $418,750. The state recorded 115 such loans worth $56.1 million, ranking 16 among states for the program's medical office lending, while the class stands 14 of 39 inside Pennsylvania. Franchise ties account for 6.1% of loans. What distinguishes the cell is that small loans coexist with a charge-off floor of 5.0% among the 60 loans in Pennsylvania's early physician cohort, with 1.7% charged off within five years of approval.

Among the holders, 13 loans worth $3.2 million sit with Manufacturers and Traders Trust Company, 12 worth $2.9 million with The Huntington National Bank, and 9 worth $1.4 million with Citizens Bank, National Association. United Community Bank holds only 8 but with $7.9 million, so its loans are much larger, and Quaint Oak Bank holds 6 worth $3.5 million. These are SBA's records of holdings, and carry no judgment on any bank's conduct. Montgomery County has 20 loans, Allegheny 17 and Philadelphia 16, with Bucks at 8 and Berks, Cumberland and Luzerne at 5 each.

Approvals ran at 20 in FY2017, rose to 17 in FY2022, then fell to 3 in FY2023, when the dollars were only $158,900, before returning to 9 in FY2025 and in FY2026. That swing means the cell is not a steady flow, and a study should not treat any single year as typical.

Cancellations

The cancellation floor for loans approved through FY2024 is 12.4%, and 13.4% if undisbursed loans are counted as cancelled.

The 5.0% charge-off figure and the 1.7% five-year figure are both minimums that open loans may raise, and a handful of loans would move either rate materially. A lender should read them together with the small median loan: a physician borrowing for equipment or a practice purchase is exposed to the physician's own ability to keep working and keep patients.

What underwriters need from a Pennsylvania medical office

The study needs the physician's panel and payer mix, the practice's collections per visit, and whether a purchase or startup is involved, since the two have different risks. Patient volume has to be built from referral patterns and the supply of other doctors nearby. With loans commonly near $150,000, fit-out and equipment are modest, so the exercise is mostly about operating cash flow in the first year, including the wait for insurers to pay. The study should show coverage of the loan payment under a slower volume, and should state what happens if the physician is absent for a period.