SBA 7(a) Physical Therapy Clinic Feasibility Study

Small practice loans, and Puerto Rico

Over FY2017 to FY2026, 3,063 physical therapy clinic loans went through 7(a), worth $951.7 million, and since 7(a) is most of the class's SBA lending, no headline figure stands apart from both its program and its class. The contrast with 504 is sharp all the same. The median 7(a) therapy loan is $140,000, and half of 7(a) therapy loans sit between $50,000 and $330,000, sizes that fit equipment, working capital, a fit-out or a practice purchase better than the clinic buildings 504 funds. The state table has one surprise. California leads with 276 loans, then Texas with 270, New York with 261 and Florida with 242, but Puerto Rico appears with 110, ahead of most states and close behind New Jersey at 126.

Higher therapy clinic losses than 504

Funded 7(a) clinics fail more often than funded 504 clinics. At least 4.1% of the 1,085 therapy loans disbursed over FY2017 to FY2021 were later written off, and 2.4% failed before their fifth year; the 504 clinic record shows none so far. Cancellation is low, at a 10.5% floor for therapy approvals dated FY2017 to FY2024 and an 11.8% ceiling. Franchised clinics account for 6.4%. The Huntington National Bank holds 230 therapy loans worth $51.6 million, JPMorgan Chase Bank, National Association 166 worth $40.2 million and TD Bank, National Association 161 worth $26.2 million; Newtek Bank, National Association has 120 and Manufacturers and Traders Trust Company 118. Approvals fell to 160 in FY2020 and climbed to 478 loans and $141.8 million in FY2025, so much of the record is too recent to have shown its losses yet.

What a 7(a) therapy practice study must check

In a 7(a) therapy loan of this size, most of the value is the practice itself, so the study has to test what keeps patients coming. For an acquisition, that means visits by therapist, the physicians and surgeons who refer, the payer mix and the trend in reimbursement per visit, and whether the therapists and referral relationships stay after the seller leaves. For a start-up, demand means the referring practices in the area, the clinics already serving them and a credible ramp in visits. Cost includes build-out, equipment, credentialing with payers and the months before claims pay. Coverage needs to hold with a therapist gone, reimbursement cut and the floating rate higher. The appraisal will be a business valuation in most cases, and the study should separate the value held in payer contracts from the value carried by people, because the people are the part a lender cannot recover.