A practice loan is repaid over a term set by the funding partner and matched to what it pays for: shorter for working capital, longer for equipment, longest for a practice purchase or buy-in. The offer states the term; nothing here is a typical figure.
Saltmead Funding Group in Mount Pleasant, Michigan explains how practice loans are repaid, how insurance timing affects repayment, what collateral is asked for and what to check before paying early.
Typical repayment structures for equipment, buy-in and working capital loans
A medical practice loan is any business loan a practice takes for practice purposes, and its repayment follows its purpose. An equipment loan for an ultrasound unit or treatment tables is repaid over a term tied to the equipment's useful life. A buy-in or practice purchase is repaid over a longer term from the practice's earnings. A working capital loan for a payroll gap is repaid over a shorter term as claims settle.
Illustration only, invented figures: $70,000 of equipment over 60 months at an annual rate of 9.5% is about $1,470 a month; a $240,000 buy-in over 120 months at 9.25% is about $3,073 a month; $30,000 of working capital over 12 months at 13% is about $2,680 a month.
A practice can hold all three at once. Each sits on its own schedule, so the equipment loan ends when the equipment is paid for, while the buy-in continues. A partner reviewing a new request adds up every payment the practice already makes.
Physician and therapy practices: how revenue timing affects repayment
Physician and therapy practices are paid after the visit, by insurers on their own schedules and by patients for copays and balances. That gap means a payment due on the first of the month may arrive before the claims that cover it. A practice whose payer mix leans on slower insurers needs a payment date and amount that fit its slowest month, not its average one.
Isabella County, MI counted 58 offices of physicians and 31 offices of other health practitioners with paid staff in 2023 (County Business Patterns). A credit line alongside a term loan can carry the timing gap so the fixed payment stays on schedule.
A practice can measure its own timing before asking for a loan: export the last six months of claims from the billing system and note the days from visit to payment for each payer. The slowest large payer sets the gap a payment has to survive.
Collateral and owner sign-offs on a practice loan
Practice loans can be secured by the equipment they buy, by receivables or by a general lien on business assets. Partners can also ask each owner to sign a personal guarantee, and a buy-in loan may need the existing partners to sign off on the buyer's share being pledged.
Ask each offer what is pledged, whether a blanket lien is filed and what the guarantee covers. Unsecured practice loans exist, but they rest more heavily on revenue and credit.
A blanket lien on all business assets can make a second loan harder later, because the first lender already holds a claim on everything. Ask whether the lien can be limited to the equipment being financed.
Paying off a practice loan early: questions to ask first
Before paying a practice loan off early, ask:
- Does the agreement charge for paying early, and by what formula?
- Is the interest simple, so early payoff saves interest, or is a fixed fee owed regardless?
- Does paying off release the lien on equipment or receivables?
- Would paying down a credit line instead save more?
The answers are in the loan agreement; ask the partner to point to them.
Two invented practice loans with their monthly cost worked out
Illustration only, invented figures: the $240,000 buy-in above, over 120 months at 9.25%, carries about $128,734 in total interest. The $70,000 equipment loan over 60 months at 9.5% carries about $18,208. Those totals, not the monthly figures, are what a practice weighs when it considers an early payoff.
Run your own figures in the calculator, and see the term loans page for purchases and buy-ins.
Isabella County, MI practice counts behind this article
Isabella County, MI had 58 offices of physicians in 2023, with 397 paid employees and $28.8 million in annual payroll, and 31 offices of other health practitioners with 186 paid employees (County Business Patterns). Half of the physician offices, 29, had fewer than five employees.
The medical practice loans page and the chiropractic and therapy page cover each kind of practice.
Of the 31 practitioner offices in the county, 19 had fewer than five employees in 2023 (County Business Patterns). For an office that size, one large payment that does not fit a slow month can strain payroll, which is why the term matters as much as the rate.
By Saltmead Funding Group · Updated
