Currently under LOI with medical practice

searcher profile

November 04, 2021

by a searcher from University of North Texas in San Antonio, TX, USA

Currently I'm under a LOI for a medical practice and courting one of the doctors to remain for licenses purpose.
Question- What other criteria is needed to satisfy either SBA or private lending? (This is in TX and is a 60/40 deal)
Also, who are the best motivated financial intuitions that deal in this vertical?

Thanks

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commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
I agree this is likely to be a challenging deal to get done from an SBA perspective. I have done these situations using an SBA loan where the buyer has a new doctor coming into the transaction with the MSO, but never where an existing doctor is staying. One of the requirements of the SBA is that you cannot guarantee an existing employee stay on for more than a year. Since you need a committed doctor for licensing, I don't think you can use one of the sellers under an SBA scenario. Sorry if this is not the news you wanted to hear.

There are a lot of lenders that provide medical practice financing, however, most of them require a medical professional to be one of if not the primary borrower. It seems you have a good equity scenario, so there may be a path to make something work on a conventional basis. Happy to discuss further at anytime. I can be reached at redacted
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Reply by a professional
in Raleigh, NC, USA
Are you a physician? Texas (like many states) have laws surrounding corporate practice of medicine that prohibits non-physicians from owning a medical practice. Hiring a physician to be an equity partner will require you to pay them fair market value and the vast majority of the charges billed to insurance. Basically the corporate owner turns into a billing/admin office and generally can't keep more than 15% of revenue. I owned a physician practice and would be happy to share details from my legal team.
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