SBA 504 Loan

The SBA 504 program is one of the most powerful tools available to a healthcare practice buying its own building. It combines a conventional bank loan (typically 50% of the project) with an SBA-backed debenture (typically 40%), leaving the borrower to fund just 10% as a down payment — far less than the 20–25% a conventional loan demands. To qualify, the business must occupy at least 51% of the building, which fits the owner-occupied model perfectly and even allows a practice to lease out the remaining space. The SBA portion carries a long, fixed-rate term, protecting the practice from interest rate swings over the life of the loan. The trade-offs are a more involved application process and prepayment penalties in the early years. For many practices, the dramatically lower down payment is what makes buying possible without draining capital needed to run the business.

By cutting the down payment to roughly 10%, the SBA 504 program frees hundreds of thousands of dollars a practice can keep in the business, often making ownership viable when a conventional loan would not.

A dental group buys a $2,500,000 building through an SBA 504 loan: a bank funds $1,250,000, an SBA debenture funds $1,000,000, and the practice contributes $250,000 (10%) — versus the $500,000+ a conventional loan would require.