How Healthcare Lenders Make Medical Equipment
A $400,000 imaging system does not cost $400,000. It co...
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How much does it cost to start a medical practice? Published estimates run from about $35,000 for a lean, low-overhead setup to $500,000 or more for an equipment-heavy one. That spread is wide because “a medical practice” can mean a one-room membership clinic or a multi-provider imaging suite. The number that matters most, though, is not on the equipment quote. It is how much cash you have to cover rent and payroll while payers are still credentialing you.
This guide breaks down what drives medical practice startup costs, what first-time budgets tend to leave out, how long it takes to open a medical practice and actually get paid, and how to compare the main ways to finance a medical practice, from SBA loans to equipment financing and working capital. Every figure below is tied to a named source so you can check it yourself.
No single benchmark fits every specialty, so the honest answer is a range with context. Here is what five published sources say, and how current each one is.
Source | Estimate | Context |
|---|---|---|
Physician Practice Specialists (2023 edition) | $35,000 to $45,000 upfront, plus about $9,000 a month | Lean model built around one cross-trained employee |
Doctorly, as cited by SigmaMD (around 2020) | $70,000 to $100,000 or more | Traditional practice. An older figure, so treat it as a floor |
Zetter Healthcare, via Business News Daily | At least $100,000 | Consultant guidance to cover equipment and startup costs |
Lendio (2023 data) | $100,000 to $500,000 | Typical range cited for a small medical practice |
$152,000 to $525,000 | Template-based range that scales with equipment and services |
Why do the numbers disagree so much? Four things move the total more than anything else.
Use this table as a checklist rather than a price list. Fill in quotes from your own market, then split every line into a one-time cost and a monthly cost, because lenders will ask for both.
Category | What it covers | What moves the number |
|---|---|---|
Space and build-out | Lease deposit, tenant improvements, signage, zoning approval for medical use | Location, square footage, landlord concessions |
Clinical equipment and supplies | Exam rooms, diagnostic tools, imaging, emergency equipment, consumables | Specialty, new versus used, lease versus buy |
Technology | EHR, practice management and billing software, phones, IT security | Vendor, number of users, whether you outsource revenue cycle management |
Licensing, legal and credentialing | State license, DEA registration, NPIs, CAQH profile, entity formation, attorney review | State rules, number of payers, services offered |
Insurance | Malpractice and general liability. Primary care premiums are often quoted at $7,500 to $20,000 a year nationally, but one New York broker lists family practice near $30,000 at $1M/$3M limits | Specialty, location, claims history. Get current quotes, and ask about claims-made versus occurrence and tail coverage |
Staffing | First hires, payroll taxes, benefits | Hiring pace, local wages, role mix |
Marketing | Website, local SEO, community outreach. One guide estimates $3,000 to $10,000 | Competition, patient acquisition plan |
Working capital | The cash cushion that covers fixed costs until collections stabilize | Payer mix, credentialing timeline, collection speed |
Pro tip Negotiate the lease before you fall in love with the space. Physician Practice Specialists recommends capping annual rent increases and settling the renewal term up front. |
Your critical path is not construction. It is payer credentialing, which athenahealth says can take four to six months or longer. The American Medical Association gives the same advice in different words: start licensing and credentialing as early as possible, because the rest of the launch waits on it.
Order matters here. According to Aledade, you cannot submit payer applications until you have finalized your practice address, phone number and insurance, although you can prepare by updating your CAQH profile. You will also need a Type 1 NPI for yourself and a Type 2 NPI for the practice. In practice, locking in your address is what lets the credentialing clock start.
That delay creates the cash gap. A simple way to size it is to multiply your monthly fixed costs by the number of months you expect to wait. As an illustration, not a benchmark: if rent, two staff members, software and insurance total $25,000 a month and collections take six months to cover them, the worst case is $150,000 of cushion before you count build-out and equipment. Partial collections will shrink that figure, but plan with the conservative one. This is the line item most first-time budgets leave out, and it is where cash flow tips for medical practices pay for themselves.
It can change both the cost and the risk. The AMA Physician Practice Benchmark Survey found that the share of physicians in private practice fell from 60.1% in 2012 to 42.2% in 2024. Reporting on the survey points to the pressure of negotiating payment rates, costly resources and payer administrative requirements. Independent ownership is still a realistic path, but it rewards owners who budget for those pressures instead of discovering them later.
Direct primary care (DPC) is one response. The AAFP reports that almost 10% of surveyed members were in a DPC practice in 2023, up from 5% in 2021, with an average panel of 402 patients. DPC avoids insurer billing, which trims overhead, but a small panel also caps revenue, so test your fixed costs against realistic membership numbers. Since January 1, 2026, people with an HSA-eligible plan can keep contributing to an HSA while enrolled in a qualifying DPC arrangement, as long as the monthly fee is $150 or less for an individual or $300 or less for a family. The IRS adjusts those limits for inflation, and fees above the cap can still be paid from an HSA but stop contributions for that period, per Hylant’s summary of IRS Notice 2026-5. Niche models such as mental wellness clinics follow the same logic: the model you pick decides which costs you carry.
Most new owners combine two or three sources: personal savings, one longer-term loan for the big items, and a flexible line for the cash gap. This comparison shows where each option tends to fit.
Option | Best for | Key facts | Watch for |
|---|---|---|---|
SBA 7(a) loan | Startup costs, practice purchase, equipment and working capital in one package | Up to $5 million, terms up to 25 years, SBA guarantee of up to 85% on loans of $150,000 or less and 75% above that | Heavier paperwork, cash injection, personal guarantee, guarantee fee of 0.25% to 3.75% |
SBA 504 loan | Real estate and major equipment | Geared toward large fixed assets | Not a tool for operating cash |
Bank practice loan | Physicians with strong credit and a solid pro forma | Many banks have medical divisions. NerdWallet lists 6.37% to 10.98% rates | Collateral, personal guarantee, slower underwriting |
Equipment financing | Imaging, diagnostic tools, furniture | The equipment is the collateral, and terms track its useful life | Lease versus buy economics, end-of-term costs |
Startup practice loan | Zero-revenue practices | Lendio says these can offer up to 100% financing | Expect to show a plan, projections, and cash or collateral |
Line of credit or working capital | Covering payer delays after opening | Revolving access. NerdWallet lists 14% to 99% for online loans | Often needs operating history. Compare APR, not just the headline rate |
Rate ranges come from NerdWallet’s medical practice loan roundup (last updated March 2026): 6.37% to 10.98% for bank loans, 10% to 15% for SBA loans and 14% to 99% for online loans. Ask for current quotes, because rates move. The same page says bank and SBA loans can take 14 to 90 days to fund, versus as fast as 24 hours with online lenders. For more on lending to practices, see our guide to healthcare loans for doctors and clinics.
The SBA does not lend directly. Approved lenders make the loan and the agency guarantees part of it. Under the SBA 7(a) program, loans reach $5 million. Terms run up to 10 years for equipment and working capital and up to 25 years for real estate. Lenders typically want at least 10% of the project in cash and may ask for 15% to 30% depending on risk. Guarantee fees run from 0.25% to 3.75% by loan size, and fee rules change each fiscal year, so ask your lender exactly which fees apply.
Two 2026 details are worth checking with your lender. On March 1, 2026, the SBA changed its ownership eligibility rules around citizenship and residency, and it stopped using the FICO SBSS score for 7(a) Small Loans of $350,000 or less. The trade-off for SBA pricing is process: SBA and bank applications carry the most thorough documentation requirements, while alternative lenders typically ask for less paperwork.
Equipment financing is often the simplest place to start because the equipment secures the loan. Biz2Credit describes it as one of the easier medical loans to qualify for, with terms tied to the expected life of the equipment. Before you sign, ask who owns the equipment at the end, what upgrades cost, and the total repayment amount. For a wider look at funding choices, see our guide to healthcare lending options.
A line of credit is built for uneven cash flow. You draw what you need and pay interest on the balance, which suits the months when payers have not caught up. OnDeck frames practice loans as a way to cover cash flow gaps while waiting for insurers to pay. Pre-opening practices have fewer options here, because many working capital products look at revenue history. One lender in NerdWallet’s roundup cites six months in business as its minimum. If you plan to use short-term financing after opening, arrange it early and price it carefully.
Lenders fund plans they can test. A lender-ready package usually includes the following.
Business News Daily also suggests sending your pro forma to a bank’s medical or dental division and using the review period to move on the lease, entity filing, tax ID, insurance and credentialing. Waiting for approval before doing anything else is the slow way to open.
Fast and flexible are fine selling points. Vague is not. Watch for these warning signs.
Plan for startup costs plus a runway of several months of operating expenses. Published startup estimates run from about $35,000 for lean models to $500,000 or more, and insurance billing adds a credentialing wait of four to six months or longer. Multiply your monthly fixed costs by the months you expect to wait, then add that to build-out and equipment.
Yes, but your options narrow. SBA 7(a) loans, bank practice loans and startup-focused practice loans all serve zero-revenue practices, and some offer high financing. Expect to show a business plan, conservative projections, a cash contribution or collateral, and usually a personal guarantee. Many working capital products require operating history, so they fit better after you open.
Often, if your timeline allows. A 7(a) loan bundles build-out, equipment and working capital with long terms that soften monthly payments. The cost is paperwork, a cash injection that commonly starts near 10% and can reach 30%, and a slower process. Ask the lender for a realistic closing date before you sign a lease.
Start before you sign the lease. Lenders want a pro forma and a lease estimate, while payer applications cannot go in until your address and phone are final, and credentialing can run four to six months or longer. Working on funding while you prepare those pieces keeps the lease, build-out and payer timeline from stalling each other.
It depends on how quickly the equipment ages and how much cash you want to keep. Buying with an equipment loan builds ownership and ties the term to the asset’s life. Leasing lowers upfront cash and eases upgrades but can cost more over time. Compare total repayment and end-of-term terms, and check tax treatment with your CPA.
Payment delays are a common reason new practices strain their cash. Hold a reserve that covers several months of fixed costs, line up a line of credit before you need it, and verify benefits and submit clean claims from day one so avoidable errors do not hold up payment. Revenue cycle discipline protects you as much as financing does.
Often, because DPC skips insurance billing, which removes billing staff and the wait on payer payments, according to SigmaMD. The AAFP reports an average DPC panel of 402 patients, so revenue is capped by how many patients you can serve. Check your fixed costs against realistic membership numbers before assuming it is cheaper.
Ask for the APR, total repayment amount, every fee, any prepayment penalty, the collateral and personal guarantee required, and any limits on how you can use the funds. In New York and some other states, lenders must give standardized cost disclosures with a specific offer, so a reluctance to put numbers in writing is a warning sign.
So, how much does it cost to start a medical practice? Plan on a startup range that fits your specialty and model, then add the operating runway that most budgets omit. Settle three things early: a lender-ready pro forma, a credentialing timeline tied to a signed lease, and a funding plan that covers the cash gap as well as the build-out.
If you want a second set of eyes on your numbers, National Medical Funding works with healthcare providers on working capital, equipment financing and practice growth. Share your budget and timeline with our team, and we will walk through the options that fit your stage in plain terms, including what each one costs.
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