SBA financing for healthcare practices that require licensed professional

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by an intermediary from The University of Chicago - Booth School of Business
in Chicago, IL, USA

4mos ago

SBA financing for healthcare practices that require licensed professional

Most healthcare practices have to be owned and managed by a licensed professional (doctor, LCSW, Dentist, etc.). PE groups buy them and form a MSO (Managed Service Organization). The actual practice continues to be owned and operated by a licensed professional (current owner or a new one who is paid a salary). Buyer's MSO takes over all admin functions, and the practice pays a management fee. Does SBA finance such deals? How?

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reply by a lender 4mos ago
from Cornell University in Los Angeles, CA, USA

Agree with Joseph, this is spot on. The PG friction is real and catches people off guard. One additional insight: the reason lenders want that licensed professional to personally guarantee isn't just about legal structure; it's because that person IS the revenue engine. If the licensed professional leaves, the practice can't operate. The license is the business. The practical workaround: find an existing employee in the practice who already holds the same license and get them to sign a multi-year employment agreement with retention bonuses. Or recruit a new licensed professional from outside and lock them into a similar arrangement. Either way, you're showing the lender operational continuity that doesn't depend solely on the seller, which is what actually gets them comfortable on the PG and the credit. We have a lot experience financing various healthcare practices via the SBA. If you ever need help reviewing a deal, I am happy to help. We work with all the major SBA lenders. The bank pay us after your loan closes, so this is a 100% free service for you. You can email me directly at redacted or schedule a meeting with me: redacted. Look forward to chatting!

reply by a lender 4mos ago
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

It is definitely harder to get the MSO model financed by SBA lenders. However, we have had success doing it in the past. It really depends on the buyer experience and how everything is setup. I would be happy to have a discussion. You can reach me here or directly at redacted