SBA 504 loans for medical and dental practices solve a unique financing challenge that most providers run into sooner or later. The equipment is expensive and highly specialized, the buildout requirements are extensive, and the facilities themselves often need to be purpose-built or heavily renovated to meet the demands of clinical work.
For practice owners in Utah looking to purchase their building, build a new facility, or invest in major equipment, the SBA 504 program is one of the most effective financing tools available and one that is frequently underused in healthcare.
SBA 504 Loans for Medical and Dental Practices: Why Healthcare Is a Strong Fit
The 504 program is built around two categories: owner-occupied commercial real estate and long-life equipment. Medical and dental practices check both boxes in a way that few other businesses do as completely.
On the real estate side, most practice owners occupy the majority of their building, which satisfies the program’s owner-occupancy requirement easily. On the equipment side, the kind of equipment used in medical and dental practices, including imaging systems, surgical equipment, dental chairs and operatories, and sterilization systems, often has a useful life well beyond the 10-year minimum the SBA requires.
The combination means a single practice purchase or buildout project can often roll both real estate and major equipment into one financing package, all through the SBA 504 program.
What Practices Can Finance With a 504 Loan
Purchasing an existing building. If you are currently leasing and want to buy the building your practice operates in, or a different building you will move into, a 504 loan can finance the purchase with as little as 10 percent down.
Building a new facility. For practices that need a purpose-built space, ground-up construction is eligible under the 504 program. New construction requires 60 percent owner-occupancy, which is rarely an issue for a practice that will use the majority of the building for clinical operations.
Renovation and buildout. Medical and dental buildouts are notoriously expensive. Plumbing for dental chairs, specialized electrical for imaging equipment, HVAC requirements for clinical spaces, and ADA compliance work all add up quickly. These renovation costs can be rolled into a 504 project.
Major equipment. Imaging equipment such as X-ray, CBCT, and ultrasound, surgical equipment, dental chairs and operatory packages, sterilization equipment, and other major clinical equipment with a 10+ year useful life can be financed through the 504 program, often alongside a real estate purchase.
Why This Matters More for Healthcare Than Most Industries
The capital intensity of medical and dental practices is unusually high relative to revenue, especially for newer practices or those expanding into a second location. A single imaging system can run into six figures. A full operatory buildout for a dental practice can easily exceed $500,000 once equipment, plumbing, and specialized construction are factored in.
Conventional financing for these costs often comes with shorter terms and higher down payments, which puts pressure on a practice’s cash flow right when it is trying to grow. The 504 program’s 20-year terms on equipment and 25-year terms on real estate spread these costs out in a way that aligns much better with how a practice actually generates revenue over time.
The Ownership Advantage for Practices Specifically
There is a dynamic in healthcare real estate that does not apply to every industry: practice buildings tend to hold their value well, particularly in markets with growing populations like much of Utah. A practice that owns its building is not just avoiding rent increases, it is building an asset that can become part of a retirement or exit strategy down the road.
For practice owners thinking about succession planning, owning the real estate separately from the practice itself, sometimes through a separate entity, is also a common structure that a 504 loan can support, since the program allows for certain related-party leasing arrangements as long as occupancy requirements are met.
What Practices Need to Qualify
The eligibility requirements follow the standard SBA 504 guidelines:
- For-profit business operating in the U.S.
- Tangible net worth under $20 million
- Average net income under $6.5 million after federal taxes for the prior two years
- The practice must occupy at least 51 percent of the building, or 60 percent for new construction
- Equipment must have a useful remaining life of at least 10 years
- Ability to repay based on practice cash flow and financials
Most established practices, including single-doctor and small group practices, fall comfortably within these thresholds. Newer practices can still qualify but should expect a 15 percent down payment requirement under the startup provision.
A Combined Real Estate and Equipment Example
Here is how a typical project might come together for a dental practice relocating to a new space:
Building purchase: $1.2 million Buildout and renovation: $400,000 New equipment (imaging, operatories, sterilization): $350,000 Total project cost: $1.95 million
At 10 percent down, the practice would need approximately $195,000 in equity, with the remaining $1.755 million financed through the bank and SBA/CDC structure at a fixed rate for the real estate portion and a 20-year fixed rate for the equipment portion.
For a practice that has been operating successfully for several years, this kind of project is often more financially accessible than owners initially assume.
If you’re exploring SBA 504 loans for medical and dental practices, getting your numbers right early makes the rest of the process much smoother.
Getting Started
If you are a medical or dental practice owner in Utah or Idaho thinking about purchasing your building, relocating to a new space, or making a significant equipment investment, the first step is understanding what your numbers would look like under the 504 program.
InterMountain Business Lending has worked with healthcare practices throughout the region and can walk you through eligibility, financing structure, and next steps with no cost or commitment.
Talk to IMBL about financing your practice →
InterMountain Business Lending is a Certified Development Company (CDC) serving small businesses in Utah and Idaho since 1979. We specialize in SBA 504 financing for commercial real estate, construction, equipment, and refinancing.