Direct answer
As of August 2026, a physician should compare medical-practice financing by total cash required, payment structure, collateral, guarantees, covenants, prepayment terms, closing conditions, and downside flexibility. The lowest stated rate is not automatically the lowest-risk or lowest-cost structure.
Match financing to the assets and transition
Separate purchase price, working capital, equipment, real estate, transaction costs, and post-close investment. A lender may finance these uses differently, and the buyer should confirm which costs require cash at closing.
Model fixed and variable obligations
Build payment schedules for principal, interest, fees, seller notes, earnouts, and any line of credit. Test variable-rate exposure, refinancing assumptions, prepayment terms, and the timing of deferred payments.
| Financing term | Buyer review |
|---|---|
| Cash at closing | Down payment, fees, working capital, deposits, transaction costs, and excluded uses |
| Payment structure | Amortization, maturity, fixed or variable rate, interest-only periods, and balloon risk |
| Collateral and guarantees | Business assets, personal assets, guarantees, lien priority, and release conditions |
| Covenants | Reporting, liquidity, debt-service, additional debt, distributions, ownership, and change controls |
| Seller financing | Subordination, standby terms, payment timing, security, default, and interaction with bank debt |
| Exit flexibility | Prepayment, refinance, sale, partner admission, and lender-consent provisions |
Read the control terms as financial terms
Guarantees, collateral, reporting requirements, debt-service tests, distribution limits, insurance requirements, and default provisions can restrict future decisions. Qualified counsel should review the loan documents and remedies.
Compare financing packages on one page
Use the same cash-flow assumptions for every proposal. Show cash at closing, monthly and annual debt service, total scheduled payments, collateral, guarantees, covenants, and downside liquidity next to the practice affordability model.
Primary sources
Frequently asked questions
Can an SBA-guaranteed loan finance a change of ownership?
The SBA 7(a) program can support eligible changes of ownership, but the lender determines the applicable structure, documentation, eligibility, and underwriting.
Should the buyer accept a variable rate for a lower initial payment?
Model payment changes and downside cash flow before deciding. The right structure depends on risk capacity, expected holding period, prepayment terms, and available alternatives.
Is seller financing the same as an earnout?
No. A seller note is generally an obligation to pay under stated terms; an earnout makes some consideration contingent on future results or events. Contract details can change the economics.