From buildouts and equipment to software and payroll, dental and medical startup costs can quickly climb to six figures. And that’s just to get through the first few months.

The right financing can help cover those expenses, giving you time to find your footing and room to grow. It starts with understanding the types of loans available to healthcare professionals without practice revenue, learning how to qualify, and avoiding common cash flow mistakes that can derail your practice in its first year.

Typical startup costs for new medical practices.

Depending on your specialty, location, and growth plans, your total startup costs could range from $100,000 to $500,000 or more. Some of the most common medical startup expenses include:

  • Office lease and buildout: Securing a space is often the largest startup expense. It may include costs such as security deposits, upfront rent, interior construction, and medical-grade flooring.
  • Medical and diagnostic equipment: Making a practice patient-ready requires investments in equipment such as imaging machines, exam chairs, and sterilization tools, as well as basic items like gloves, stethoscopes, and blood pressure cuffs.
  • IT systems and EHR software: Modern medical practices require advanced technology systems. Startups need to purchase computers, networking hardware, and the subscription, implementation, and training fees for an electronic health record (EHR) system.
  • Licensing, insurance, and credentialing: This covers business licenses, malpractice insurance, facility insurance, and the costs associated with the provider credentialing process.‍
  • Payroll for core staff: You’ll need to hire and pay a core team, such as a medical assistant, receptionist, and office manager, for at least a few weeks before the practice opens. These positions are critical for effective pre-launch setup and organization.

Securing sufficient financing well ahead of your launch may help preserve your personal finances while giving you the funding needed to give your practice a strong start.

Common types of medical practice loans.

Without revenue or financial history, securing a traditional small business loan may be a challenge. However, the following loans are commonly used to support new medical practices during their launch phase.

Healthcare startup loans.

Designed for zero-revenue operations, healthcare startup loans offer funding for anything from practice buildouts to working capital. They often provide 100% financing and offer favorable terms.

Equipment financing.

When you need to purchase major medical machinery, diagnostic tools, or office technology, equipment financing may be the right solution. These loans use equipment as collateral, often resulting in lower interest rates and small to no down payment requirements.

SBA loans.

These government-backed loans offer lower down payments, favorable rates, and longer repayment terms (up to 25 years for real estate). SBA loans are often used for larger funding needs, such as major practice buildouts or real estate purchases.

Business line of credit.

A startup business line of credit provides flexible access to cash. Since you only pay interest on the funds you use, it often acts as a cushion for temporary shortfalls, such as unexpected inventory needs, payroll, or operational expenses.

How to qualify for a medical startup loan.

When applying for a medical startup loan, lenders typically closely examine your personal financials, credit history, and how well-prepared you are for the launch. These key factors may strengthen your application:

  • Personal credit score: Since the business has no credit history, the borrower’s personal credit score becomes a primary decision factor. A strong score indicates financial responsibility, which may make it easier to get approved and secure competitive interest rates.
  • Business plan and projections: Presenting your lender with a detailed startup plan based on conservative projections shows that you’ve thought through the numbers and have a plan to repay the loan.
  • Industry experience: Credentials, licensing, and work history assure the lender that your practice is legitimate and positioned to start earning revenue.‍
  • Cash reserves or collateral: Some medical startup loans offer 100% financing, but having personal capital to contribute or offering sufficient collateral may help you secure better terms, especially for non-SBA loans.

Showing lenders that you’re organized, strategic, and financially disciplined may improve your odds of getting funded. A financial advisor specializing in healthcare may help you refine your projections or suggest other options for strengthening your financial position. If you have little to no credit history or high student loan debt, consider seeking a cosigner with strong personal financials.

Managing cash flow in your first year.

The first 12 months for a medical startup are often the most financially challenging. Even a well-run practice that appears profitable on paper can feel the pinch when faced with delayed insurance reimbursements, unexpected expenses, and slower-than-expected patient volume.

When used strategically, medical startup financing can help cover operating costs and working capital needs. Set aside enough funding to cover three to six months of fixed expenses and don’t skimp on marketing during this critical time. Remember that patient acquisition takes time, and cutting back on your visibility may extend the time it takes to start turning a profit.

Evaluating Return on Investment (ROI)

Think of your medical practice loan as an investment rather than a cost. Taking this approach may help create long-term, sustainable profitability.  

To measure its return, start by comparing the cost of your loan to projected revenue growth. Then, estimate how long it will take to break even. Don’t forget to consider intangible returns such as improved patient access, operational stability, or stronger brand trust.

Avoid these startup financing mistakes.

Many new medical entrepreneurs are so focused on getting approved for a loan, they get tripped up by other financial and strategic errors. As you prepare for your launch, be aware of these common pitfalls:

  • Underestimating startup costs: Build a contingency fund (approximately 20-30% of total estimated costs) into your financing request.
  • Taking on too much debt without a repayment plan: Borrow no more than what you can comfortably pay back based on conservative financial projections.
  • Neglecting marketing or patient acquisition costs: Allocate sufficient funds to digital marketing, local outreach, and referral networking. This is critical for growing a patient base, especially in your first year.‍
  • Overinvesting in non-essential equipment at launch: In your first year, avoid investing in high-end office furniture, specialty equipment, or other items that aren’t strictly required for quality patient care.

To create a solid financial foundation, focus on strategic, phased spending that’s aligned with patient growth.

Lendio simplifies medical practice financing.

Starting a new medical practice requires strategic planning and the right financial partner. Lendio simplifies the funding process, connecting healthcare professionals with 75+ lenders and loans designed specifically for medical startup companies.

Compare loan options side-by-side, explore offers aligned with your medical specialty, and find the medical practice loan that’s right for your needs with one simple application.