Medical and Dental Practice Financing: Equipment, Buyouts and Cash Gaps
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Ten years in business banking before co-founding Lending Gurus. · Updated Oct 28, 2026
A busy practice can look great on paper and still run short on cash. You see patients today, pay staff and suppliers this week, and wait on insurers to pay for the visit later. Add a new imaging system, a second operatory or a chance to buy out a retiring partner, and the gap gets wider.
This guide covers how funding usually works for medical, dental and other health practices: financing equipment, buying a practice or a partner’s share, and covering the wait between a claim and a payment. Every funding partner sets its own requirements and makes its own decisions, so treat this as a map of the options and what partners tend to look at.
Why practice funding works differently
Most of the value in a practice sits in three places. There is the equipment, which is expensive and specialized. There are the patient relationships and the reputation, which is what you are really paying for when you buy a practice. And there are receivables, the claims you have already earned but have not been paid on yet.
Partners tend to like practices for a simple reason. Demand for care is steady, and a practice with a few years of collections history gives them a clear picture of how money comes in. What makes things harder is a slow billing process, a heavy reliance on one payer, or a buyout priced well above what the numbers support.
Financing equipment
Equipment is often the first thing a practice finances. Dental chairs, imaging, lasers, lab equipment and practice management software all cost real money, and the equipment itself can secure the financing.
What tends to matter most:
- The equipment and the quote. Partners want the vendor quote, the make and model, and whether it is new or used. Specialized equipment can be harder to resell, which affects how a partner values it.
- How it pays for itself. If a new machine lets you offer a service you currently refer out, show the expected volume. A partner reads that as part of the repayment story.
- Your collections history. Steady monthly collections over time carry more weight than one strong month.
- Your credit and existing debt. Many practice owners already carry education debt or an earlier practice loan, and partners will look at the whole picture.
Leasing is the other route. It can lower what you pay up front and make upgrades easier, but you may not own the equipment at the end and the total cost can run higher. My guides to leasing vs buying business equipment and equipment financing requirements go deeper on both.
Buying a practice or a partner’s share
Practice acquisitions and partner buyouts are some of the largest checks a health care owner will ever write. The price usually reflects goodwill, meaning the patient base and the practice’s name, more than the equipment in the rooms.
SBA 7(a) loans are a common tool here. According to the SBA, 7(a) proceeds can be used for a complete or partial change of ownership, and the maximum for a 7(a) loan is $5 million. That covers buying a whole practice and buying out part of an owner’s interest. Each lender still sets its own requirements on top of the SBA rules, and the SBA has specific rules about things like seller involvement after the sale.
Partners reviewing a practice purchase usually want to see:
- Several years of the practice’s tax returns and financial statements
- Collections and production reports, plus a breakdown by payer
- A valuation or appraisal, and the purchase agreement or letter of intent
- Your own licensing, experience and credit
- How patients and key staff will transition, and how long the seller will stay to help
Seller notes come up often in practice sales, since a retiring owner may be willing to carry part of the price. My post on buying an existing business explains how seller notes and equity injection fit together.
The insurance reimbursement gap
This is the cash problem most practices feel first. You deliver care now, file the claim and wait. Commercial insurers each have their own timelines and their own reasons for kicking a claim back.
Medicare at least publishes its rules. For a clean claim, meaning one that needs no extra information to process, Medicare contractors generally cannot pay before day 14 for electronic claims or day 29 for paper claims, and must pay interest on a clean claim that is not paid within 30 days, per the CMS Medicare Claims Processing Manual. Claims with errors or missing information take longer, which is why a tight billing process is one of the cheapest forms of working capital a practice has.
Ways practices cover the gap
- A business line of credit. You draw what you need while claims are pending and pay it down as payments land. Partners tend to look for several months of steady deposits, reasonable credit and some time in business.
- Medical receivables financing. Some partners lend against your commercial insurance receivables. Read the contract closely, because the structure matters a lot here (see the next section).
- A working capital term loan. A set amount paid back over a set schedule, useful for a defined need like hiring ahead of a new provider’s start date.
A warning about factoring government claims
Federal rules limit who can receive Medicare payments owed to a provider. Under 42 CFR 424.73, Medicare generally does not pay amounts due a provider to anyone else under an assignment, power of attorney or similar arrangement, with a few narrow exceptions. Federal Medicaid rules separately bar payment to or through a factor.
In practice, that means a standard factoring deal where a company buys your Medicare or Medicaid claims and collects them directly usually does not work. Funding tied to those receivables tends to be structured as a loan to the practice with payments still flowing to the practice’s own account. If a provider offers to buy your government claims outright, ask a health care attorney to review it before you sign.
Costs that catch new practice owners off guard
- Credentialing time. Getting a new provider credentialed with insurers can take months, and claims from that provider may not pay until it is done.
- Buildout and compliance. Plumbing for dental operatories, lead lining for imaging rooms and accessibility work can push a buildout well past the first estimate.
- Malpractice and other insurance. Partners may ask for proof of coverage before closing.
- Software and billing support. A practice management system or an outside billing service is a real monthly cost, though it often pays for itself in fewer denied claims.
What funding partners usually review
- Business bank statements for the last several months
- Collections and accounts receivable aging reports
- Your payer mix, meaning how much comes from Medicare, Medicaid, commercial plans and patients paying directly
- Personal and business credit
- Equipment quotes, buildout bids or a purchase agreement, depending on the need
- Licenses, and any existing loans, leases or receivables agreements
Having these ready before you start conversations saves time on both sides. A clean aging report is especially useful, since it shows a partner how long your claims actually take to turn into cash.
Where Guru fits
Guru is not a lender. Guru asks a few questions about your practice, your patients and payers, and what you need the money for, then matches you with funding partners who may be a fit. Those partners review your information and make every decision, including whether to offer funding and on what terms. Starting a conversation is free and does not commit you to anything. For other industries, see my guide to business funding by industry.
FAQ
Can a new medical or dental practice get funding?
Often, yes, though options are narrower without a collections history. Equipment financing is a common starting point because the equipment backs it. For a startup practice, partners lean harder on your training, experience, credit and business plan.
Can I use an SBA loan to buy a dental practice?
SBA 7(a) loans can be used for a complete or partial change of ownership, which includes buying a practice or a partner’s share. The lender decides whether the deal fits its requirements and the SBA’s rules.
How long does Medicare take to pay a claim?
For clean claims, Medicare contractors generally cannot pay before day 14 for electronic claims or day 29 for paper claims, and owe interest on clean claims not paid within 30 days. Claims that need more information take longer.
Can I factor my insurance claims?
Commercial insurance receivables can sometimes be financed. Medicare and Medicaid claims are different, because federal rules limit paying anyone other than the provider, so those deals are usually structured as loans to the practice. Have an attorney review any agreement.
This article is general information, not legal, tax or financial advice. Medicare, Medicaid and SBA rules can change, so confirm current requirements and talk to a health care attorney or CPA about your specific situation.