If you're thinking about transitioning to ownership, you're probably already investigating your loan options. Funding for a practice purchase or start-up in a lease space is called practice financing and can be structured as either a conventional practice loan or a Small Business Administration (SBA) loan. Here are the pros and cons of each.

Conventional practice loans
A conventional practice loan is typically financed over 5 to 10 years, and can range from variable and fixed-rate loan packages with down payment requirements and standard repayment terms, to fixed-rate loans with up to 100 percent financing and flexible terms.

Conventional loans can offer a number of advantages to new business borrowers, particularly if you're working with a specialized lender:

  • Lower fees and less paperwork
  • Flexible repayment plans
  • Up to 100 percent financing options available
  • Business assets and future performance used as collateral by some specialized lenders, rather than personal property and personal assets

Note that if you're not working with a specialized lender, you may be required to make a larger down payment and have limited repayment options. In addition, personal assets, such as your home, may be used as collateral.

SBA practice loans
SBA practice loans are term loans obtained through a bank or commercial lending institution and guaranteed by the Small Business Administration. If you're not familiar with SBA loans, you might be concerned about the process being more cumbersome than a typical bank loan, but the truth is that they're not nearly as difficult to get as you may think.

SBA practice loans are typically financed over 7 to 10 years, with SBA lenders offering 85 to 90 percent financing. The loans include:

  • A lower variable rate option
  • No prepayment penalties
  • More flexible credit underwriting guidelines

But, SBA practice loans typically require at least a 10 percent down payment, and loan fees and closing costs can range from 3.5 to 4 percent, depending on the size of the loan. In addition, they tend to require more paperwork.

The key when obtaining an SBA loan is to work with a Preferred SBA Lender who has been given the authority to make loan decisions on behalf of the government and can move you through the loan process quickly and efficiently.

If you're ready to talk about loan options for your practice purchase or start-up, call us at Wells Fargo Practice Finance to find out about our practice acquisition and start-up financing packages. As an AAHA member, you automatically qualify for preferred rates on competitive fixed-rate loans.

To learn more, just call your Wells Fargo financing specialist at 866-4MY-PAWS (866-469-7297) or visit us at


All financing is subject to credit approval and, as applicable, SBA eligibility. 
© 2014 Wells Fargo Bank, N.A. All rights reserved. Wells Fargo Practice Finance is a division of Wells Fargo Bank, N.A.


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