Can my medical practice get funding with existing debt?
Most medical practices carry multiple financing sources at the same time. About 65 to 70% of all medical equipment is financed rather than purchased outright. Add student loans, practice acquisition debt, and working capital advances, and carrying debt is the standard operating state for a medical practice. The question lenders ask isn't "do you have debt?" It's "can your cash flow cover another payment?"
Medical practices have an advantage here. Healthcare lending carries a 2 to 4% default rate, compared to 5 to 8% across all industries. Bank approval rates for healthcare run 60 to 65%, and alternative lender approval hits 70 to 80%. Lenders are more willing to fund behind existing debt when the borrower is a medical practice.
How lenders evaluate it (DSCR):
The metric that drives the decision is Debt Service Coverage Ratio. It's your net operating income divided by total monthly debt payments. SBA lenders want at least 1.25x. Best rates come at 1.5x or higher.
| Monthly Financials | Practice A (Strong) | Practice B (Stressed) |
|---|---|---|
| Revenue | $80,000 | $35,000 |
| Operating expenses (65%) | -$52,000 | -$22,750 |
| Net operating income | $28,000 | $12,250 |
| Existing debt payments | -$6,000 | -$8,000 |
| Proposed new payment | -$4,000 | -$4,000 |
| DSCR | 2.8x (strong) | 1.02x (borderline) |
Practice A qualifies comfortably. Practice B would need to restructure existing debt before adding more. A DSCR below 1.0 means the practice can't cover its obligations from operations.
The MCA consolidation opportunity:
This is where the real savings are for practices that took on expensive advances. Consolidating high-cost MCAs into a term loan can cut monthly payments dramatically.
| Scenario | Before | After Consolidation | Savings |
|---|---|---|---|
| $41K MCA at high factor rate | ~$300/day | 12% APR term loan | ~$15,800 |
| Multiple MCAs totaling $1,800/day | $54,000/month | $4,200/month term loan | $30,000+ |
Swapping from a 40 to 150% effective MCA rate to a 10 to 25% term loan typically reduces total cost by 60 to 80%. If your practice saves $2,100 per month through consolidation, that's $25,200 per year flowing back into operations.
The 50% rule for stacking:
Most lenders allow additional funding once you've repaid at least 50% of your existing balance. About 38% of businesses with an MCA carry two or more positions simultaneously. It's common. But stacking gets dangerous when total monthly debt payments exceed 25 to 35% of gross monthly revenue. Beyond that threshold, adding more debt makes the cash flow problem worse.
Why this matters right now:
According to MGMA's 2025 data, 90% of medical practices report higher operating costs this year, averaging 11.1% year-over-year increases. Only 56% saw revenue growth, and 30% reported declining revenue. The squeeze between rising costs and flat revenue is pushing more practices toward additional funding. Having existing debt doesn't disqualify you, but the funding needs to be structured correctly.
How QuicLoans helps practices with existing debt:
As a broker, we specialize in navigating stacking rules, finding second-position lenders, and structuring consolidation. Different lenders handle existing debt differently. Some won't fund behind another lender's UCC filing. Others will subordinate if the DSCR supports it. We find the right match from our lender network. See your medical practice funding options or apply in 5 minutes.
Looking for more medical funding information? Explore all medical business loans →