Financing a Practice Relocation

When Relocation Makes Sense

Practice relocation is a major undertaking, but sometimes it's the right strategic move. Common reasons include outgrowing current space, lease expiration without favorable renewal terms, demographic shifts in your patient base, opportunity to purchase rather than lease, building issues or infrastructure limitations, and competitive positioning improvements.

Whatever the driver, relocation requires significant capital and careful planning to minimize disruption to your practice.

Calculating Relocation Costs

Before pursuing financing, develop a comprehensive budget for all relocation expenses:

Leasehold Improvement Financing

Building out clinical space is typically the largest relocation expense. Medical and dental offices have specialized requirements: plumbing, electrical, HVAC, and compliance features that drive costs well above general office buildouts.

Financing options for leasehold improvements include practice loans from healthcare lenders, SBA 7(a) loans with up to 10-year terms, landlord tenant improvement allowances, and equipment-bundled financing packages.

Equipment Decisions: Move, Upgrade, or Replace?

Relocation provides an opportunity to evaluate your equipment strategy. Moving existing equipment has lower cost but risks damage and downtime. Upgrading allows you to add new technology while relocating. Replacing aging equipment avoids moving costs and adds capability.

Many practices find that a combination approach works best—move equipment with remaining useful life, replace items nearing end-of-life, and add new technology to enhance the practice.

Practice Loans for Relocation

Healthcare-focused lenders offer practice loans that can cover all relocation expenses in a single package. These loans typically feature amounts from $100,000 to $2 million+, terms of 5-10 years, competitive rates (6-10% typically), and fast approval from experienced healthcare lenders.

A single consolidated loan simplifies your financial management compared to multiple financing sources.

SBA Loans for Larger Projects

SBA 7(a) loans work well for major relocations, especially those involving real estate purchase. Benefits include up to $5 million in financing, longer terms (up to 25 years for real estate), lower down payment requirements, and the ability to include working capital in the loan.

The longer timeline (60-90 days) requires earlier planning, but the terms often justify the wait.

Managing Cash Flow During Transition

Even well-planned relocations typically cause a temporary production dip. Patients may delay appointments during the move, and the new location needs time to reach full efficiency.

Plan for 2-3 months of reduced revenue by building reserves before the move, including working capital in your financing, maintaining a line of credit as backup, and timing the move to minimize impact.

Timing Your Relocation

Strategic timing can minimize disruption and maximize success:

• Avoid your busiest season if possible
• Plan for 2-4 weeks of reduced capacity during the move
• Allow buffer time in construction schedules (delays are common)
• Coordinate equipment delivery with space completion
• Plan marketing campaign to launch before and during the move
• Notify patients well in advance (3+ months)

Real Estate Purchase vs. Lease

Relocation may present an opportunity to purchase rather than lease your space. Ownership builds equity and provides more control over your environment. However, it requires more capital and creates additional management responsibilities.

SBA 504 loans offer attractive terms for owner-occupied real estate: 10% down payment, below-market rates on a portion of the loan, and terms up to 25 years.

Preparing Your Financing Application

Lenders will want to see your detailed project budget and timeline, current practice financials (2-3 years), lease or purchase agreement for new space, contractor bids for buildout, equipment quotes, and explanation of strategic rationale for the move.

A clear, well-documented plan demonstrates professionalism and increases approval likelihood.

Making the Move Successfully

Successful relocation requires adequate financing, careful planning, and realistic expectations. Build contingency into your budget (15-20% minimum), communicate extensively with patients, and prepare for a temporary production impact.

The right new location can transform your practice—better space, improved patient experience, and enhanced profitability. Proper financing makes the transition manageable.