The Math That Made Them Finally Build

The conversation that stops most practice owners from building is a number. They hear $1.5M or $2M for a new facility, and the first thing their brain does is calculate a down payment. Twenty percent of $2M is $400,000. Twenty-five percent is $500,000. That's a significant cash position to deploy, and for many owners who have been reinvesting in their practice, carrying student loans, or managing normal business cash flow, it's a number that puts the project in the "someday" column. Someday becomes five years. Five years becomes a decade. The space stays too small. The production ceiling stays in place. The someday never quite arrives.

What most practice owners don't know — or don't know until someone explains it to them — is that SBA lending programs exist specifically to address this. The SBA 7(a) program and the SBA 504 program are both designed to facilitate owner-occupied commercial real estate and construction for small businesses. Healthcare practices, including dental, medical, and veterinary, are among the most eligible business categories. In the right structure, these programs can finance a new facility build at 90 percent or more of total project cost. In some cases, 100 percent of construction and equipment costs can be financed when the structure is assembled correctly.

The SBA 504 program in particular is structured for owner-occupied commercial real estate. The loan is split between a conventional lender covering roughly half the project, a Certified Development Company covering 40 percent, and a relatively small owner equity contribution — sometimes as low as 10 percent. For a practice that is financing both real estate and equipment as part of a ground-up build, the numbers can be structured in ways that reduce or eliminate the traditional down payment requirement entirely. The SBA 7(a) program works differently — it's a single loan rather than a split structure — but similarly allows high loan-to-value financing on qualifying owner-occupied properties.

None of this is magic, and not every practice qualifies. Lenders underwrite these loans based on the practice's revenue history, cash flow coverage ratios, credit quality, and the projected economics of the new facility. The qualification process is real. But the number of practice owners who assume they don't qualify without ever having the conversation is very large — and many of them are wrong.

More important than the loan structure, though, is the math that changes the calculation entirely. The conversation isn't really about how much you're borrowing. It's about what the new facility makes possible.

Take a dental practice constrained to six operatories in a space that can't accommodate growth. The practice is busy — patients are waiting weeks for appointments, hygiene is backlogged, the doctor is turning away new patients. The owner knows they need more space. They've run the debt service calculation: $2M borrowed at current rates adds roughly $1,800 to $2,200 per month to their fixed overhead compared to what they're currently paying in rent. That number feels manageable but not exciting.

Here's where the math shifts. What does a constrained practice do when it adds four operatories, brings on an associate, and opens its hygiene schedule? In practices that have been through this transition, the production increase isn't marginal — it's often $20,000 to $40,000 per month or more, depending on how severely the prior space was limiting throughput. The debt service on the build is a few thousand dollars per month. The production increase enabled by the build is a multiple of that. You're not evaluating whether you can afford the mortgage payment. You're evaluating whether you can afford to keep operating without the capacity.

Dr. Skjei built Lake Dental Care to accommodate a practice that could scale to 10,000 patients and $4M or more in annual production. That scale doesn't happen in a space you've outgrown. It happens in a facility designed from the beginning to support it. The financing made the project possible. The production capacity made the financing irrelevant as a constraint. When the math works out that way, the question isn't whether to build — it's how fast you can move.

This is the conversation that shifts things for owners who've been stuck in the "someday" column. Not a generic encouragement to take on debt, but an honest look at what the current space is costing in constrained production, what the new facility enables, and what the financing actually looks like when structured correctly. Sometimes the answer is that the timing isn't right — cash flow isn't there, revenue history doesn't support the underwriting, the market conditions don't favor a new build. But the only way to know that is to actually run the numbers, which most owners never do before they've already talked themselves out of it.

100 percent financing isn't available to everyone and it isn't the right answer for every situation. But if you've been telling yourself you can't afford to build because you don't have a down payment saved, that assumption deserves to be tested before you accept another year or two in a space that's holding your practice back. Have the conversation about what the financing actually looks like, and then look at what the new facility makes possible. The math might surprise you.

Primus works with practice owners through the full process, including the financial structure of the project from the first conversation. Start at primus-companies.com.