Medical Practice Loans: Broker Assessment

To assess a medical practice loan, separate the funding purposes, establish who will own and run the practice, then test its cash flow and security. A medical practice acquisition loan also needs evidence that earnings can continue after the seller leaves, especially when the price includes goodwill.

Work through the five stages below before submitting a loan for medical practice purchase, fit-out or expansion. The finished file must connect each requested facility to its borrower, repayment source and supporting evidence.

Define the Practice Purpose

1. Break the request into separate uses of funds before choosing a loan structure. Record who needs each amount, when it must be paid and which entity will own the funded asset.

Funding purpose	What the money supports	What to establish first
Acquisition	Purchase of an existing practice	Business or share purchase, goodwill allocation and incoming owner
Buy-in	A stake in a practice or partnership	Ownership percentage, rights to earnings and existing partner arrangements
Fit-out	Work on purchased or leased rooms	Tenant or property owner, works quote and landlord consent where needed
Equipment	Medical or administrative assets	Purchaser, supplier, installation costs and equipment ownership
Premises	The building occupied by the practice	Property-owning entity and the operating practice’s occupancy arrangement
Refinance	Replacement of existing facilities	Borrower, balances, existing security and discharge costs
Working capital or growth	Costs before new receipts arrive	Wages, rent, recruitment, opening dates and the forecast cash shortfall

A property-owning company and the practice operator can have different debts and income. Show the rent paid between them in each entity’s forecast, and avoid counting the same earnings twice.

As at October 2026, National Australia Bank (NAB) practice finance covers establishment, expansion, acquisition and fit-outs. Its medical, dental and veterinary purchase funding can reach 100% of the purchase price, subject to eligibility. That purchase-price figure doesn’t establish funding for every transaction cost or another lender’s required contribution.

Calculate the client’s contribution from the complete budget. Include costs outside the proposed facilities and cash needed while rooms are closed or new practitioners build their billings. Use the business acquisition loan guide for the broader purchase and transaction framework.

Assess the Practitioner and Practice

2. Document the practitioner’s professional standing and the practice’s operating model. Record qualifications, registration, specialty and experience, plus ownership share and responsibility for managing staff or finances.

Use the Australian Health Practitioner Regulation Agency (Ahpra) practitioner guidance to check current registration through its online Register of practitioners. Registration evidence and lender eligibility answer different questions. A registration record doesn’t establish access to a specialist credit concession.

As at October 2026, BOQ Specialist’s practice purchase page describes lending to doctors, dentists and vets. Match the applicant’s profession and proposed purpose to that product before applying its conditions.

Build an operating profile from aggregated practice records. Show patient volumes, recurring versus occasional visits, referral sources and fee mix, including private fees and bulk billing where relevant. Identify how much revenue comes from each practitioner and whether employment or contractor agreements continue after the transaction.

Compare appointment demand with consulting rooms, rostered hours and actual practitioner availability. A forecast that adds billings requires capacity to provide those appointments. Record recruitment assumptions and the cost of replacing a departing practitioner without assuming clinical scope or permission to operate a particular service.

For an acquisition or buy-in, set out the handover. Record how long the seller stays, who manages the practice during transition and which agreements support continuing operations. Refer any practice-specific operating approval to the responsible authority and retain the evidence separately from the lender’s credit conditions.

Analyse Cash Flow and Goodwill

3. Reconcile historical practice earnings with the income available under the new ownership structure. Trace financial statements to current management accounts and bank receipts, then explain differences in timing or accounting treatment.

Normalisation adjusts historical profit for costs or income that won’t continue. Support each adjustment with records, and include the replacement cost when a departing owner did clinical or management work. Removing that owner’s pay while retaining all their billings overstates the money available for debt repayments.

As at October 2026, BOQ Specialist can assess acquired-practice income together with the practitioner’s current personal billings, depending on the scenario. Its goodwill assessment considers earnings before interest, taxes, depreciation and amortisation (EBITDA) and gross revenue. These are its assessment inputs, not a universal valuation formula.

Goodwill is the practice value beyond its physical assets. Explain which continuing earnings support that value and how ownership transfers affect them. For a minority buy-in, distinguish the practice’s profit from the applicant’s actual entitlement to distributions and any restrictions on receiving them.

Test a Departing Owner’s Billings

Consider this hypothetical acquisition. The accounts show annual operating profit of $300,000 after the seller’s remuneration. The seller leaves, and management proposes adding back $100,000 of that remuneration to produce $400,000 before debt payments.

A replacement practitioner costs $90,000 each year. Keeping that cost reduces the adjusted operating profit to $310,000. If annual payments on existing and proposed debt total $180,000, the initial balance is $130,000 before tax and other cash needs.

Now assume lost appointments reduce receipts by $80,000 with no immediate reduction in fixed costs. The balance falls to $50,000 before tax and other cash needs. These are illustrative cash-flow assumptions, not a lender’s servicing calculation or an approval threshold.

Model the transition month by month as well. Include tax payments, equipment commitments, working-capital movements and distributions to owners. If cash falls below zero before replacement billings arrive, quantify that shortfall and identify evidenced reserves or agreed funding to cover it.

Match Security to the Funding

4. List the security proposed for each facility, together with its owner and existing lender claims. Identify business assets and equipment separately from property. Name every proposed guarantor.

As at October 2026, BOQ Specialist’s purchase product uses goodwill and equipment as security, including the purchased partnership share for a buy-in. It also requires sufficient life and income protection cover for goodwill-secured balances. Don’t translate this into a blanket exemption from every guarantee or insurance condition.

The same lender’s equipment finance page distinguishes lease ownership by the lender from a chattel mortgage where the borrower owns the equipment. Under the chattel mortgage, the equipment secures the loan. Match equipment repayments to its working life and account for any final payment.

For specialised imaging or treatment equipment, retain the supplier quote, model, condition and service history where applicable. Show installation requirements and ongoing maintenance costs. Use the equipment finance guide for the wider useful-life and supplier assessment.

For fit-out in leased rooms, examine the lease term, options, assignment conditions and any obligation to restore the premises. A costly fit-out can have little recovery value outside that location. Resolve whether the proposed lender accepts the works as security and whether a valuation or additional security is required for this transaction.

If premises are also purchased, distinguish the property’s value from practice goodwill. Record any specialised layout or permitted-use condition affecting the valuation. Confirm the actual security package in the lender’s transaction terms before presenting it to the client.

Prepare the Practice Loan File

5. Assemble a purpose-specific file and reconcile it against the proposed facilities. Include only records relevant to the applicant and transaction, with an owner for each outstanding item.

Evidence group	Records to include	What the assessor can trace
Practitioner	Qualifications, registration record, experience and personal financial position	Professional eligibility and ability to operate the acquired practice
Entities and ownership	Company or trust records, partnership agreement and ownership schedule	Borrower, owners, distributions and proposed guarantors
Financial position	Historical statements, current management accounts, bank activity and debt schedules	Earnings, current trading and existing repayment obligations
Transaction	Purchase or buy-in agreement, asset allocation and handover arrangements	What transfers and which earnings continue
Occupancy	Lease, options, assignment approval or premises purchase documents	Continued use of the rooms and occupancy costs
Equipment and fit-out	Supplier quotes, specifications, works budget and relevant approvals	Asset ownership, timing, installation costs and working life
Security and valuation	Existing charges, property evidence, required valuations and insurance	The proposed security package and outstanding conditions
Forecast	Monthly cash flow, supported adjustments and weaker-revenue case	Repayment capacity, transition costs and funding shortfalls

As at October 2026, BOQ Specialist prefers two to three years of practice financial statements and lists personal financials and the purchase contract. It states a goodwill valuation isn’t required. An independent valuation can still inform the buyer’s assessment of the price.

Record lender criteria beside the applicant facts. Separate the profession and purpose covered by a product from transaction-dependent conditions such as accepted goodwill, contribution, guarantors or equipment value. Keep any requested exception distinct from a published standard condition.

For pricing, compare written offers for the same facilities and security package. Record the fixed or variable rate basis, fees, repayment schedule and any final payment. BOQ Specialist describes fixed and variable options as at October 2026, but those descriptions don’t establish a rate for this file.

Before submission, verify that amounts reconcile across the contracts, funding schedule and forecasts. Check that ownership and security records name the same parties. If a handover agreement is missing or a forecast relies on an unfilled practitioner role, resolve that item and update the cash flow before relying on the earnings.

The file is ready when every facility has an evidenced purpose and repayment source, the transition funding is accounted for and outstanding lender conditions have named owners.