Plastic Surgery Practice Down Payment Requirements
One of the first questions surgeons ask when planning an acquisition is how much cash they will need. The plastic surgery practice down payment, often called the equity injection, is not a single fixed figure. It depends on the loan program, the lender, the strength of the practice, the buyer’s background and how the deal is structured.
This article explains what shapes down payment requirements, where the funds can come from and how to prepare. Program rules and lender policies change, and nothing here is legal, tax or financial advice. Every loan is subject to approval, and nothing here is a commitment to lend.
Why Lenders Require a Down Payment
A down payment shows that the buyer has a financial stake in the practice’s success. It also gives the lender a cushion if the practice performs below expectations after the sale. In plastic surgery, where revenue may be cash-pay, marketing-driven and closely tied to the selling surgeon, lenders pay particular attention to how much risk the buyer is sharing.
What Shapes a Plastic Surgery Practice Down Payment
Several factors can influence how much equity a lender expects:
- Loan program: SBA-backed loans and conventional loans have different equity expectations
- Practice cash flow: strong, consistent earnings may support more financing
- Surgeon dependence: if revenue may decline after the seller leaves, a lender may want more equity
- Revenue mix: how cosmetic, reconstructive and nonsurgical revenue are balanced
- Buyer experience: surgical experience, any prior ownership and familiarity with the practice
- Buyer’s financial strength: credit history, liquidity and other debts, including student loans
- What is included: goodwill, equipment, a surgical suite, real estate or working capital
SBA Loans and Equity Injection
SBA 7(a) loans can be used to help finance practice acquisitions. For a change of ownership, program rules generally require an equity injection from the buyer, and the amount and acceptable sources are set by current program rules and the lender’s review.
In some cases, a seller note may count toward part of the equity injection if it meets specific program conditions, such as standby requirements. These rules are detailed and change over time, so buyers should confirm how they apply with the lender. Eligibility and terms depend on the business, the buyer, the use of proceeds, program rules and lender review.
Conventional Loans and Down Payments
Conventional practice loans follow each lender’s own policies. Some lenders that specialize in healthcare may be willing to finance a large portion of a practice purchase for well-qualified buyers, while others may expect more equity, additional collateral or a shorter term. Structure varies widely, so comparing options is important.
Possible Sources of the Down Payment
Depending on the lender and program, equity may come from:
- Personal savings and investment accounts
- Cash from the sale of other assets
- Gifts from family members, if documented and permitted
- Retirement account rollover structures, which require specialized tax and legal advice
- A seller note, where the program and lender allow it
Lenders usually want to verify where funds came from, so keeping clear records helps. Borrowed funds used as equity are often restricted.
Seller Notes and Earnouts
A seller may agree to finance part of the price through a promissory note. Seller notes are typically subordinate to the senior loan, which means the lender is repaid first, and they may need to meet specific conditions to be treated as equity. Lenders or programs may also limit earnouts, so any payment tied to future performance should be discussed with the lender early.
Do Not Forget Liquidity After Closing
The down payment is not the only cash a buyer needs. After closing, a new owner may face:
- Payroll and rent before revenue stabilizes under new ownership
- Marketing to introduce the new surgeon
- Patient deposit obligations assumed from the seller
- Device payments, maintenance and supplies
- Closing costs, legal and accounting fees
Lenders often look at how much liquidity a buyer will have after closing. Using every available dollar for the down payment can leave a new owner vulnerable during the transition.
What Early-Career Surgeons Should Know
Surgeons who have recently finished training may have significant student debt and limited savings. That does not necessarily rule out ownership, but it may affect the structure. Options can include a longer seller transition, a seller note or a phased purchase. Our article asking whether a new plastic surgeon can buy a practice covers these paths in more detail.
Real Estate Can Change the Math
If the acquisition includes the seller’s building, the total amount financed rises and so may the plastic surgery practice down payment. Some buyers separate the two, purchasing the practice first and leasing the building with an option to buy later. Others finance both together to secure the location. A lender can explain how each approach would affect equity expectations, and counsel can help document any lease or purchase option.
How to Prepare
- Review your credit and resolve any errors
- Organize personal tax returns, bank statements and a personal financial statement
- Document the source of the funds you plan to use
- Estimate post-closing reserves alongside the down payment
- Use our SBA loan calculator to compare payment scenarios for planning purposes only
For the full acquisition process, see our guide on how to buy a plastic surgery practice.
Final Thoughts
A plastic surgery practice down payment depends on the loan program, the practice’s cash flow, surgeon dependence and the buyer’s own financial position. Understanding these factors early, documenting your funds and protecting post-closing liquidity can help you approach lenders with a realistic plan.
US Medical Funding helps plastic surgeons structure and finance practice acquisitions. Learn more about our plastic surgery practice acquisition financing and our full range of plastic surgery practice financing options.
