How Much Does Medical Practice Funding Cost? Factor Rates, APR & Fees Explained

Ask ten practice owners what their funding costs and you will get ten different answers—most of them wrong. Not because they were misled, but because the funding industry uses at least three different ways to express price: interest rates, annual percentage rates, and factor rates. A “1.25” from one provider and a “14% APR” from another are not directly comparable, yet practice owners are asked to choose between them every day.

This guide fixes that. It explains exactly how each funding product is priced, what the real dollar cost looks like on a typical advance, and which fees tend to hide inside an offer. By the end, you will be able to take any two funding offers—no matter how they are quoted—and compare them on a single, honest number: total dollars repaid relative to what the capital does for your practice.

This is a guide to understanding cost, not a financing offer. The figures below are typical 2026 market ranges and will vary by provider, practice profile, and the amount requested.

The Short Answer: What Funding Costs in 2026

For practice owners who want the bottom line first, here is the typical cost range for each common funding type in 2026. The rest of the article explains how to read these numbers and what determines where your practice lands within each range.

The widest spread is not between products—it is within them. Two practices can apply for the same revenue-based advance and receive factor rates of 1.15 and 1.42 based on their revenue stability, time in business, and existing debt. Understanding what moves that number is the difference between overpaying and getting your best available price.

Factor Rate vs. APR: The Most Important Distinction

This single concept causes more confusion—and more overpaying—than anything else in practice financing. Get this right and every offer becomes legible.

What a factor rate is

A factor rate is a fixed multiplier applied to the amount you receive. It is expressed as a decimal, typically between 1.10 and 1.49. To find your total repayment, multiply the funded amount by the factor rate. Receive $100,000 at a 1.25 factor rate and you repay $125,000—a total cost of $25,000. That number does not change based on how long repayment takes. Factor rates are used for revenue-based capital and merchant cash advances.

What APR is

APR (annual percentage rate) expresses cost as an annualized percentage that folds in interest and most fees. It is the standard for loans, SBA products, and lines of credit. The critical feature of an interest-based product is that the cost accrues over time—so repaying early generally reduces what you pay in total. APR also makes products of different lengths comparable, which is exactly why it is the regulatory standard for consumer lending.

How to convert a factor rate to an annualized cost

A rough but useful method: take the total cost (funded amount × factor rate, minus the funded amount), divide by the funded amount to get the cost percentage, then annualize it by dividing by the repayment term in years. On a $100,000 advance at 1.25 repaid over 9 months, the cost is $25,000 (25%), and annualized that is roughly 33%. This is not a flaw in the product—it reflects the speed, accessibility, and lack of collateral—but you should know the number before you compare it to a 13% APR loan.

Cost by Funding Type: A Side-by-Side Comparison

Here is how the major funding products compare on cost, pricing method, and the trade-offs that justify their price. For a deeper look at the products themselves, see our guide to funding options for medical practices.

Notice the inverse relationship between cost and speed. The lowest-cost products (SBA and bank loans) take the longest to fund and demand the most documentation and the strongest credit. The fastest product (revenue-based capital) carries a higher headline cost in exchange for funding in days with minimal documentation and no collateral. There is no “best” cost in isolation—only the best fit for what your practice needs and qualifies for.

Real Dollar Examples: What You Actually Repay

Percentages and factor rates are abstract. Here is what a $100,000 capital need looks like in real dollars across three common scenarios.

Scenario 1: Revenue-based working capital

A dental practice receives $100,000 at a 1.22 factor rate, repaid over an estimated 10 months through a small fixed daily or weekly remittance. Total repayment is $122,000. Total cost of capital is $22,000. The practice has the funds in its account within 48 hours and uses them to add a second operatory that begins generating revenue the following month.

Scenario 2: SBA loan

A medical practice qualifies for a $100,000 SBA loan at 12% APR over five years. Total interest paid across the full term is roughly $33,000, plus an SBA guarantee fee and closing costs. The total cost is higher in absolute dollars because the term is far longer—but the annualized rate is much lower, and the monthly payment is small and predictable. The trade-off is a 60-to-90-day funding timeline and extensive documentation.

Scenario 3: Business line of credit

A specialty clinic opens a $100,000 line of credit at 16% APR but draws only $40,000 to cover a seasonal staffing gap, repaying it over four months. Interest is charged only on the $40,000 drawn, so the cost is a few thousand dollars—far less than a full advance—because the practice borrowed only what it needed, when it needed it.

The Fees Nobody Talks About

The quoted rate is rarely the whole story. These are the fees that can quietly raise your true cost, and what to ask about each.

The single most powerful question you can ask any funder is: “What is the total dollar amount I will repay, including every fee?” A reputable provider will give you that number in writing. If an offer is quoted only as a rate and a provider is reluctant to state the all-in dollar total, treat that as a warning sign.

What Actually Drives Your Price

Within any product, your specific cost is set by how a funder reads your risk. These are the factors that move your rate up or down. Many overlap with what determines approval in the first place—see what lenders look for for the full picture.

Revenue consistency and volume

Steady, growing monthly deposits signal lower risk and earn better pricing. Erratic or declining revenue pushes your factor rate or APR higher because the funder is pricing in uncertainty.

Time in business

A longer operating history generally lowers cost. A practice with three years of records will usually price better than one with eight months, even at identical revenue, because the track record reduces perceived risk.

Existing debt load

If a large share of your revenue already services other obligations, funders price the added risk into your rate—or reduce the amount they will offer. Practices carrying multiple stacked advances see this most acutely; consolidating them, as covered in our consolidation guide, can both lower payments and improve future pricing.

Personal credit (for some products)

For interest-based products—SBA loans, bank loans, and lines of credit—a higher credit score directly lowers your APR. For revenue-based capital, credit carries minimal weight, which is why it remains accessible to practices whose owners have a lower score.

Bank account health

Average daily balances, overdraft frequency, and the ratio of deposits to withdrawals all factor into pricing. A clean account that maintains a healthy buffer signals strong cash management and earns better terms.

When Cheaper Costs More (and Vice Versa)

The lowest rate is not automatically the lowest-cost decision. Two situations illustrate why.

When the cheaper rate costs more

A practice is offered a 12% SBA loan but the funding will take 75 days. The capital was needed to secure a discounted equipment package and an additional provider before the busy season. By the time the loan funds, the equipment discount has expired and the season has started without the new hire. The “cheaper” money cost the practice the entire opportunity it was meant to capture. A faster, higher-rate advance that funded in 48 hours would have produced a far better return despite its higher headline cost.

When the more expensive rate is the right call

The same logic runs the other way. If $80,000 of working capital lets a practice add a service line that generates $15,000 in new monthly revenue, a $20,000 cost of capital is repaid by the new revenue in under two months—and everything after that is profit. The return on the capital, not the rate in isolation, is what determines whether the financing was a good decision. Our guide on how working capital fuels practice growth works through this ROI math in detail.

7 Ways to Lower Your Cost of Capital

Whatever product you choose, these steps can measurably reduce what you pay.

1. Strengthen your recent revenue. Funders weight the most recent three months most heavily. Consistent or growing deposits over that window directly improve your pricing.
2. Clean up your bank account. Eliminate overdrafts and maintain a healthy average daily balance for at least 90 days before applying.
3. Reduce or consolidate existing debt. Lowering your debt-to-revenue ratio—especially by consolidating stacked advances—improves both approval odds and price.
4. Request the right amount. Asking for more than your revenue comfortably supports raises your risk profile and your rate. Match the request to genuine capacity.
5. Separate business and personal finances. A clean, dedicated business account makes underwriting easier and reduces the uncertainty premium funders add.
6. Improve personal credit (for interest-based products). If you are pursuing an SBA loan, line of credit, or bank loan, even a modest credit score increase can lower your APR.
7. Get multiple offers and compare the all-in total. Competition works in your favor. Ask each provider for the total dollar cost, then choose on that number—not the headline rate.

How to Compare Two Offers Correctly

When you have offers in hand, run every one through the same four-step process so you are comparing like with like.

Done consistently, this process turns a confusing pile of incomparable quotes into a clear ranking. The cheapest annualized cost is not always the winner—but you will at least know precisely what you are trading when you choose speed, accessibility, or simplicity over the lowest rate.

Frequently Asked Questions