Business loans for medical practices: how lenders see GP and specialist clinics

Doctors are some of the easiest people in Australia to lend to. Medical practices are not always so simple. A GP with a decade of strong billings can walk into a bank and be treated as a premium customer, while the practice that GP works in, with its lease, staff, contractor arrangements and tax exposure, gets a much harder look. Understanding why is the first step to borrowing well.

Why do lenders treat the doctor and the practice separately?

When an individual doctor borrows, the lender sees a highly qualified professional with secure, transferable income. If one practice closes, they can work at another next week.

When a practice borrows, the lender is assessing a business. Its income depends on keeping doctors, many of whom are contractors who can leave. It carries a lease, receptionists and nurses on the payroll, and an expensive fit-out that’s worth little to anyone else. It may also carry tax exposure the owners haven’t fully quantified.

None of this makes practices bad borrowers. Medicare-backed income is regular and predictable, and established practices are well regarded. It simply means the practice needs to show its own strength rather than relying on the doctors’ reputations.

What do medical practices typically borrow for?

• Fit-outs. Consulting rooms, treatment and procedure rooms, sterilisation areas, accessible bathrooms, reception and waiting areas. A new GP fit-out commonly runs well into six figures. See our page on office fit-outs for how fit-outs are costed and funded.
• Clinical equipment. Examination couches, ECGs, spirometers, autoclaves, vaccine fridges, procedure lighting, and for specialists, diagnostic and imaging equipment. Equipment finance is the usual fit.
• Buying into or buying a practice. Partner buy-ins, acquisitions of retiring doctors’ practices, or a group consolidating several clinics. A business acquisition loan, often backed by property, is common.
• Premises. Buying medical suites or a freestanding clinic, sometimes through a self-managed super fund. See commercial property loans.
• Technology. Practice management software, telehealth set-ups and cybersecurity upgrades.
• Working capital and tax. Covering the lag on incentive payments, a payroll tax bill, or a period of lower billings while recruiting.

Need funds for a fit-out, buy-in or tax bill? Start your enquiry; a specialist reviews it, and asking won’t touch your credit file.

How is payroll tax affecting medical practice finances?

Over the past few years, state revenue offices and tribunal decisions have treated many payments to contractor GPs as wages for payroll tax purposes, where the practice collects patient fees and pays doctors a share. Practices that had never paid payroll tax on those arrangements suddenly faced potential liabilities, in some cases going back years.

States have since responded in different ways:

Jurisdiction	Position (summary)
Queensland	Amnesty to 30 November 2024, then an exemption for wages paid to GPs from 1 December 2024
Victoria	Relief for earlier periods, and from 1 July 2025 an exemption for GP wages linked to fully-funded (bulk-billed) GP services
ACT	From 1 July 2025, an exemption for designated medical practices on wages paid to GPs for bulk-billed or exempt services
South Australia	Amnesty for contractor GP services, and a bulk-billing exemption from 1 July 2024

Victoria’s exemption is proportional. The State Revenue Office calculates the exempt share using the ratio of fully-funded GP item payments to all GP item payments, and practices must keep records of the calculation. It doesn’t extend to dentists or allied health businesses. NSW and the remaining states take their own approaches, so confirm the position for your state with its revenue office and your accountant.

For lenders, the question is simple: is there an unquantified payroll tax liability sitting behind this practice? Disclose it, show how it’s being handled, and it usually becomes a manageable part of the application. A practice facing a large assessment can often fund it with a term loan or property-secured loan; our page on paying a tax bill compares the options.

The bulk billing switch and the cash gap

From 1 November 2025, bulk billing incentives expanded to all Medicare card holders, and the Bulk Billing Practice Incentive Program (BBPIP) began. According to the RACGP, participating practices must bulk bill all eligible GP non-referred attendances, be registered with MyMedicare and advertise their participation. In return, they receive an extra 12.5% on eligible MBS benefits, split equally between the practice and its GPs, paid quarterly on the previous quarter’s billings.

For a practice moving from mixed billing to full bulk billing, the maths can work well over a year. Timing is the trap. Gap fees disappear immediately, yet the incentive is only paid once the quarter has ended. Practices making the switch often carry a temporary shortfall for several months.

Here’s a simplified illustration. Suppose a practice’s eligible GP attendances generate $400k of MBS benefits a quarter. The BBPIP adds 12.5%, or $50k, of which the practice’s half is $25k. If the practice previously collected $60k a quarter in gap fees and gave those up immediately, it could be well behind in the first quarter until the incentive and higher bulk billing incentive items come through. A business line of credit or short-term facility, sized using our cash flow gap calculator, can smooth the transition.

What else do lenders weigh?

• Doctor retention. How many GPs, how long they’ve stayed, and whether a couple of high billers carry the revenue.
• Contractor agreements. Lenders may read service agreements to understand the income split and payroll tax position.
• Lease security. Remaining term and options. Equipment lenders often require a landlord waiver so they can retrieve financed gear if needed.
• Billing mix. Bulk billing, private billing and specialist referrals each carry different stability.
• Accreditation and registration. Practice accreditation and doctors’ AHPRA registration underpin the income.

Documents to prepare

1. The practice entity’s accounts and tax returns for the past two years
2. A year of business bank statements
3. A billing summary by doctor and billing type (MBS, private, other)
4. Copies of contractor or service agreements with GPs
5. Your premises lease, including options
6. Any payroll tax assessments, correspondence or payment arrangements
7. Fit-out or equipment quotes
8. For buy-ins: the partnership or shareholder agreement and the practice valuation

Example: a GP buying into a suburban practice

An invented scenario for illustration only. A GP in Brisbane has worked as a contractor in a five-doctor practice for four years. The founding principal plans to retire and offers a 50% stake for $450k. The practice is profitable, mostly bulk billing, and the Queensland exemption from December 2024 has removed the payroll tax concern that worried earlier buyers.

The GP’s bank offers to fund the buy-in using equity in the family home, but its health team needs several weeks to complete a practice valuation. The principal is happy to wait. Meanwhile, the practice uses equipment finance to replace two ageing autoclaves and a vaccine fridge without dipping into the working capital account. Once settlement is done, the new partners plan the fit-out refresh they’ve been putting off.

Taking the next step for your practice

Most practices that come to us aren’t in trouble; they’re mid-change. A partner retiring, a fit-out overdue, a payroll tax letter, a decision to bulk bill. Each has a finance solution. The aim is to pick the one that fits the practice’s real cash flow.

Enquiring takes about a minute, and it has no effect on your credit score. We don’t pass your details on to a long list of lenders. A real person who understands health businesses reads your enquiry and phones you to discuss it. Please share accurate figures on billings, doctor numbers and any tax exposure, so the first option we suggest is the right one.

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