Healthcare Practice Expansion Funding
How Riverside Pediatrics used a multi-source financing strategy to open a second location — and stayed financially stable throughout.
Eight Years of Practice Growth
Riverside Pediatrics was founded in 2018 by Dr. Amara Osei in Sacramento, California. After eight years, the practice had grown to three full-time physicians, two nurse practitioners, and a staff of 12, generating approximately $2.8 million in annual collections. Patient volume was at capacity, and the practice was turning away new patients — a problem that represented both a revenue opportunity and a community health need.
The Multi-Part Financing Challenge
Opening a second pediatric practice requires capital for several distinct purposes: buildout costs for a new clinical space (typically $150–400 per square foot for medical offices), equipment (exam tables, diagnostic equipment, EHR systems), working capital to cover the gap between startup and when insurance reimbursements begin flowing, and operating reserves for the inevitable six-to-twelve month ramp-up period. For Riverside Pediatrics, the total capital need was estimated at $680,000. This was too large for a simple working capital loan and complex enough to require multiple financing components — a situation that overwhelmed the practice administrator when she initially began researching options.
The Multi-Source Funding Strategy
Working with an advisor through LendWorks Connect, Riverside Pediatrics developed a three-component financing structure. An SBA 7(a) loan for $450,000 covered the buildout, equipment, and initial working capital — the long-term investment portion with a 10-year term at a blended rate of prime plus 2.25%. A medical practice line of credit for $150,000 from a healthcare-specialized lender provided a revolving cushion for insurance reimbursement timing gaps. The practice contributed $80,000 from retained earnings to cover initial operating expenses. The SBA loan process took eight weeks from application to funding, which gave the practice time to negotiate the lease on the new space and begin the buildout permitting process simultaneously.
Eighteen Months After Opening
The second Riverside Pediatrics location opened in the spring of 2025. By month six, it was cash-flow positive. By month twelve, it was generating $95,000 in monthly net collections — nearly 40% of the original location's volume. The line of credit was used actively during months three through seven to bridge insurance payment timing gaps, then repaid as the practice's collections cycle stabilized. "The key was treating each component of the capital need separately," says practice administrator Patricia Reyes. "The long-term investment in the buildout and equipment belongs with long-term financing. The working capital needs belong with a revolving credit facility. Mixing them together into one loan would have been much messier."
Advice for Healthcare Practice Owners
Healthcare practice financing benefits from specialized lenders who understand medical practice cash flow cycles, reimbursement timing, and the difference between collections and billings. A generalist lender may decline a practice that looks revenue-light on paper because a large portion of billings haven't converted to collections yet. For practice owners considering expansion, the most important step is building a realistic expansion financial model before approaching lenders — including monthly cash flow projections for the new location across a 24-month horizon. Lenders who see a thoughtful financial model with clearly documented assumptions are far more confident in your plan than those who see a general statement of expansion intent.
