Medical and Dental Practice Working Capital: Equipment, Buildout, and Insurance Receivables

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By Jon Lynch — Commercial Finance Broker, Jon Lynch Financial Group · Veteran-owned · Updated July 20, 2026

Medical and dental practices typically run $50,000 to $250,000 a month in deposits, and the recurring cash question isn't profitability — it's the lag between treatment and payment. A claim submitted to an insurer is commonly adjudicated and paid in 30 to 45 days, sometimes longer with a resubmission or an appeal, while the practice has already paid the hygienist, the associate, and the supplier who delivered the materials for that same visit.

Layer in a large one-time cost — a new imaging unit, a buildout for a second operatory or a second location, an associate buy-in — and the reimbursement lag turns from background noise into a real funding decision. A blown compressor or a lease renewal with a build-out clause doesn't wait for the insurance cycle to catch up.

Here's the part worth saying plainly: practices are among the strongest credit profiles in commercial finance, and a strong practice usually qualifies for equipment financing, a term loan, or a line of credit — all genuinely cheaper than a revenue-based advance. An advance still has a place for speed or a thinner file. It shouldn't be the first offer a well-run practice accepts, and it shouldn't be the only one it's shown.

42%

of small business financing applicants received the full amount they requested
Federal Reserve, 2026 Small Business Credit Survey

The other 58% didn't get the full amount requested — one more reason a practice with strong deposits and clean financials should shop more than one offer before signing.

How much working capital does a medical or dental practice need?

Enough to cover payroll, supplies, and lease costs through a full reimbursement cycle — commonly 30 to 45 days — without treatment volume ever pausing. Practices in this range typically run $50,000 to $250,000 a month in deposits.

Core placements run $50,000 or more a month in deposits, which is exactly where most established practices sit. Most deals land between $20,000 and $200,000 a month; there's a dedicated program below that.

How long does insurance reimbursement actually take?

Commonly 30 to 45 days from a clean claim submission to payment — longer if the claim is denied, under-coded, or needs a resubmission. The table below shows the difference between a clean claim and one that gets kicked back.

Illustrative reimbursement timeline for a submitted claim — not a quote or a guarantee of payment.
StepClean claimDenied or resubmitted claim
Visit performed, claim submittedDay 0Day 0
Payer adjudicationDay 15-30Day 15-30 (denied or flagged)
Payment issuedDay 30-45
Resubmission or appeal filedDay 30-40
Payment issued after resubmissionDay 60-90+

The practice has already paid its staff and its supplier for that visit well before either column resolves. A denied or under-coded claim doesn't just delay payment — it can double the wait.

Should a practice finance equipment or pay cash?

Financing usually preserves working capital for payroll and supplies while the equipment pays for itself out of the revenue it generates — paying cash is only the better move when the practice has a genuine reserve well beyond what the purchase requires. Equipment financing is a credit product, secured by the equipment itself, and is typically priced lower than a revenue-based advance because the collateral reduces the funder's risk.

What's the right way to fund a buildout or a second location?

Usually a term loan or a construction- or buildout-specific credit facility sized to the project, not a revenue-based advance sized to overall deposits. A buildout is a one-time capital project with a defined cost and a defined completion date — financing it against the practice's daily deposits stretches the cost of the project across the whole business's cash flow longer than necessary. A practice with clean financials and a signed lease is usually a strong candidate for conventional or SBA-backed financing here.

How does an associate buy-in typically get funded?

Often through a combination of the incoming associate's own financing and a note or credit facility on the practice side, structured around a valuation and a payment schedule agreed in writing before any cash moves. Buy-ins are financing decisions and legal ones at the same time — undocumented terms create problems well before any funder is involved.

Why do practices usually qualify for cheaper capital than an advance?

Because consistent deposits, real collateral in the equipment and the practice itself, and a credentialed, licensed operator add up to one of the stronger credit profiles a funder sees. That combination typically opens the door to equipment financing, a term loan, or a line of credit — all genuinely less expensive than a revenue-based advance, which is priced for speed and thinner files, not for practices with this kind of profile.

Which structure fits which practice need.
StructureFinanced againstFits best when
Equipment financingThe equipment itselfPurchasing or replacing imaging, chairs, or other major equipment
Term loan or SBA-backed financingThe practice's overall financials and collateralFunding a buildout, a second location, or a major one-time project
Line of creditA borrowing base or the practice's overall financialsOngoing working capital cushion for payroll and supplies through reimbursement cycles
Revenue-based advanceOverall depositsYou need funds quickly, or the practice is newer and doesn't yet qualify for the credit products above

The honest order of operations: check the credit products first. A strong practice that accepts an advance without shopping the alternatives is very likely paying more than it needs to.

When should a practice not take the first offer — or any offer?

A few honest lines before signing anything:

Strong practice. Slow reimbursement. Tell us what you're funding — equipment, a buildout, a buy-in, or the cycle itself — and we'll show you the cheapest structure that actually fits, not just the fastest one.

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Under $20K a month in deposits? Most of what's above is priced for businesses doing $50K or more a month in deposits — that's the core of what we place. Funding doesn't stop below that line, though; the structure just changes. There's a program built for exactly your revenue level, and the same rule applies either way.

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Frequently asked questions

How much working capital does a medical or dental practice need?
Enough to cover payroll, supplies, and lease costs through a full insurance reimbursement cycle — commonly 30 to 45 days. Practices in this range typically run $50,000 to $250,000 a month in deposits.
How long does insurance reimbursement actually take?
Commonly 30 to 45 days for a clean claim, and 60 to 90 days or more if the claim is denied, under-coded, or needs resubmission.
Should a practice finance equipment or pay cash for it?
Financing usually preserves working capital for payroll and supplies while the equipment pays for itself out of the revenue it generates. Paying cash only makes sense with a genuine reserve well beyond the purchase cost.
Why do practices often qualify for cheaper capital than a revenue-based advance?
Consistent deposits, real equipment collateral, and a credentialed operator add up to a strong credit profile — one that typically opens the door to equipment financing, a term loan, or a line of credit at a lower cost than an advance.
Is a revenue-based advance ever the right choice for a practice?
Yes, usually for speed or for a newer practice that doesn't yet qualify for the credit products above. It shouldn't be the first offer a well-established practice accepts without comparing alternatives.
Is there a program for practices under $20,000 a month in deposits?
Yes. Core placements run $50,000 or more a month, but there's a dedicated program below $20,000 — the structure changes, funding doesn't stop.

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