$750K Expansion Capital for a Healthcare Services Provider

The practice had operated two profitable locations for six years, building a reputation in their market for specialized orthopedic rehabilitation. Patient demand exceeded capacity at both sites, and demographic analysis identified a third location in an adjacent market with strong referral potential from two local hospital systems already sending patients to their existing clinics.

The buildout economics were well-defined: approximately $310K for leasehold improvements and specialized rehab equipment, plus $440K in operating runway to cover staffing, rent, and overhead during the ramp period. The challenge was timing. Buildout would take 75 days. Insurance credentialing at the new location required 30-45 days after opening. Even after seeing patients, reimbursement cycles run 60-90 days from date of service to payment receipt.

In total, the owners faced a 5-7 month gap between initial capital outlay and meaningful revenue from the new location — a common growth working capital challenge in healthcare. Their bank offered an SBA loan but the timeline was 90+ days to close — too late for the lease they'd secured. A private equity group offered expansion capital but required 30% ownership. The owners had built the practice from scratch and weren't willing to dilute.

The third location opened on schedule, 78 days after initial capital deployment. Insurance credentialing completed within 5 weeks of opening, and the hospital referral relationships generated patient volume faster than the conservative model had projected. The location saw 45 patients per week by month 3 — ahead of the month-5 target in the original business plan.

The location reached cash flow breakeven at month 5 and was generating positive net contribution by month 8. The ramping repayment structure meant debt service obligations aligned naturally with the revenue curve — the practice never experienced a month where facility payments strained operations at any of the three locations.

The facility was fully repaid within the original 12-month term. The practice now operates three locations generating combined revenue exceeding $9M annually. The owners retained 100% ownership — the equity stake the PE group had requested would be worth over $1M today based on the practice's current EBITDA multiple. The bank has since extended a conventional line of credit based on the expanded three-location financials.