SBA lenders approved 297 7(a) loans to medical, dental and hospital equipment and supplies merchant wholesalers (NAICS 423450) from October 2023 to June 2026, $163,143,000 from 92 lenders. The median loan was $200,000, above the national $150,300, at a median rate of 10.5% against 10.25% nationally, and 40.7% were SBA Express loans. Acquisitions were 9.8% of loans, close to the national 10.4%, with a median of $574,000. Lenders focus on the distribution agreements behind the product line, customer concentration and payment speed, regulatory standing, and expiry-dated inventory.
| Measure | Medical, Dental, and Hospital Equipment and Supplies Merchant Wholesalers | All industries |
|---|---|---|
| SBA 7(a) loans approved | 297 | 162,355 |
| Median loan | $200,000 | $150,300 |
| Middle half of loans | $100,000 – $500,000 | $50,000 – $500,000 |
| Loans of $1 million or more | 14.5% | 12.9% |
| Median rate at approval | 10.5% | 10.25% |
| Middle half of rates | 9.5% – 11.5% | 9.3% – 11.25% |
| Acquisitions (change of ownership) | 29 (9.8%) | 16,849 (10.4%) |
| Median acquisition loan | $574,000 | $693,000 |
| Lenders that made these loans | 92 | 1,648 |
| SBA 504 loans (real estate, equipment) | 11 | 16,714 |
Approvals FY2024 – FY2026 to date (1 Oct 2023 – 30 Jun 2026), cancelled loans excluded. Source: SBA 7(a) and 504 FOIA loan records, as of June 30, 2026.
- SBA 7(a) loans approved
- 297 (Oct 2023 – Jun 2026), from 92 lenders
- Median loan
- $200,000 (national $150,300)
- Median rate at approval
- 10.5% (national 10.25%)
- SBA Express share
- 40.7% of loans
- Acquisitions
- 29 loans (9.8%), median $574,000 at 9.75%
- SBA 504 loans
- 11, median $1,233,000
The line card is the business
A medical or dental distributor sells products it did not make, under agreements that let it do so. The list of manufacturers a distributor carries, its line card, is most of what it is worth. An underwriter's first question is how secure those agreements are, because a distributor that loses its largest line can lose a large share of its revenue in a quarter.
- Term and termination. Many distribution agreements run a year or two and renew, and many let the manufacturer end them on notice. Lenders read the termination clause of every major line.
- Exclusivity and territory. An exclusive territory is worth more than a non-exclusive one, and a lender wants to know which the company has.
- Change of control. Agreements often let the manufacturer terminate if the distributor is sold. In an acquisition that is the single largest risk; see change-of-control consents.
- Manufacturer concentration. A distributor whose revenue rests on one or two manufacturers is underwritten more like a sales agency than a wholesaler. Compare wholesale trade agents and brokers.
A table of revenue and gross margin by manufacturer, with each agreement's renewal date, answers the lender's first question before it is asked.
What SBA lenders approved
| Figure | Medical and dental wholesalers | National | Reading |
|---|---|---|---|
| Median loan | $200,000 | $150,300 | Somewhat larger; middle half $100,000 to $500,000 |
| Median rate | 10.5% | 10.25% | A quarter point above; middle half 9.5% to 11.5% |
| Acquisition share | 9.8% | 10.4% | Close to the national mix |
| Acquisition median | $574,000 at 9.75% | — | Modest for a purchase; the value sits in agreements, not assets |
| SBA Express share | 40.7% | — | Smaller loans decided on the lender's own process |
| Loans of $1 million or more | 43 (14.5%) | — | The 90th percentile was $1,473,020 |
| SBA 504 | 11 loans, median $1,233,000 | — | Few, but large: owner-occupied buildings such as a warehouse, or long-life equipment |
The median term was 120 months and only 13.5% of loans were fixed-rate. Start-ups were 5.7% of loans and franchises 2.4%, and the median company supported 4 jobs: this is a trade of small, owner-led distributors. The owner's relationships with buyers at hospitals and practices are much of the goodwill, and lenders underwrite the owner as much as the company.
Customers pay well, and slowly
Most healthcare customers pay in the end, but many pay late, and the kind of customer decides how a lender treats what it owes.
| Customer | How it buys and pays | What the lender watches |
|---|---|---|
| Hospitals and health systems | Through purchasing contracts and approved-vendor lists; long payment cycles | Age of balances, contract renewal, whether one system is too large a share |
| Physician and dental practices | Repeat orders on account; faster but smaller | Breadth of the customer base; practice consolidation shrinking it |
| Ambulatory surgery centers | Procedure-driven orders, often high value | Concentration and payment history |
| Nursing and long-term care | Recurring supply contracts | Operators' own financial strength; some pay very late |
| Government facilities | Contract awards with formal invoicing | Contract term and recompete dates; slow but reliable pay |
Where receivables back a line of credit, lenders typically advance 80% to 90% of eligible receivables, treat invoices more than 90 days past invoice as ineligible, and commonly cap any single customer at 20% to 25% of eligible receivables. A distributor with one hospital system as its largest customer, paying past 90 days, can find that much of its best receivable is not borrowable. See eligible vs ineligible receivables and lines of credit for wholesale distributors.
Where the need is working capital that rises with sales, a revolving line usually matches it better than a ten-year term loan, including the SBA Express term loans that make up 40.7% of this trade's approvals. SBA's CAPLines are one option; see SBA CAPLines and CAPLines vs a conventional line.
Regulation and the inventory
Distributing medical devices and supplies is regulated work. Depending on the products, a distributor may need state wholesale licenses, federal registration, and for prescription devices, controls on who it may sell to. A lender does not need to understand every rule, but it needs to see that licenses are current in every state the company ships to and that there are no open enforcement matters.
- Expiry dates. Sterile supplies, reagents and many disposables carry expiry dates. Stock near expiry is close to worthless as collateral, and lenders ask for inventory aged against expiry, not just against purchase date.
- Recalls and liability. A recalled product can leave a distributor holding stock it cannot sell and customers it must notify. Product liability insurance and the manufacturer's indemnity in the distribution agreement both matter.
- Capital equipment. Distributors that sell imaging, dental chairs or surgical equipment carry high-value units and often provide installation and service. Service contracts are recurring revenue the lender values; demo equipment and trade-ins are harder to value.
Where inventory backs a line, lenders typically advance up to 85% of net orderly liquidation value, or roughly half of cost, and exclude short-dated or recalled stock. See inventory advance rates.
Buying a distributor
29 loans financed a change of ownership, at a median of $574,000 and 9.75%. The price of a distributor is mostly goodwill: customer relationships and a line card, neither of which a buyer owns until the manufacturers and the customers accept the new owner. Lenders want manufacturer consents in hand, or at least written confirmation from the largest lines, before closing.
SBA's rules shape the rest. In a complete change of ownership the seller may consult for up to 12 months (up to 24 months under SOP 50 10 8.1 from 1 October 2026) but may not stay as an owner, officer or employee, so the buying relationships the seller holds have to move inside that window. The buyer brings an equity injection of at least 10% of total project costs; a seller note counts toward half of it only on full standby for the life of the loan. An independent business valuation is required where the amount financed, less appraised real estate and equipment, exceeds $250,000. From 1 October 2026, every change of ownership needs financial due diligence and debt service coverage of 1.25x on historical results. See customer concentration in an acquisition and how SBA 7(a) finances an acquisition.
Preparing a distributor's file
SBA's list: business tax returns for 2–3 years, a P&L and balance sheet with a year-to-date P&L through last month-end, a debt schedule with copies of notes being refinanced, and personal tax returns and a personal financial statement for each owner of 20% or more. A line of credit adds an AR aging by customer with days outstanding, an AP aging and an inventory report. A purchase adds the target's latest full year of figures and the letter of intent.
For this trade, add the line card with revenue and margin by manufacturer, copies of the major distribution agreements, the customer list with balances owed, state licenses and registrations, inventory aged against expiry, and any group purchasing or government contracts. Transparent builds that into a lender package in a day once the documents are in, and puts it in front of the 278 lenders in its book that write SBA 7(a) and 504, and of the 235 that write asset-based lending and lines. See our lenders.
Common questions
- How much do SBA lenders lend to medical supply distributors?
- The median 7(a) loan in NAICS 423450 from October 2023 to June 2026 was $200,000, with the middle half between $100,000 and $500,000. Purchases of distributors had a median of $574,000.
- Can hospital receivables back a line of credit?
- Yes, and they are good credit, but slow. Invoices more than 90 days past invoice are typically ineligible, and a single large customer is commonly capped at 20% to 25% of eligible receivables.
- What happens to my distribution agreements if I sell the company?
- Many let the manufacturer terminate on a change of control. A buyer's lender will want the major manufacturers' consent before closing, because the line card is most of what is being bought.
- Is short-dated inventory counted as collateral?
- Usually not. Lenders exclude or heavily discount stock near its expiry date, and recalled products, so an inventory report aged against expiry is the useful one.
- Is a term loan or a line of credit better for a distributor?
- For growing sales, usually a line, because the need rises and falls with receivables and inventory. A term loan fits a one-time need: a purchase, a warehouse, or refinancing.