How to fund your new private practice

April 8, 2024   |   Physical Therapists

When it comes to physical therapy practices, Brian Gallagher, PT, has enough experience owning, scaling, selling and buying them back to fill several business books. Instead, he’s using his deep knowledge to coach hundreds of new private practice owners on launching successful physical therapy businesses.

Gallagher and his team at MEG have helped hundreds of physical therapy startups become profitable and viable in their first three years of business. One of the early lessons he shares is how to shift your mind about funding your practice and then how to actually fund a new physical therapy practice.  

What you don’t want to do is fund your business the way you financially run your household. “At home, the rule is don’t spend more than you make, but in a business, you need money to make money,” says Gallagher.

Consider two examples: 

  1. One new practice gets a loan to rent property in a high-traffic area and equip the practice with the latest equipment and modern decor. Staff are on hand to promote the practice and ensure it runs smoothly. 
  2. Another competing practice operates on a shoestring budget, conservatively spending only what comes in. The owner runs every aspect of the business alone.

In most cases, the second practice will struggle to compete. “Many people go into business saying I’m not going spend what I don’t have and then bootstrap in the whole business. That’s a hobby, not a business,” says Gallagher. 

Instead, Gallagher recommends looking at your predicted cash flow. Your income needs to outpace your expenses – including any amount you would owe on a business loan. “The success of a business is growth outpacing yesterday. I have no issue with borrowing money as long as the monthly payment is covered with a decent spread over the income.”

Following are steps Gallagher recommends to secure the funding you need to build the practice of your dreams.

Step 1: What type of owner are you?

Before diving into the funding logistics, Gallagher recommends determining what type of owner you are. Gallagher identifies four types of owners: 

The innocent owner: This is someone who falls into an opportunity to launch a business, such as when a boss retires. This owner is typically looking for step-by-step instructions on how to succeed.

The know-it-all owner: This person has many years of experience and a deep background. However, this owner has difficulty admitting when he or she is not the expert. This owner needs to learn how to delegate and when to seek help.

The go-getter owner: This owner is ready to learn whatever it takes to build a profitable, successful business. 

The caregiver owner: This owner cares deeply about providing the best possible care to patients without paying attention to building a viable business model. This owner must acknowledge that setting up a financially sound business supporting the owner is ultimately good for patients.

Each type has distinct traits and challenges, which influence the approach to funding and business management. Self-reflection is critical in aligning your funding strategy with your business goals and personal strengths.


Step 2: What type of physical therapy business do you want to build?

Next, Gallagher recommends determining what type of physical therapy business you want to start to know how much funding you need. 

Mobile clinic: 

This type of clinic doesn’t require much funding, so you can typically self-fund it. 

Brick and mortar clinic: 

The cost of starting a new brick-and-mortar clinic is between $35,000 and $150,000, says Gallagher. This depends on your location and build-out plan. Outside of those two variables, the rest of setting up a clinic is similar for most new PT practices. Tables, chairs, equipment, computers and insurance are priced similarly wherever you’re located. 

Funding strategies for a new physical therapy practice

Securing thousands of dollars to start a new physical therapy practice can seem overwhelming until you realize that start-up costs are less than a home mortgage, even in a more expensive area. Gallagher recommends getting an SBA loan, private funding or home equity line of credit (HELOC). The right one for you depends on your financial tolerance.


Step 3: Prepare a financial business plan

To secure a bank loan for a new physical therapy practice, you must create a business plan outlining the financial steps to build a viable business. A well-crafted business plan demonstrates the viability of your business idea to potential lenders and serves as a roadmap for your success. 

Include information such as: 

  • Briefly description of your physical therapy practice
  • Funding requirements to specify the amount of loan you are seeking and how you plan to use it 
  • Business model of how you will operate
  • Introduce the key members of your team
  • Startup costs
  • Expected cash flow analysis
  • Legal documents, such as business registration, licenses and lease agreements
  • Financial projections of profit and liabilities (a P&L statement)

Once you have a solid business plan and funding to get started, Gallagher recommends bravely moving forward. “Funding your practice is probably the best investment you’ll ever make because what you’re banking on is you.” 


Click here to learn more about CM&F’s physical therapist malpractice insurance, also known as physical therapist professional liability insurance.

Get the Coverage You Need In Just 5 Minutes

  • A++ Rated & 4.8/5 Satisfaction Rating
  • Competitive Rates, Comprehensive Coverage
  • Excellent, Live Customer Service
  • Quick, Easy, Quote – No Hidden Fees
  • Coverage & Documents Available Immediately

We have protected healthcare professionals for over 100 years. Are you protected?

Sign-Up For Our Newsletter

Related Articles