Healthcare projects are capital-heavy and slow to stabilise. A new hospital needs a building, a clinical fit-out and expensive equipment before the first patient arrives. An established nursing home's money is often stuck with insurers, third-party administrators (TPAs) and government schemes long after treatment.

That is why hospitals, clinics and diagnostic centres rarely rely on one loan. The usual answer is a combination of facilities, each matched to a different need.

What are the main ways to fund a hospital or clinic?

Facility What it funds Typical security Repaid from
Term loan (construction / purchase) Land and building, construction, premises purchase, fit-out and expansion Mortgage of the property being built or bought, plus collateral where needed Operating cash flows over several years, often after a moratorium
Equipment finance Imaging, theatre, ICU, lab, dialysis, dental or ophthalmic equipment Hypothecation of the equipment Revenue the equipment earns, over a tenor linked to its useful life
Working capital (cash credit / overdraft) Medicines and consumables, salaries, and the gap while insurance and scheme claims are paid Receivables and stock, plus collateral Collections, renewed every year
Loan against property (LAP) Any business need, including expansion or refinancing Mortgage of an existing residential or commercial property Business or professional income

Public sector banks package several of these together in healthcare schemes. SBI's Healthcare Business Loan, for example, covers hospitals, nursing homes, clinics, diagnostic centres, pathology labs and speciality centres such as dialysis, dental and IVF. It ranges from above ₹10 lakh to ₹50 crore, and term loans run up to 10 years including moratorium. Bank of Maharashtra's Mahabank Loan Scheme for Doctors offers term loans and cash credit from above ₹10 lakh to ₹25 crore, repayable over up to 12 years. Indian Bank's IND Health Care goes up to ₹50 crore and sets separate tenors for equipment and for building loans. Each scheme has its own eligibility, margin and collateral rules, and the bank decides every case on merit.

Equipment funding has its own choices, such as leasing, vendor finance and refurbished machines. We cover those in medical equipment finance: leasing vs loan.

Construction and term loans for a new hospital

A greenfield hospital is assessed like a project. Lenders want a detailed project report covering bed count and speciality mix, construction cost, equipment list, staffing plan and month-by-month ramp-up. They also look for:

  • Promoter contribution. Banks fund a share of the cost and expect the promoters to bring in the rest. The healthcare schemes above set margins of roughly 20–30% depending on the facility.
  • A realistic moratorium. Hospitals take time to fill beds. SBI allows a moratorium of up to 18 months on term loans (6 months for equipment). Indian Bank allows up to 18 months for building loans.
  • Clear title and approvals. The land or premises must have clear title and sanctioned plans that permit hospital use. When the fire department audited 484 hospitals in Nagpur in August 2026, it found 94 running without approval for hospital use and 121 without a fire NOC. Lenders take this kind of gap seriously.

For larger or more complex projects, the choice between a bank, an NBFC and a financial institution matters as much as the scheme. See bank vs NBFC for project funding.

What do lenders assess in a hospital loan?

The promoter doctors

Healthcare schemes are built around qualified promoters. SBI expects promoters of hospitals and nursing homes to hold qualifications such as MBBS, BDS, BHMS or BAMS. Bank of Maharashtra asks for a registered medical practitioner with at least two years' experience after qualifying. Indian Bank's scheme also allows non-medical entrepreneurs who have professional tie-ups. The lender will look at your specialisation, years in practice, local reputation and whether key consultants are committed to the new facility.

Location and catchment

Lenders ask who the facility will serve: the catchment population, competing hospitals nearby, road access and whether your planned specialities match local demand.

Occupancy, ARPOB and track record (existing hospitals)

For running hospitals, the numbers speak first. Lenders typically review:

  • Bed occupancy, meaning the share of available beds actually used over the year.
  • ARPOB (average revenue per occupied bed), a common measure of how much each occupied bed earns.
  • Revenue mix between in-patient, out-patient, diagnostics and pharmacy.
  • Audited financials, income tax returns and GST filings. SBI asks for ITRs where a unit has run for more than a year.

Payer mix: PM-JAY, MJPJAY, insurance and TPAs

A hospital's real cash flow depends on who pays the bill. Cash patients pay at discharge. Insured patients pay through insurers and TPAs after claim processing. Patients covered by government schemes, such as Ayushman Bharat PM-JAY and Maharashtra's Mahatma Jyotirao Phule Jan Arogya Yojana (MJPJAY), are paid for by the scheme after the hospital submits and gets approval for each claim.

Empanelment brings volume, and it can bring better rates. Under the AB PM-JAY Quality Certification programme run with NABH, empanelled hospitals with Bronze, Silver or Gold certification get 5%, 10% or 15% higher package rates. Silver needs NABH entry-level certification and Gold needs full NABH (or NQAS) accreditation.

Scheme receivables can also be slow. In October 2025, the Free Press Journal reported that private hospitals under MJPJAY were owed more than ₹182 crore, with some bills pending since the previous year. It also reported that delays followed the scheme's shift from an insurance model to an "assurance" model run directly by the state. Lenders therefore look at:

  • the share of revenue from schemes and insurance compared with cash patients
  • receivable ageing, meaning how many days claims typically take to be paid
  • claim rejection and deduction rates

A high share of slow receivables usually means you need a larger working capital limit, and a lender may set tighter drawing-power margins on older receivables.

Accreditation and quality

NABH accreditation is voluntary. Lenders still read it as a sign of established systems, and it affects scheme package rates as described above.

Which approvals do lenders check?

Healthcare schemes require the facility to hold the approvals and registrations that apply to it, and banks check them before they disburse. In Maharashtra, these usually include the following.

  • Nursing home registration. Under the Maharashtra (Bombay) Nursing Homes Registration Act, 1949, no person may carry on a nursing home without registration. The Act defines a nursing home broadly as premises that receive and treat sick or injured people, including maternity homes. A certificate is valid until 31 March of the third year after it is issued or renewed.
  • Biomedical waste authorisation. Under the Bio-Medical Waste Management Rules, 2016, every occupier handling biomedical waste must apply to the State Pollution Control Board for authorisation, whatever the quantity. In Maharashtra, that is the Maharashtra Pollution Control Board.
  • Fire NOC. Fire safety is enforced under the Maharashtra Fire Prevention and Life Safety Measures Act, 2006. After the Nagpur audit, action was started under this Act against 265 hospitals and three were shut.
  • AERB licence for radiology. Any X-ray-based equipment, including CT, cath labs and mammography, must be type-approved. You need AERB procurement permission before buying it, and no diagnostic X-ray equipment may be used on patients without an AERB licence for operation.
  • Building approvals for hospital use, plus occupancy certificate and local trade or shop licences as applicable.
  • Service-specific registrations, for example where ultrasound is used, as required by the relevant law.

Missing or expired approvals are among the most common reasons a healthcare loan gets delayed. Keep the file current before you apply.

Is a hospital loan priority sector lending?

Often, yes. That matters because banks have priority sector targets to meet, which can make them more willing to lend.

  • Health care infrastructure. Under RBI's Priority Sector Lending Master Directions, bank loans of up to ₹12 crore per borrower for building health care facilities in Tier II to Tier VI centres count as priority sector lending under social infrastructure. Tier II to Tier VI centres are, broadly, towns with a population below 1 lakh. A hospital in a larger city does not qualify under this head.
  • MSME lending. Clinics, diagnostic centres and smaller hospitals that are registered on Udyam as micro, small or medium enterprises can qualify for priority sector treatment as MSMEs. Bank of Maharashtra's doctors' scheme requires an Udyam registration certificate.

How does CGTMSE help clinics and smaller hospitals?

Service enterprises that qualify as micro or small enterprises can benefit from the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). It guarantees collateral-free credit of up to ₹10 crore per borrower. For loans above ₹50 lakh, cover is generally 75% of the amount in default, and higher for women entrepreneurs and certain other categories. Under a hybrid model, the lender can take collateral for part of the loan and get CGTMSE cover on the unsecured part.

Banks use this in their healthcare schemes. SBI offers nil collateral up to ₹2 crore when the loan is covered by CGTMSE, and Bank of Maharashtra offers CGTMSE cover up to ₹5 crore. The guarantee is at the lender's option and carries an annual fee, which the bank may pass on to you.

Is there any government guarantee scheme for hospitals right now?

The pandemic-era ECLGS 4.0 for hospitals, nursing homes, clinics and medical colleges closed on 31 March 2023, along with the earlier ECLGS phases.

A new ECLGS 5.0, approved in May 2026, runs until 31 March 2027 or until ₹2.55 lakh crore of guarantees are issued, whichever comes first. It is not hospital-specific. It gives borrowers that had existing working capital limits on 31 March 2026 additional working capital of up to 20% of their peak fund-based working capital in the fourth quarter of 2025–26. By 20 August 2026, about ₹2.50 lakh crore of guarantees had already been issued, so check with your lender whether cover is still available.

When does a loan against property make sense?

Many doctors already own a residence, clinic premises or commercial property. A loan against property can fund expansion, fit-out or refinancing, especially when the new facility is in leased premises that a lender can't take as security. Eligibility depends on the property, its title and your income. See loan against property eligibility in Thane and Badlapur.

Common mistakes that slow hospital funding

  • Sizing working capital on cash collections alone. If half your revenue comes from schemes and TPAs, plan for the delay.
  • Applying before approvals are in place. Nursing home registration, fire NOC and AERB permissions take time, so start early.
  • Equipment-heavy plans with thin margins. Lenders want to see that each major machine can pay for itself.
  • Mixing personal and practice finances. Clean, separate books make assessment faster.

The same funding-mix logic applies in other businesses with a cash-flow gap. See working capital for contractors.

How Biz Corp Solutions helps

We help doctors, hospitals, nursing homes and diagnostic centres work out the right mix of term loan, equipment finance, working capital and loan against property. We prepare the project report and documents, and we approach suitable banks, NBFCs and financial institutions, keeping you updated at every stage. The lender makes the final decision on sanction and terms. Learn more about our hospital funding service.