Understanding Loan Refinancing for Radiology Clinic Owners

A radiology clinic owner can refinance the loan on the CT scanner, the loans on the ultrasound and x-ray units, the fit-out loan on the lead-lined rooms and, where the practice owns its building, the property loan. Each section takes one loan, what a refinance can do to it, and how each scanner's effective life age bears on the loan term.

Is the balloon on the CT scanner's loan, the large sum held back until the last month, about to fall due before you have decided whether to upgrade that scanner or replace it? Would stretching the loans on the scanners leave repayments running after Medicare stops paying benefits on scans from those machines? Have the loans on the ultrasound and x-ray units and the fit-out loan ended up with different lenders and end dates, so sorting them out keeps sliding down the list?

The Australian Institute of Health and Welfare counts 32.2 million Medicare-subsidised diagnostic imaging services in 2024-25, up from 23.9 million in 2014-15. A clinic is paid for that work scan by scan, while its scanners can be bought in lump sums on equipment finance.

Ardent Capital Group can look at every loan in your imaging clinic with you, from the CT and its balloon to the shielded rooms, and help refinance the ones that need to change.

The loans on the scanners and each machine's effective life age

Every scanner in the clinic earns Medicare benefits for a limited number of years, so its loan and its age belong side by side. The Department of Health, Disability and Ageing gives each piece of imaging equipment an effective life age. Once a machine passes it, Medicare no longer pays any benefits for imaging taken on it. A qualifying upgrade extends it to a maximum extended life age. The ages are set by modality, meaning the type of machine:

• CT, ultrasound and mammography: 10 years, or up to 15 with an upgrade.
• MRI: 10 years, or up to 20 with an upgrade.
• General x-ray, OPG (the panoramic dental x-ray) and fluoroscopy (live, moving x-ray imaging): 15 years, or up to 20 with an upgrade.

A new machine's age counts from its installation date. A second-hand machine's age counts from its first use in Australia. If it was used overseas first, the age counts from the manufacture date of its oldest component. An upgrade qualifies only when it lifts the system's performance to match new equipment supplied in Australia at the time.

A loan on a CT that runs past the scanner's effective life age, with no upgrade planned, keeps taking repayments after scans on that machine stop attracting a benefit. A refinance sets a new end date for the loan, which can fall before or after that age.

Two dated Medicare changes also bear on the loans. The schedule fee on CT services, the fee the Medicare benefit is worked out from, fell by 2% from 1 November 2024. For MRI machines in metropolitan areas, practice-based licences replaced machine licences from 1 July 2025. The department has scheduled the licence requirement for those metropolitan machines to end from 1 July 2027.

Example: a leased imaging clinic's three loans

Setting the CT, the smaller units and the rooms out together shows how differently each loan is built. The figures here are illustrative, built around a set of loans we can assist with refinancing. The clinic leases a ground-floor tenancy beside a medical centre with six years left on the lease. It runs a CT room, an x-ray room and two ultrasound rooms.

The CT was installed new four years ago on a chattel mortgage. Under a chattel mortgage the clinic owns the scanner from day one, and the lender holds a mortgage over it until the debt is cleared. That loan ends with a balloon, which keeps each monthly repayment lower.

The clinic owes $600k on the CT at an assumed 9.75%, repays $15,686 a month for 36 months, then owes a $150k balloon. Across all three loans, about $30,320 leaves the account each month. The rates are assumed for the arithmetic only, not market rates, and any new loan is assumed at 9.5%. The clinic's overdraft is left out.

How a refinance changes the clinic's repayments

A refinance replaces an existing equipment or fit-out loan with a new one on new terms. It moves three things on the $1.13M owed across these three loans: its rate, how many months it runs and the security the lender holds.

• Rate. Shave the rate and keep the months the same, and both the monthly outgoing and the total interest come down. The lender fixes the rate once it has assessed the clinic.
• Months. More months shrink each repayment and add interest, because the clinic owes the balance for longer. That can still fit a clinic's plans for a defined period, such as the year after an MRI room opens while referrals for it build, provided the loan finishes inside the scanner's effective life age.
• What secures it. Security means an asset the lender may take if repayments stop. Put a building or a home up as security and the rate is generally lower than on an equipment loan or an unsecured one. That property then secures the clinic's debts.

Each repayment covers the month's interest on the balance first, and the remainder reduces what is owed, so the interest share is largest early. A balloon stays owing for the whole term, so interest is charged on it every month.

Worked example: one month on the CT scanner's loan

The loan on the CT shows how a balloon plays out month by month. A month's interest on $600k at an assumed 9.75% is $4,875. Of the $15,686 repayment, the other $10,811 reduces the balance. Across the 36 repayments the clinic clears $450k of the balance, and the last $150k is due as the balloon.

Refinancing each loan in an imaging clinic

The CT, the smaller units, the shielded rooms and the building each age on their own timetable, so each loan is looked at on its own.

The loan on the CT scanner and its balloon

The CT carries the clinic's largest loan, and the scanner itself secures it. The machine also carries its own running costs: a manufacturer service contract and, at some point, a replacement x-ray tube.

Moving this loan lets the clinic go to a new lender on a different rate and term. It can also turn the balloon into a short loan of its own when it falls due. In the example the balloon lands when the CT is 7 years old, three years before its 10-year effective life age. A two-year loan on the balloon ends a year before that age. A five-year loan would outlast that age by two years unless the scanner is upgraded.

If the clinic expects to replace the CT at year 10 rather than upgrade it, paying out the balloon and funding the next scanner belong in one plan. The supplier's quote helps with that. It also helps to ask early for a payout figure, which is the exact sum that would settle the CT's loan on a chosen date. A fixed-rate CT contract may add an early payout charge, which the contract sets for settling ahead of schedule.

Ultrasound, x-ray and mammography units

The smaller units cost less than the CT, but each one has its own effective life age. An ultrasound unit reaches its effective life age at 10 years and a general x-ray unit at 15. Separate loans let each term sit inside its own machine's age.

X-ray, CT, mammography and fluoroscopy units emit ionising radiation, the kind the lead lining is there to block. Their use is regulated by the radiation regulator in the clinic's state or territory. Ultrasound and MRI do not use ionising radiation. It helps to keep each unit's licence or registration details with its invoices.

The shielded rooms and the lease

The fit-out is what lets an ordinary tenancy hold a CT and an x-ray room safely. An imaging fit-out includes lead-lined walls and doors in the CT and x-ray rooms, and lead glass in the control windows. It also includes a slab strong enough to carry the CT, dedicated power and cooling for the equipment, and a reporting room with diagnostic monitors. An MRI room adds radiofrequency shielding, which keeps outside radio signals out of the scans. It also needs a quench pipe, which vents the magnet's helium outside if the magnet is shut down fast. The shielding and the quench pipe stay with the building.

How long a lender will lend over a fit-out depends on how many years the lease still has to run. In the example, the 60 months left on the fit-out loan sit inside the 72 months left on the lease. The lease's make-good clause sets what the tenant must remove or restore when the lease ends. It can cover stripping lead lining and reinstating the slab, and that cost falls in the lease's final year.

The overdraft and an ATO payment plan

Imaging income comes in scan by scan, while wages and reporting fees fall due on set days. An overdraft over the trading account can carry radiographer wages, radiologist reporting fees and a service contract invoice through a lean week. Converting the drawn amount into a term loan clears it, but leaves the clinic without that buffer for the next lean week.

GST (the goods and services tax), super or PAYG withholding can fall behind and sit on an ATO payment plan, paid off in instalments. PAYG withholding is the tax taken out of staff pay. On most plans, the general interest charge goes on accruing on whatever is still unpaid. That charge is the interest the ATO adds to tax paid late. The balance can be paid out with a business loan. From 1 July 2025 onward, neither the general interest charge nor the shortfall interest charge from the ATO is deductible for the clinic. The shortfall interest charge applies when an amended assessment raises the tax owed. A business loan's interest may still be deductible, and your accountant confirms where the clinic's interest falls.

Premises the practice owns

A clinic that owns its building carries a property loan that can run far longer than the loan on a CT. Where the practice or a related trust owns the building, the property loan is refinanced on a current valuation of the premises. Non-bank lenders publish property loan terms of 25 to 30 years, and banks commonly publish 10 to 15. Folding the CT's loan into a 25-year property loan spreads a 10-year machine across 25 years. Our radiology and imaging premises refinance page covers the property loan and keeping the loans on the scanners apart from it.

Combining the loans on the scanners and the fit-out

Seen one by one, the three loans can now be weighed as a group: left apart, or brought into one.

Worked example: four options for the $1.13M on three loans

This comparison keeps the CT's age beside the money, since a longer loan can outlast the scanner's effective life age. Each option is compared with keeping the scanners and rooms on their current loans. Each also states how old the CT will be when its last repayment is made.

All figures are illustrative and rounded, worked on assumed rates. They are not market rates, quotes or approved outcomes. Payout figures, early repayment costs, fees and the cost of upgrading or replacing the CT are left out.

The 7-year loan has the lowest monthly outgoing and costs the most: $127k more in total than the 5-year loan, for $5,263 less each month. Its last 12 repayments also fall after the CT passes its 10-year effective life age, unless the clinic has upgraded the scanner by then. Refinancing only the balloon leaves today's repayments untouched. Its new loan runs alongside the last two years of the fit-out loan, so both finish in month 60.

Which trade suits depends on the clinic's billings, the lease and the plan for the CT at year 10. From here we would gather the payout letters and rerun the comparison on real balances and scanner ages. The option the owner picks then goes to lenders that finance diagnostic imaging.

What the lender holds against the new loan

A refinance changes who holds a claim over the clinic's scanners and other assets, as well as the rate.

• The scanners. Paying out the old chattel mortgage releases the CT from the outgoing lender, and the incoming lender registers its own security over the machine.
• A general security agreement. This gives the lender a charge over what the business owns, recorded on the PPSR, the national register of security interests in personal property. It does not cover land, buildings or fixtures to land. On a refinance the outgoing lender's registration is released and the incoming lender registers its own. It helps to confirm each release at settlement.
• The home. Loans secured by a home are generally available at lower rates and over longer terms than equipment loans. The home then secures the clinic's debts. That decision belongs to the owner, and the 7-year option in the worked example shows how much a longer term adds. The home mortgage itself, a separate loan, is what our home loans for business owners page is about.

Radiologist partners and more than one site

An imaging practice owned by several radiologists can spread its borrowing across more than one entity. Some owners hold the practice through a company or a unit trust, which is a trust divided into units much like shares. Where a second site runs through another entity and each owner gives a guarantee, a lender reviews every borrower and every guarantor together. Each entity supplies its own financials and statements, and each owner lists their personal debts.

Preparing an imaging clinic's refinance application

Much of what a lender asks of an imaging clinic already sits in its equipment records and billing system.

What to line up first

Some of this takes time to collect, so it helps to start early.

• The equipment register. It helps to list each machine with its install date, any upgrade invoices and its entry on the clinic's Location Specific Practice Number record. That is the number Medicare gives each site that provides imaging. The list puts the years each scanner has left before its effective life age beside its loan.
• Payout figures in writing. It helps to get one for every loan, including the balloon amount and any early payout charge. Where a fixed contract's early payout charge outweighs what the clinic would save, the numbers can be run again closer to that contract's end.
• A dip in billings. If a scanner was offline for a tube replacement, a run of later months in the statements shows the billings once it was back in use.
• Lodgements. A lender assesses the clinic on lodged figures and checks its ATO account too. It helps to lodge any late BAS (business activity statement) or tax return before applying.

Medicare billings and referrals in the clinic's records

Income arrives two ways. On a bulk-billed scan, the practice accepts the Medicare benefit as full payment and the patient pays nothing. On a patient-billed scan, the patient pays the clinic's fee and claims the Medicare rebate, and the difference is the patient's gap.

• Billings by modality. Reports split by CT, ultrasound and x-ray show what each scanner earns against the loan on it.
• The referral base. Imaging outside hospital is generally requested by a GP or specialist. Billing reports by referrer show how the clinic's requests are spread across the practices that send them.
• Radiologist costs. The radiologists who report the scans can be employees, contractors or owners drawing from the practice. Their fees or draws are a large line in the accounts.
• Staff costs. The clinic's radiographers and sonographers are paid under a modern award, which sets minimum pay and conditions (Health Professionals and Support Services Award 2020).
• Running costs. Service contracts, image archiving and reporting software, contrast, and power for the equipment rooms.

Papers a lender will ask the clinic for

Several of these come straight from the billing system, the equipment register and the accountant.

• Payout letters for every loan, showing any balloon and early repayment cost
• The equipment register with install dates, upgrade invoices and serial numbers
• Recent business bank statements for each trading account
• Billing reports by modality and by referrer for the last 12 months
• This year's BAS, plus lodged financials and tax returns for the two years before it
• The lease showing when it ends, any options to renew and the make-good clause
• Each owner's and guarantor's personal debts: home loan, car finance, credit cards

Once the refinance settles, the equipment loans or the overdraft may still have a scheduled review of their own. The lender may look at billings since the loan began and at changes such as an upgrade to a scanner nearing its effective life age. Current billings for each machine answer most of what it asks, and the same figures let the owners compare other lenders. Our guide covers how an annual review of a business loan works.

Questions radiology clinic owners ask about refinancing

Does comparing refinance offers leave a mark on my credit file?

Every formal application adds an enquiry to the credit file of the borrowing entity and of every guarantor. Comparing options and payout figures first, then applying only where a lender's policy fits an imaging practice, keeps the enquiries to the ones that count.

Will Medicare stop paying on my ultrasound before the loan on it finishes?

It helps to compare the install date with the loan's end date. An ultrasound unit reaches its effective life age at 10 years, or up to 15 with a qualifying upgrade, so a loan that ends before the tenth year runs inside it.

I bought a used CT that had been in a clinic overseas. How is its age counted?

From the manufacture date of its oldest component. That can leave fewer years before its effective life age than the purchase date suggests. The refinance term is then best set against the age counted from the component date.

Does our MRI's Medicare eligibility change if the loan moves to a new lender?

No. Medicare eligibility attaches to the practice and the machine's entry on its Location Specific Practice Number record. A refinance changes the lender, not where the scanner is installed.

Our clinic is in a metropolitan area and we want to add an MRI once licensing ends there. Does the refinance need to wait?

Not necessarily. A lender assesses the clinic's total debt, so the MRI, its shielded room and the existing scanners can be looked at together. The supplier's quote and the room's build costs help with that.

Most of our scans are bulk billed. Does that count as income?

Medicare benefits paid to the practice on bulk-billed scans are business income, shown in the statements and billing reports. The lender decides how it weighs them.

Our largest referring GP practice has just closed. Will a lender see that?

It shows in the billing reports by referrer. A few months of billings after the closure show where those requests went.

Our radiologists report as contractors. How does a lender treat their fees?

Their fees are a cost of the practice, shown in the accounts and statements. Written contractor agreements show how those reporting fees are set.

Can my home come off the equipment loan when we refinance?

It can be looked at. Where the scanners, a general security agreement and the clinic's trading carry the debt on their own, a refinance can be structured without the home, subject to the lender's assessment.

What will the refinance cost before any saving shows?

The costs can include an early payout charge on a fixed-rate equipment contract, discharge fees, an establishment fee, registration fees, and valuation and legal costs where property is involved.

Working through the clinic's loans with Ardent Capital Group

An imaging clinic's loans paid for machines and rooms that age at different rates: the CT at 10 years, the x-ray unit at 15, the shielding for as long as the lease runs. At Ardent Capital Group we assist imaging clinic owners with refinancing equipment and fit-out loans, consolidating clinic debts and working capital, and our radiology and imaging business loans cover the equipment and cash flow side. We arrange the finance across every loan on the clinic's list, and your accountant settles the tax detail with you before you sign. With the CT balloon or the next scanner ahead, we would be glad to look over the clinic's loans alongside you.

Written by

Nick Chong

Managing Director, M.AppFin, Dip. Mortgage Mgmt

Nick holds a Bachelor of Agricultural Economics, a Master of Applied Finance and an Advanced Diploma in Financial Planning. He founded Ardent Capital in 2016 after more than a decade in financial planning and mortgage broking. For the past ten years he has led a team of finance specialists, mortgage advisers, brokers and credit analysts, all working to secure optimal outcomes for clients and always acting in their best interests. The team brings both a qualitative and a quantitative approach to every deal.