Whether you’re an experienced dentist or just getting started, a dental practice loan can help provide funds to acquire a new practice, pay for startup costs, expand your clinic, purchase expensive equipment and cover other operational costs. We’ve evaluated the best dental practice loans based on loan terms, fees, rates, customer satisfaction, and overall quality.
If you require cash due to a cash flow shortfall or have a less than perfect credit score, American Express Business Blueprint™ could be a promising option.
Fundera does not lend money directly but offers a digital marketplace where you can connect with lenders to provide a financing solution for your business.
National Funding offers small businesses working capital and equipment financing loans that are suitable for a broad range of businesses, and you could receive approval and funding within 24 hours.
A dental practice loan is a form of financing that allows you to purchase real estate, equipment, and cover ongoing expenses. These loans are typically used by dentists who want to grow their practice or start a new one.
How do dental practice loans work?
The process begins when you apply for your loan. The lender will review your credit history and financial situation before deciding whether they can offer you a loan. If they decide you are eligible, they will begin the process of underwriting your application and determining how much money they will lend you.
What are the requirements for a dental practice loan?
Here are some requirements that must be met before you can qualify for a dental practice loan:
Business plan: A strong business plan will demonstrate your commitment to running the business and will help convince lenders that you have a plan for success. It should include details about how much money you need and what you plan on using it for as well as projected income and expenses over the next few years.
Credit score: Lenders want to know they’ll get paid back on time before lending money. That’s why they look at your credit score to see how responsible you are for making payments. A high credit score means you’re unlikely to default on payments, making it easier for lenders to approve your application.
Financial statements: You’ll need your most recent financial statements, including income statements and balance sheets. If you’ve been operating for less than one year, the lender will want to see projections for growth over the next few years.
Annual revenues: If your practice isn’t profitable, lenders may still consider funding it. They know dental practices are worthwhile because of the low default rates.
What are the types of dental practice loans?
There are several types of loans available for dentists who need financing to start or grow their practice. Here are the most common options:
Term loans: Term loans are similar to personal loans but have a longer repayment period and come with a fixed interest rate. These loans come in as a lump sum that needs to be paid monthly which includes the principal amount and interest.
SBA loans: SBA loans are designed specifically for small businesses like dental practices. It is backed by the government and typically offer lower interest rates than other types of loans. SBA loans also have flexible repayment terms and may allow you to defer payments if necessary.
Business line of credit: A line of credit is a revolving loan, and it is similar to a credit card, which means it allows you to access funds as needed. A line of credit can be promising when you don’t expect to need all the money right away or if you need flexible access to capital throughout your business’s life cycle.
Equipment financing: Equipment financing allows you to purchase dental equipment and pay for it over time instead of all at once. This is especially helpful if you don’t have enough cash to buy everything at once but still want the benefits of new equipment.
What are the benefits of getting a dental practice loan?
Here are some of the benefits of a dental practice loan:
Build credit history: If you don’t have much credit history or have had trouble with past payment obligations, getting a small business loan may help build your credit, so other lenders will want to lend to you in the future.
Tax benefits: You can earn tax benefits from your state and federal governments. The amount of tax deduction depends on how much money is spent on interest, equipment, labor costs, and other expenses related to running your business.
Grow your business: You can use the loan for any expense related to growing and running your business. You can use it for buying inventory or equipment, paying staff salaries, marketing expenses, or even covering operating expenses.
How can you use a dental practice loan to grow your practice?
Here are some ways that you can use a dental practice loan to grow your business:
Hire additional employees: The most obvious way to use a dental practice loan is to hire additional employees. If you have too much work for your existing staff, it may be time to add another dentist or hygienist. You can also add support staff, such as office managers, dental assistants, and receptionists.
Expand your practice:Â You can expand your current office space by adding more chairs or rooms, so you can see more patients each day.
Upgrade existing dental equipment:Â You can upgrade an existing piece of equipment or add new technology like digital X-ray machines and intraoral cameras.
Utilize digital marketing: Digital marketing can be an excellent way for a business to reach new customers. If you already have an established website, consider adding more content or revamping your site, so it stands out from other dental practices in your area.
How to choose the best dental practice loan
Here are some tips for choosing a dental practice loan:
Know your needs: Before applying for a loan, understand exactly what you’re looking for. Do you want to buy new equipment? Pay off an existing loan? Expand into new areas of the office? This will help you decide how much money you need and what type of loan best suits your needs.
Know your options:Â A dentist may only offer one financing option, but many others exist. You’ll want to shop around and compare your options before signing up with anyone.
Flexible repayment schedules:Â Consider a lender who offers flexible repayment schedules. Keep to note that a longer term will be less stressful on your cash flow since payments are stretched, but the overall interest you pay will be higher. This is the opposite for shorter terms.
Compare interest rates:Â When you compare loans, some loans may have lower interest rates than others, but they may also have higher fees or other associated costs. You will need to understand what the total cost of each loan is going to be before deciding which one is best for your situation.
Find a trusted lender: An experienced lender who has been successful in helping other dentists in your area get funding for their practices can be critical. These lenders will know the ins and out of your type of industry.
Application fees: Some lenders may charge an application fee for their loans or even a credit check fee. These can add up over time, so you must consider how many applications you’ll need to make before you decide on a lender.
