– Dental Practice –
Dental Practice: Opening a dental practice most times is an expensive task. Finding a space to house your practice, hiring employees, outfitting your offices, and spending valuable time on marketing to get more patients; are most times what you go through. The worst case is if you’re a recent graduate with debt. Things can be even harder.
It takes far more to run a dental practice than just a dentist, however; dental hygienists, assistants, lab technicians, and office personnel are all necessary now as practices grow. In addition, you’ll need equipment and supplies—everything from X-ray machines to dentist chairs and instruments.
With all these costs in mind, it is sounding more tedious already. Not to worry, I will be helping you to highlight all the financial options you have. Thereby, reducing your workload and helping you chase after that dream carrier of yours.
Financing Options for Dental Practice
Below are your available financing options for you;
A Business Line of Credit
A business line of credit or Business LOC has been a popular way for many dentists to quickly access capital as needed, repay the amount borrowed, and access it again. The flexibility of a line of credit makes it possible for a dental practice to respond quickly to opportunities.
A Short-Term Business Loan
Many online lenders offer short-term business loans for small businesses, including professionals like dentists. With terms that range from three months to three years, this type of financing makes it possible for a dental practice to borrow capital and repay it quickly—often making the total dollar cost lower than a longer-term loan.
Many people, when they think of business equipment, think of construction or industrial equipment, but that would be an incomplete definition.
A dental chair, an x-ray machine, and other equipment used in a dental practice could also be considered equipment. Many practices turn to equipment financing to fuel growth or otherwise fund opportunities for their businesses.
The SBA (Small Business Administration) Loan Guarantee Program
Although the SBA is not a lender; it provides financing through participating banks and credit unions (among others). The SBA Loan Guarantee Program will sometimes qualify a borrower who might not meet the more rigid criteria required by the bank.
If your dental practice is an established business, and your personal credit score is above 680, this could be an option for your business.
If you’ve made the decision to seek a dental practice loan, the next step is finding the best small business loan lenders. There are several lenders in the financial market that are familiar with the specific needs of a dental practice and can help guide you through the loan process.
This lender specializes in loans made through the federal Small Business Administration. SBA loans offer lower rates than alternative or private market loans and can get you on the road to full financing quickly.
To pre-qualify, you simply fill out a short form on their website. The application doesn’t negatively affect your credit either; SmartBiz runs a soft credit inquiry initially and only runs a hard inquiry once you’ve accepted their offer and filled out the full complement of paperwork.
You can be pre-qualified for up to $350,000 within five minutes and can finance a long list of activities, including office space purchase, employee hiring, advertising, equipment purchasing, or even working capital.
SmartBiz Loans have a variable rate of the prime rate plus 2.75% to 3.75%, which currently averages out to about 9.18% with all loan origination fees.
The fees are 2% of the loan amount, and if your loan is $125,001 or more, you’ll also need to pay a guarantee fee to the SBA of between 2% to 3% of the loan.
OnDeck is a well-known lender that offers dental practice loans as well as lines of credit. Term loans can be up to $500,000, with lines of credit available for up to $100,000.
Applications are reviewed with a soft credit inquiry, and you can apply online or by calling their customer service at 888-269-4246. The entire process from application to money in hand can be as short as 24 hours.
Loans through OnDeck can be for terms as short as three months or as long as three years, depending on what you need to accomplish.
Interest rates can be as low as 9% simple interest or 8.50% APR. The loans can be used to finance buying or starting a practice, buying new equipment, or infusing your practice with some working capital.
- First and foremost, you’ll need a place to practice. Whether you buy or lease an existing building or build something from scratch, you will likely end up needing to remodel or build patient exam rooms, office space, and room for your supplies.
- Speaking of supplies, you’ll need to purchase all of them; in addition, you’ll incur plenty of costs as you’re opening your doors.
- Marketing is critical; you’ll pay for advertising campaigns and possibly new patient promotions to get people through the door. Staff requires salary—and possibly benefits—and you’ll also need insurance on your building and equipment.
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Getting a small business loan seems like the best option for making all of this happen, but there are often issues with getting that financing. Most lenders won’t offer you a loan without putting some things in check. And you have a part to play by remaining flawless in the details required from you.
Below are some of the things you need to address in your dental loan application:
- Business plan – Every small business owner should prepare a comprehensive business plan. The loan should address your dental experience, target market, competing practices, and marketing strategies. It should also contain financial projections.
- Student debt – Most lenders understand that dentists have student loan debt, so this shouldn’t stop you from qualifying for dental practice loans. Just make sure you show in your business plan how to pay back the student loan as well as the business loan.
- Practice location – Your practice’s location can matter more than you think. Do you have familial or other connections to the area? Do you already know people in the community who will become your patients? Not having community ties can make it harder to qualify for a business loan.
- Dental experience – The larger the loan you ask for, the more experience you ideally should have. It will be hard for a new dental grad to get a $1 million loan for a new practice. But such a loan is not out of the question for a more experienced dentist with a long roster of patients.
- Credit – Credit is obviously a big factor in determining whether you qualify for a dental loan. To qualify for a bank loan or SBA loan, your credit score should be at least 650 or higher. Scores below that, and you might only qualify for a short-term or medium-term online loan.
Being a dentist is expensive, and the cost might seem prohibitive if you have your heart set on being one. With some smart planning and the right dental practice loan, you can have the practice you want.
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