There’s nothing more exciting than bringing your business goals to life. Whether you want to start your own dental practice, pivot your dental offerings by investing in new technology, renovate your current practice, or need to access cash flow quickly, there are several dental practice loans that would be helpful. So let’s break down some popular dental practice financing options so you can confidently reach your practice goals.

“I want to start my own practice. Should I take out a bank loan?”

Congratulations! You want to be your own boss and open up your own practice. This will require you to lock-in some heavy financing as there are several costs you’ll need to consider: commercial space, renovations, equipment, and access to cash to hire and retain staff. This is where a dental practice loan from a large financial institution is appealing.

Using a traditional bank loan

Large US banks will offer dental practice loans of up to $5 million with 100% financing.

Most large US banks like Wells Fargo, Bank of America, and Citi Bank offer dental business loans.  And although these banks have similar offerings, treat it like dating and see which institution you like best. Ask if you can get a longer term financing option, so your loan repayments are lower at the start of building up your practice. If you’re renovating, ask for a dedicated project manager that will pay payments to suppliers on your behalf. Finally inquire about discounts.(Many banks give veterans special pricing.)

If you’re looking to buy out a practice, a bank can offer you a practice acquisition loan which will give you the funds to buy out individual partners or the practice all together. And just like qualifying for a home mortgage, your credit rating and your current debt load will come into play. However, big banks like investing in dental practices. This line of work usually pays off for everyone. So you shouldn’t have any issues qualifying for a dental practice loan.

Applying for a Small Business Administration Loan

Another way to get your hands on the necessary funds to open your practice or buy out a practice is a Small Business Administration (SBA) Loan. Unlike a big bank, the SBA doesn’t lend money directly but instead works with lenders to provide loans. In the simplest terms: think of the SBA as a dating service: matching qualified candidates with trusted lenders.

The most popular loan is the SBA 7a which can guarantee you a loan of up to $5 million with up to 75% of financing. If the loan is less than $150k, you can receive up to 85% of financing. The SBA 7a loan process is longer and more tedious as it requires you to submit several forms (which can be found here).

“I want to invest in new technology and equipment. How can I finance this?”

Trends in the dental industry change as new technology becomes available, your practice must invest in new equipment. (Staying competitive can cost a pretty penny!) That’s why many dental practices gravitate towards leasing options, as it doesn’t require you to buy the equipment up front.

Equipment Leasing and Financing

Just like leasing a car, equipment leasing allows you to access equipment needed for your practice like: x-ray machines, sterilization tools, dental chairs, and more without having to put any money down. Since the equipment is used as collateral, it can remove financial pressure. What the practice is responsible for is agreeing to the set lease terms and payment plan. And just like leasing a car, once your lease term comes to an end, you can buy out the equipment based on the current market value. To access an equipment lease, start with a quick Google search and you’ll find several services that were built to lease out dental equipment.

If you rather buy the equipment, you can access funds by applying for a dental equipment loan from either a big bank, the SBA, or a private lender.

“The COVID-19 pandemic has hit my practice with unexpected expenses. Should I use a Business Line of Credit?

No one could have predicted the financial impact of the COVID-19 on dental practices. As you begin to reopen your practice with new protocols and safety measures, you’ll notice the rise of unexpected expenses like: purchasing more PPE or having to perform last-minute modifications and renovations to your office. A business line of credit is a way to access casht fast so you can pay for the unexpected.

Here’s how a business line of credit works:

You can apply for a business line of credit through a bank or vetted lender. Once you’re approved, a set amount of funds will be transferred into your practice’s bank account which you can dip into right away. What you take out from the fund is what you have to pay back (with interest). Having access to a line of credit can come in handy (especially in emergencies). If your practice has a good credit score and you make your payments on time, you can usually be approved for a line of credit within the day.

Bottom line: You want a dental business loan. Make sure your books are balanced. 

Now that you’ve become more versed with the different loans for dentists that are available, there is one thing to note: in order to be approved for any type of financing you must have a solid business plan and show proof of a steady stream of revenue. If balancing your books is something your practice struggles with, Opencare’s Revenue Cycle Management (RCM) service can help. We get you paid for your services from managing all insurance claims and appeals, to the posting of payment claims. RCM has also been proven to help dentists not lose revenue by helping practices avoid minor clerical errors, inaccurate submissions and inefficiencies in appealing patient claims.

Let’s get your dental practice books in balance by getting in touch with Opencare today