3 Easy Steps to Finance a Dental Practice
Opening a new dental practice can be incredibly exciting. You’ll naturally have grand ideas about the kind of patient care experience you wish to provide, about the type of staff you wish to develop, and even about how you’ll configure the practice building itself. One thing that can be a little harder to envision is how you’ll pay for it all. Practice financing options may seem a little daunting, but in truth, there are just a few simple steps that can help you turn those grand visions into thrilling realities.
Here’s a step-by-step overview of how to pursue financing for your dental practice.
Simple Steps for Dental Practice Financing
1) Develop your business plan.
Starting a dental practice means you’re no longer just a dentist; you’re also a business owner! Coming up with a business plan is a crucial first step, as it will help you place your financing needs into perspective. For example, a good business plan will tell you how much space you’ll need, whether you’ll be recruiting other dentists to work with you, how you’ll grow the business, and what kind of cash flow you can expect. All are directly germane to practice financing.
2) Review your financing options.
Dentistry is a recession-proof business, which means most lenders view dental practices as relatively low-risk ventures. As such, you’ll find that there are plenty of financing options to choose from. Spend some time comparing financing options from different lenders, particularly seeking institutions that have divisions specifically focused on dental or medical practice financing. (This will be the case primarily with larger financial institutions.)
Traditional Bank Loans
Certainly, if you already have a traditional financial institution that you trust and that you enjoy working with, it makes sense to explore the loan options available. Applying for a business loan via a traditional bank is often perceived to be difficult or fraught, but again, most lenders really like working with dentists.
You’ll likely want a conventional loan, which helps keep your monthly payments down. While the loan options will vary from bank to bank, amounts usually fall somewhere between $30,000 and $5 million. Repayment timelines start at 10 years, and the time required for loan approval may be anywhere from a couple of weeks to a couple of months.
You might also look into loans from the Small Business Administration. These loans tend to have very generous terms, and can be used for a variety of applications: Capitol, renovations, procurement of inventory, and more.
Business Lines of Credit
Still another option is to seek a business line of credit, which functions almost like a credit card: You’ll be able to draw on your line of credit, repay it, then draw again as needed. A line of credit will typically have a much lower limit than, say, a traditional bank loan, yet it can be a great option for dealing with unforeseen expenses or emergency needs that arise.
For your dental practice to succeed, you’ll need some state-of-the-art equipment, including chairs, office computers, X-ray equipment, digital imaging, and more. Equipment can be incredibly costly, which makes equipment financing packages pretty enticing. You can find a variety of loan amounts to accommodate different types of equipment, and repayment terms can vary from six months to five years. Approval times can be quite fast, sometimes as fast as a single business day!
3) Compare your options.
There are a few other options you might consider, like seeking a personal loan from friends and family, but by and large, these are your best bets for dental practice financing. Once you compile a list of several different options, take some time to compare, remembering that traditional bank loans and SBA loans are usually the best bets for financing a new dental practice.
Seek Clarity from a Practice Financing Consultant
Have questions about picking the best financing option? We’d be more than happy to help. Reach out to LenDRgroup Consulting whenever you’re ready to chat with one of our consultants.