Are you starting a dental business? You may need to begin by addressing your financial needs as running a dental practice requires substantial capital. But the question is – how to get loans for your dental practice?
You walk into a building and feels like it is the place of your dreams to start your dental practice. You instantly want it. But what about the financial arrangements? Will the bank lend you the money to buy it?
Establishing a new dental practice or expanding an existing one requires investment. However, arranging the finance for it can be tricky, and any wrong choice can put you in a tough financial spot.
How to Finance Your Dental Practice?
Whether you are opening a new dental practice or making improvements to an existing one, every venture in this world needs financial investment. For this, you need to address a number of things.
For instance, paying daily expenses like rent, maintenance, utility, and dental disposables to meeting payroll costs, dental equipment, and producing medical supplies. Depending on essential factors like location, size of your office, the equipment you use, etc., will determine a new dental practice’s total cost.
It may not be possible to lay out all of that money you’ve saved, especially to boost the revenue of your dental practice initially. So what could be the solution? One of the steps is to understand how to finance your dental practice. Here are a few tips to finance your dental practice.
Create a Business Plan
Everything starts with a plan, and so should be your dental practice. If you want to be a business owner, you need an appropriate business plan. But what makes a good business plan? It should answer the critical questions regarding your vision and financing.
Here are a few things that your business plan should address:
- How big of a space do you need?
- Will you be working, solo, or as an associate?
- How are you planning to manage the cash flow?
- What will be the equipment?
- What is your vision?
Answering a few questions will put you in a better position to make a business strategy.
Know Your Financing Options
Once you have your business plan ready, it’s time to review your financing options. When it comes to dental practice, most lenders see it as low-risk investments since the industry is recession-proof. Some banks like Bank of America, Citizens Bank, and BB&T have special divisions working with dentists to make all the loan arrangements.
Many traditional banks offer loans specifically for dentists, and it is a great idea to use the services of a trusted bank that already handles your finances. Although conventional banks take time to approve the loan, they often like to work with dentists. Most banks will try to set up on traditional term loan to make your monthly payments reasonable.
You may also consider online lenders for their speed of application and approval process. If you do not want to involve in a complicated application process, taking online lenders’ services can be a great idea. These lenders offer both long-term and medium-term loans.
The U.S. Small Business Administration (SBA) also provides business loans through participating lenders. You can apply for traditional term loans for your small business with SBA. However, SBA itself doesn’t offer funds but works as an intermediary between lenders and the applicants.
The Business Lines of Credit (LOC) acts as a form of revolving credit, and once approved for a line, you can take a loan, repay, and draw again as needed. However, lines of credit often have lower overall limits than those of traditional loans. If you are up to something urgent or unforeseen, this can be a great option.
It can be an attractive option for dentists as it addresses equipment investments. Some of the important concerns that this option addresses include x-ray machines, computer systems, etc. Also, the equipment itself can be used as the collateral of the loan.
No matter the institution you apply with, you will need to follow a process to get the approval.
Compare Your Financing Options
Once you know the financing options available, compare them to check what will work best for you. Review every option profoundly to understand what is best as not all options may be suitable for your needs. If you start a new dental practice, considering the traditional term loans can be a great idea.
On the other hand, if you are considering renovations or expand your business, a Line of Credit (LOC) from an online lender may be the best way to go. If you want to choose the best possible option, you will need to determine your needs and check the following points, and you won’t go wrong.
- Value of loan and the interest rate
- Length of loan
- Arrangement fees and early repayment charges
- Collateral requirements
- Additional services
- Late payment fees
- Customer service
Several financial institutions provide expert advice to understand the finer details before you make the final decision.
If you are worried about how to get loans for your dental practice, here we have addressed some issues in the FAQ section.
FAQs on Loans for Your Dental Practice
Can I get a business loan if I have student loan debt?
Yes, you can apply for a business loan even if you have student loan debt. Banks consider it an investment, and most dental associates have a fair amount of student loan debt.
Do I need to talk with a lender before applying for a loan?
Yes, it is always better to talk to a lender regarding your loan, as knowing your specific requirements will help them provide personalized service.
What loan is right for me?
Well! When you are considering a loan for your dental practice, there are many options you can consider and choose the one that best suits your needs.
Is the property included when I apply for a dental practice loan?
No, real estate is a different loan structure and often amortize for a more extended period, while a short-term to medium-term loan can cater to your dental practice loan requirements.
Will lenders help me through the process?
Yes, most reliable platforms offer unparalleled customer service and help their clients through the loaning process.
What is the best way to secure a business loan?
The earlier you include your bank, the better, and prepare to answer questions about the dental practice and your goals.
What can be the different dental practice loan requirements?
Starting a new practice, acquiring an existing practice, and expanding a practice are major scenarios for which practitioners look for a loan.
How do I get to know about break-downs in cost when a loan is being funded?
A typical budget will list a cost breakdown by taking into account things like the construction, equipment, working capital, legal, permits, architecture, etc.
Is starting a new dental practice riskier than expanding an existing one?
It may depend on several factors such as the location, size of the clinic, type of equipment, etc., but lenders see pros and cons to both situations before approving a loan.
What is the one piece of advice for dentists who are looking at different loan opportunities?
It is good to know your requirements to consider all aspects of the loan option and understand the legal terms if you’re looking at the big picture.
Want your dental practice loan to get approved faster?
No loan is easy to approve until you follow a process and start looking for financing as early as possible. Taking help from experts is another thing you can do to process your loan application a bit fast. Every financial institution has a team of experts with decades of combined experience and loan transactions under their belts.
If your loan is not getting approved on time, there may be something you’re doing wrong. Let’s discuss the common mistakes dentists make that can delay a dental practice loan.
- Not providing the right information and documentation.
- You are not prequalifying for your loan.
- Not being prompt with providing what lenders need.
- You are not paying bills on time.
- Not understanding the legal requirements correctly.
- Not having the right business plan to execute the project.
If you’re considering buying or starting a dental practice, be prepared with everything when you’re thinking of how to get loans for your dental practice.