Dental Practice Business Loans
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The dental industry is a complex and competitive industry that will often require financing to navigate the different issues faced by dentists. It’s essential to understand the types, terms, and uses of the various business financing options available in the marketplace so a dental practice can make informed decisions and get the best terms for what you are using the money for.
Are you starting on your own as a dentist and searching for financing to purchase a dentist practice? Are you an established dentist practice who is looking to expand your business? Perhaps you’re a dentist who is looking for better equipment. Regardless, understanding the different dentist loan products and lenders available in the marketplace is very important.
How Do You Finance a Dental Practice?
When beginning the process of potentially financing your dental practice, the first question you need to ask yourself is why. What is the purpose, and how will the financing benefit your business? The purpose and use may dictate what dental business loans you will choose and drive the best terms for the use. It’s not just about the rates. You need to balance interest rates with costs, terms, payment frequency, and product flexibility when making the best choice for practice solutions. It’s recommended to always explore every financing option in the marketplace.
10 Best Dental Practice Loans
What Types of Funding are Available for Dental Practices?
SBA Loans for Dental Practices
SBA loans are backed by the Small Business Administration (SBA) and provide guarantees to the approved lenders of these funding options in case of default. An SBA loan is an excellent product for more significant amounts of capital that require long-term financing. Unfortunately, the qualifications for SBA loans are stringent. They require substantial paperwork and time for decisions, but an SBA loan is well worth it and very popular with dentists because they offer an attractive interest rate and repayment terms. SBA has numerous financing options, although some offers require real estate as collateral.
SBA Product Overview
Interest Rates: 6.5% up to prime plus 1% to 2.75%
Term: 2 to 25 years
Fees: 1% to 4% origination fees
Payments: Monthly
Credit Score: Must have good to excellent
Traditional Bank Loans for Dental Practices
Whether it is to start a new practice, acquire an existing one, or obtain additional capital, some banks will help you with dental practice loans. Bank loan rates are competitive and are typically 4.5% up to prime plus 1% to 2%. These products do require significant paperwork and are not easy to qualify for. They have a very low approval rate. Less than 20% of dentists receive approval from a bank and fund.
Product Overview
Interest Rates: 4.5% up to prime plus 1% to 2.75%
Term: 1 to 5 years
Fees: 1% to 3% origination fees
Payments: Monthly
Credit Score: Must have excellent credit
Small Business Lines of Credit for Dental Practices
Business lines of credit are the most flexible funding products. Business lines operate a lot like a credit card in that it is an open revolving line of credit that allows for draws at any time up to a specific limit.
Product Overview
Interest Rates: 4.5% and up depending on many factors
Term: Revolving with renewals quarterly; 6 or 12 months
Fees: 1% to 3% origination fees
Payment: Monthly
Credit Score: Must have excellent credit
Special Features: You can draw as little or as much money up to a limit at any time
Long-Term Loans for Dental Practices
A long-term loan is defined as terms over two years or more in duration. Rates vary greatly and can start at 6.99% and go up to as much as 18% based on the credit and financial condition of the dentist’s office. Applicants should expect to provide a lot of documentation for a term loan like this to qualify and achieve approval as the rates and terms are attractive. Practice lenders have higher credit standards. Dentist application approval rates on these programs range from 15% to 20%, so only healthy and profitable dentists get approved.
Product Overview
Interest Rates: Starting at 6.99%
Term: 2 to 5 years
Fees: 1% to 3% origination fees
Loan Payments: Monthly, bi-monthly
Credit Score: Must have excellent credit
Short-Term Loans for Dental Practices
Short-term loans have a fixed lump sum offered upfront, with a fixed payback amount over a fixed term of time, typically 6 to 18 months. When you cannot qualify for more traditional loan products, short-term financing can be a great alternative. By definition, short-term business loans mean terms typically from 6 months up to 18 months to repay. Rates are based on factor costs and not principal and interest and cost more than traditional loans. The good news is these products require very little paperwork, and credit requirements are much more forgiving than conventional loan options.
Product Overview
Interest Rates: Starting at 1.10% up to 1.45%
Term: Typically 6 to 18 months
Fees: 1% to 5% origination fees
Loan Payments: Weekly, bi-weekly, monthly, and in some cases daily Monday-Friday
Credit Profile: All scores accepted from poor to excellent
Special Features: Fast process; approval of funding can be the same day to 24 hours
Merchant Cash Advance for Dentists
Merchant cash advances, also known as a purchase of future sales agreements, advance a fixed sum of money upfront to practice owners with a discounted purchase price to pay back that is a more significant amount than the lump sum upfront provided to the merchant. The advance is repaid by taking a fixed percentage of future credit card sales batches until the payback amount is paid back in total. There is no term limit with advances as the fixed back percentage never changes. The time frame to pay back depends on the volumes of future card sales. It’s estimated that merchant cash advances are set up with expectations of being repaid in 6 to 18 months. Still, it may be longer or shorter depending on the future revenue of the dental practice.
Product Overview
Factor Rates: Between 1.09% and 1.45%
Term: No term limits estimated payback periods are 6 to 18 months
Fees: Typically 1% to 5% origination fees
Payment: Fixed percentage splits from future credit card batches
Credit Profile: All types considered from poor to excellent
Business Cash Advance for Dentists
Business cash advances, also known as a purchase of future sales agreements, advance a fixed sum of money upfront to a practice owner with a discounted purchase price to pay back, which is a more significant amount than the lump sum upfront provided to the merchant. The advance is repaid by taking a fixed percentage of future overall sales, which is different from a merchant cash advance which takes a percentage of future revenue.
Payments are collected by a fixed daily or weekly payment deducted from the practice’s bank account, based on the fixed percentage of future sales. Every month, if the fixed payments take more than the set future percentage of sales, then a refund back to the merchant can occur. This repayment continues until the payback amount is paid back in total. There is no term limit with advances as the fixed back percentage never changes. The time frame to pay back depends on the volumes of future overall sales. It’s estimated that business cash advances are set up with expectations of being repaid in 6 to 18 months. Still, it may be longer or shorter depending on the future revenue of the dentist’s practice.
Product Overview
Factor Rates: Between 1.09% and 1.45%
Term: No term limits estimated payback periods are 6 to 18 months
Fees: Typically 1% to 5% origination fees
Payment: Fixed ACH weekly or daily Monday-Friday
Credit Approval: All types considered from poor to excellent
Equipment Financing for Dentists
Equipment financing consists of either loans or leases, are available for dentist practices that look to purchase equipment and are willing to use that equipment as collateral.
Product Overview
Rate Details: Interest rate or factor rate
Term: 1 to 5 years
Fees: 1% to 3% origination fees
Payment: Monthly
Credit Approval: Must have good to excellent credit
Unique Features: Fast process; limited paperwork required
Business Credit Cards for Dentists
Business credit cards function as a revolving line in which a card is issued to be used for both purchases and expenses. Most businesses use this product in conjunction with other loan products.
Product Overview
Interest Rates: Starting at 0% up to 28.99%
Term: Revolving; no term limits
Fees: 1% to 3% origination fees
Payment: Low flexible monthly payments
Credit Approval: Must have good to excellent credit
Dental Practice Acquisition Loans
Whether it is to start a new practice or acquire an existing practice, some banks will provide practice solutions to finance the purchase up to 100%. Dental practice acquisition loan rates are competitive and are typically 4.5% up to prime plus 1% to 2%. This product does require significant paperwork and is not easy to qualify for. Banks like Bank of America specialize in dental practice acquisition loans and also offer a startup loan. The bank will evaluate the cash flow and debt of the practice for this loan option.
Product Overview
Interest Rates: Starting at 4.5% up to prime plus 1% to 2.75%
Term: 5 to 15 years
Fees: 1% to 3% origination fees
Payment: Monthly
Credit Approval: Must have excellent credit
Benefits and Best Uses of Dental Practice Acquisition Loans for Dental Practices
The use is pretty obvious. The best use of this type of financing is to acquire an existing or new dental practice. The benefits of this type of financing allow the dentist to operate their own practice. Below are a few of the most common reasons dentists need a business loan for the dental office:
- Office space and office loans
- Debt consolidation of installment loans
- Refinance student loans and student loan debt
- Finance business plan
- Equipment purchases and equipment loans
- Real estate for office
- Working capital needs
- Cash flow
- Technology
- Renovation work
The fast, convenient and straightforward way to get the money you need for your business – now! Get Your Quote Today by filling out our simple form.
How to Apply and Qualify for Dental Practice Financing
Check out How to Find the Best Small Business Loans to weigh all the benefits and evaluate the decision to get funding for your practice.
Dentists applying for a loan with AdvancePoint Capital can expect a simple application process. Start with this online form by providing a name, email address, and phone number. Then fill out the short application page, wait a few hours for your approval to go through, and get your approval!