How to Get Business Loans for Dentistry Business

If the time has come to expand or improve your dentistry business, or if you are just starting out, securing the best financing option is pivotal to your success.

You need a solution that conforms to the needs of your business and takes into consideration your revenue.

If you plan on making office renovations, expanding, relocating, or purchasing the latest equipment for improved patient care and comfort, you may need additional growth capital or working capital.

What Financing Options Are Available For Your Business?

It is important to consider all your options and choose the best one for your dentistry business. You should begin by examining your need for capital, as well as the terms of each loan (and any hidden restrictions or risks you may encounter).

When it comes to the typical bank loan, there are always some hidden risks within the terms of their loan products. Always look at the fine print and determine exactly how it could impact your business and future success.

Banking on a Traditional Bank Loan? Look Elsewhere

You may qualify for a bank loan, but the question is really whether (or not) the bank meets your needs.

For example, a dentistry business loan from your bank will ask you to pledge your property and assets as collateral to secure the loan. This can be combined with a repayment schedule that is unrealistic, based on your practice and income. This all makes for a risky venture.

Another issue is speed and flexibility. You may need a loan to replace broken or obsolete equipment quickly; speed is not something that occurs within a typical bank. If your revenue ebbs and flows throughout the year, flexibility in your repayment schedule is also important to best conform to your practice’s level of business each month.

Finally, if you are just starting out you may need to look elsewhere. According to Foxbusiness.com, many banks turn away requests for a start-up loan because they require three years of business financial data to be provided.

According to amednews.com, medical and dental professionals are wise to carefully take stock of their individual borrowing needs; what is the purpose of the loan, which option covers your situation and still keeps your risks low, and how much flexibility does the loan product give you?

Additional Drawbacks of Conventional Lenders

  • A conventional lender will probably require a personal guarantee for a small practice loan, so you need to think about the possible repercussions. You must protect your finances if the practice is restructured or one or more partners decides to leave.
  • Most bank loans have terms that include a “joint and several” clause, which holds each partner within the practice individually liable for the loan if it goes into default. So, never assume that leaving the practice releases you of that loan obligation and make certain you are not going to be liable if the practice defaults on a loan.
  • Banks require a lengthy application that takes at least 30 days to process.
  • You must have a very detailed business plan, which outlines your business, tax and bank records, and all the collateral you have, which they can take if you cannot repay the loan.

Small Business Administration (SBA) Loans For Dentists

The SBA, a government agency, offers several types of lending options to small businesses and dentistry practices. According to the sba.gov, borrowers need to look at the exact purpose of their funding need.

If a dentist is looking to take out an SBA-guaranteed loan, he should be aware that the process is more document intensive than with other methods of funding.

Things to Consider For SBA Loans:

  • Collateral and liability vary depending on which loan product you choose. It is vital that you read all the fine print regarding what you will be liable for if the loan goes into default.
  • You will be required to offer an extremely detailed business plan, which includes a current overview of your business and its projected future. For example, if you are borrowing money to purchase a new diagnostic or therapeutic device, you need to show the figures of exactly how much income it will generate and how this will affect your bottom line in the years to come.
  • Your resume, personal credit history and ability to manage the practice may be scrutinized as part of the approval criteria.
  • It can take 90 days or longer to close on your loan.

Business Lines of Credit For Dentistry Businesses

A line of credit is a great option for any short-term loan needs. It can be used to purchase equipment as well as smaller ticket items, but remember that a longer-term loan should actually be used for anything that requires extended payments, like to buy out a dentistry business or to acquire real estate for your practice to call home.

Things to Consider About Credit Lines:

  • Lines of credit should be paid off within a year.
  • They may offer good interest rates but are not for large purchases.

Alternative Lenders Offer Financing Options Tailored to Dental Practices

Determining what type of financing makes sense for your practice and funding needs is very important. You should consider what the loan is being used for and the time-frame of the funding method you select.

According to smallbusiness.chron.com, alternative lending is where many business owners are turning for creative lending solutions. These agencies can offer useful flexibility in how you repay your loan and they typically have many funding options to choose from. For example, some offer a payment plan that fluctuates with your sales volume.

Things For Dentists to Consider About Alternative Lenders:

  • The approval process is typically quick and painless, supporting your need to move fast on a new opportunity or equipment for your practice.
  • Dentistry business loans provided by alternative lenders typically have simple applications that take less time, require less documentation, and may be easier to successfully navigate.
  • Alternative lenders tend to look more at your business potential than your past credit history, so having less than perfect credit is not an issue.
  • Payment schedules can be made to fit your business and limit risks.
  • The interest rate may be slightly higher than the bank or other lenders, but the tradeoff is you get a great loan product, quickly and easily, which conforms to you and your business needs.

If you decide that it is time to get financing for your dentistry business, you should take the time to research all available options before applying. It is wise to understand the requirements, benefits, and risks involved with each loan product and application.

But if you’re ready to pre-qualify for funding now, fill out our online form or contact us. Prequalifying is free and easy and will not hurt your credit.