How to Choose the Best Dental Practice Loan
- Loan features: How much does the lender offer? What are repayment terms?
- Application process: Is the loan application simple or complex? Does it result in a hard or soft inquiry on a dental practice’s credit?
- Interest rates and fees: What interest rates does this lender charge? Are there other fees?
- Qualification process: What criteria does the lender use regarding credit scores, time in business, or annual revenues?
- Customer support: How can customers reach the lender? Is customer service available by email, phone, or chat?
- Online user reviews: What are other customers saying about the lender on review sites like Trustpilot?
- Perks and bonuses: Does the lender offer a mobile app, flexible payment options, or other features?
What Are the Costs of Opening a Dental Practice?
Starting a New Dental Practice
If you want to start your practice from scratch, you might want to go for a business startup loan. Usually, these types of loans begin with interest-only or low payments that restrict your expenditures during the opening phase and initial construction. In this case, lenders might release the fund disbursements over time, by paying your contractors progressively. This can reduce the amount of interest you need to pay.
Buying an Existing Dental Practice
There are pros and cons to buying an existing dental practice instead of building one from scratch. You will likely need to look for a loan such as dental practice financing that will cover equipment upgrades or renovations plus the purchase price.
Working Capital Financing
If you have a practice that is already up and running, you might need help sustaining cash flow, especially during a slow business period. An online lender that gives quick funds may be your best option because it will provide you with quick access to cash.
Dental Equipment Financing
This type of financing might be easier to get than a dental practice loan because you can use the equipment as collateral for the loan. Unlike small business loans, dental equipment loans might not be amortized. This means that the loan amount comes with the financing charge. This means that paying off the loan before due time won’t save you money as the interest doesn’t accrue over time.
Dental Software Financing
Software purchase and licensing needs for your dental business can grow over time–anywhere between hundreds of dollars to thousands of dollars. As your practice grows, your technology needs might change. You may also need funds to teach staff how to use the new software.
How to Qualify for Dental Practice Loans
While each lender will have different requirements for approval, there are a few things to consider before applying for a dental practice loan.
- How you’ll spend the money: Before taking out financing, make sure you have a budget for the money so you spend it to grow your practice. This can be part of your business plan.
- How the money will make more money: Ideally, the money you borrow will help you generate more profits. However, don’t bank on this and take out more debt than you can afford to repay.
- Your credit situation: Your personal credit may impact the types of loans and rates you qualify for, so if you have bad credit, you may be limited in your options.
- Your plans for the future: This loan may serve as a stopgap during a slow revenue period, though ideally, it will help you grow your business over time. Consider what your long-term goals are for the practice.
What Can You Use Loans for a Dental Practice For?
Let’s look at a few of the ways you can use your dental practice loans to improve your business.
- Hire staff: As your business grows, you may need to hire additional administrative staff, hygienists, or dentists to better serve your growing dental practice.
- Marketing: Getting the word out about your practice takes time and money, and a loan can help cover the costs of advertising and marketing.
- Equipment: Dentistry has seen some leaps forward in terms of technology, and having the latest equipment, such as X-ray machines, can help you attract more patients.
- Startup costs: Starting a practice can be costly, with remodeling fees, payroll costs, equipment, and supplies. A loan can help.
- Slow periods: If your business sees fewer patients during certain months, it may be challenging to pay your bills. A loan can serve as a stopgap until revenues pick up.
Conclusion
A dental practice loan can help you do more in your business by providing the capital you need to launch or grow. Choosing the best financing option is up to you. Be sure to shop around, as dental practice loan interest rates may vary from one lender to another.