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Best Dental Practice Loans: Rates & Information

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Best Dental Practice Loans: Rates & Information

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Best Small Business Loans for Dental Practice

What is a dental practice loan?

A dental practice loan is a small business loan or business line of credit that provides funding to open, sustain or purchase a dental practice. Whether you’re an established dentist looking to expand your practice or recently graduated and want to start your own business, a dental practice loan can help you achieve your business goals. 

There are several ways you can get a dental practice loan, including from specialized lenders, online lenders or SBA government-backed loans. As you explore a dental practice loan, make sure you understand all of your options available.

What advice is there for a dentist looking for a dental business loan?

If you’re looking to obtain a dental practice loan, there are a few things you can do to improve your chances of qualifying. 

  • Improve your credit score - Having a high credit score will allow you to unlock the best terms and conditions for your dental practice loan. Although there is no magic formula to improving your personal credit score, you should consider cleaning up errors on your personal credit report.
  • Have a strong business plan - Banks and lenders like to see that you have a clear plan of action for your dental practice. Make sure you have a business plan that outlines your goals and how you plan to repay the loan. 
  • Seek out a specialty lender - Borrowing from a lender specializing in dental loans can give you access to different terms and conditions. They also may not be deterred if an applicant has student debt from dental school. A lender specializing in dental loans should better understand the risks associated with the loan. 
  • Keep a low credit balance - Paying your bills on time and keeping a low credit card utilization will show a bank you are financially responsible. 

What will lenders consider when reviewing your loan application? Access personalized insight at mySMBScore now. 

Will a dentist's student loans affect their chances of receiving dental practice loans?

If a bank is specialized in working with dental or doctor loans, student loan debt is generally not considered against a borrower. While the payment will be factored into their debt-to-income ratio, it is expected that most recently-graduated dentists will have several thousands of dollars in student debt. 

However, if you are not making your student loan payments or defaulting on your student loans, a bank will likely see this as a concern and could impact your approval decision. Learn more about how student loan debt may affect your ability to qualify for a business loan at mySMBscore. 

How much working capital do I need for a dental practice?

The amount of working capital needed will depend on the practice and your business plans. Additional working capital can help fund marketing efforts and operating expenses or help keep the business open during slower periods. 

If you need quick access to funds for your dental practice, an online lender will likely be the fastest way to get the working capital loan you need. Before applying for a loan, focus on your needs and budgets. It’s important to only borrow what you need to avoid unnecessary hardship. 

When should a dentist contact a banker about a dental practice loan? 

The sooner, the better! If you are considering starting your own practice or are about to graduate from dental school, it can be helpful to understand your financing options. Bankers may be commissioned though so learn what you can and ask the right questions. If you already have an established practice check your SMBscore before making the call. 

What can dental practice loans be used for?

There are several ways you can utilize a dental practice loan. Some common uses include: 

You can explore different lending products based on your needs and goals. 

What types of dental practice loans are available?

Whether you’re looking to start a new dental practice or need new equipment for your office, several loan options are available. Some common ones include: 

  • SBA loan - If you’re looking to acquire real estate or open a new location, an SBA loan could be a good option for you. It’s an affordable lending option with a lower down payment requirement and a favorable amortization schedule. Plus, interest rates are capped and loans are partially backed by the government. Beware though - qualifying takes time, patience, and no shortage of legitimacy. 
  • Working capital loan - If you need more cash flow to support your business, a working capital loan will give you access to fast funds you can use for a variety of operating expenses. 
  • Business line of credit - This is one of the most popular ways to get financing for your dental practice.  A business line of credit is a great option for borrowers who are looking for a flexible source of financing they can draw from repeatedly. 

When should a dentist consider an SBA loan over a conventional loan?

There are several benefits to seeking an SBA loan over a conventional loan. A few benefits include

  • Looser qualifications: With looser requirements, an SBA loan is a great option for a borrower who cannot qualify for a conventional term loan
  • More favorable terms: SBA loans can offer more flexible repayment terms, including lower down payments, lower interest rates and a favorable amortization schedule. 
  • Real estate transactions: With a fixed interest rate and longer loan period, an SBA loan is a good solution for real estate financing or large commercial projects. 

What credit score do you need for a dental practice loan?

While each lender will have different credit requirements, the better your credit score, the better terms and conditions you’ll unlock. A good credit score (anything over 670, according to FICO) will help you improve your chances of qualifying for a dental practice loan. 

How many years can you finance a dental practice?

If you are looking to get a dental office financing loan, the repayment terms can range from a few years for an equipment loan up to 25 years for a more conventional term. The repayment period will depend on the type of loan you get and the amount you finance. Keep in mind that the longer your repayment period is, the lower your monthly payment may be, but you will likely spend more on interest over the term. Keep an eye on total loan costs as you shop offers

Are dental practice loans tax deductible?

While the payments on a dental practice loan principal are not tax-deductible, the interest payments are. If you have questions about how a dental practice loan can affect your taxes, make sure to speak with a qualified tax professional.

What is a good profit margin for a dental practice?

Having a benchmark for your dental practice’s gross profit margin can help you understand how to improve and generate more profit. The average dental practice has around 30-40% gross profit margin. Although this can change depending on the expenses and costs associated, around 40% is a typical gross profit margin. 

What common mistakes do dentists make that can delay a dental practice loan approval?

If you’re looking to get a dental practice loan, there are a few common mistakes you should avoid to ensure you’re able to get the funding you need smoothly and quickly. Some mistakes include: 

  • Not getting pre-qualified - Getting pre-qualified is a simple and easy way to make sure you know what your borrowing capacity is and what you can get approved for, assuming you can provide necessary documentation and meet underwriting checks. If you are looking to get pre-qualified and see offers from lenders ready to work with you, mySMBscore can help. With the mySMBscore platform, you can find lenders that want to work with you based on your personalized credit data, saving you time and money as you review your dental practice loan options.
  • Missing documentation - As you apply for your dental practice loan, you must gather all the appropriate documents so you can quickly send them to your lender with your application. This will ensure the lender has all the information they need to approve your application. 
  • Irresponsible financial decisions - If you are late with your current bill payments or have a low credit score, your application might not get approved. It’s important to stay on top of your finances during the application process to ensure you’re approved.  
  • Submitting misinformation - During the pre-qualification process it’s important to submit accurate information. If information is incorrect this can cause the prequalification to be revoked. 

How do you qualify for a dental practice loan?

While each lender will have different requirements to qualify for a dental practice loan, there are a few things that are common across the industry, including 

  • A high credit score - It’s recommended your personal credit score be at 700 or higher to get the best rates. 
  • A solid business plan - Showing a complete and thorough business plan to your lender can strengthen your application. 

As you submit your application, ensure you clearly understand what you can afford and how you’ll repay the loan. To learn more about what you need to qualify for a business loan, unlock actionable insights at mySMBscore discover personalized business loan options

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