Whether you’re a new dental school graduate eager to start your career, a seasoned veteran expanding an existing dental practice, or a dental professional who’s considering a move from a salaried role to a practice of your own—the financial side of managing a successful dental practice can be equally intimidating. You need a solution that conforms to the needs of your business and takes into consideration your revenue.
Financial Loan Options Available for Dentists
It is important to consider all your options so you can choose the best one for your dentistry business. What is your need for capital? What are the terms of each loan? What are the hidden risks withing the terms of the bank loan? What is in the fine print and how will it impact your business?
Do Traditional Bank Loans Meet Your Need?
- Slow Process – Do you need a loan to replace broken or obsolete equipment quickly. Speed is not something that occurs with a typical bank loan.
- Inflexible Repayment – Do you need flexibility in your repayment schedule? The bank will expect a strict monthly payment schedule.
- Strict Securing of the Loan – Your bank loan will ask you to pledge your property and assets as collateral to secure the loan. Would this make for a risky venture for you?
- Only Want Experienced Practices – Are you just starting your practice? Many banks turn away requests for a start-up loan because they require three years of financial data.
- Tied To All Individuals in the Practice – Most bank loans have terms that have a joint and several clause, which hold 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 the loan obligation and make certain you are not going to be liable if the practice defaults on a loan.
You may qualify for a bank loan but the question is really whether the bank loan meets your needs.
Small Business Administration (SBA) Loans for Dentist
According to the sba.gov borrowers need to look at the exact purpose of their funding need. If you are looking at a SBA -guaranteed loan you need to be aware that the process is more document intensive than most other loans and therefore takes more time to to qualify. A few things to consider for a SBA loan…
- Collateral and Liability Needed – Read all the fine print to make sure what you will be liable for if the loan goes into default.
- Business Plan Required – An overview of your business and its future will be required. Any purchase for which you want the loan you will need to show the figures of exactly how much income it will generate and how this will affect your bottom line in the future.
- High Scrutiny – Your resume, personal credit history and ability to manage the practice will be scrutinized as part of the approval criteria
- 90+ Days to Close – Takes at least 90 days to close the loan
Line of Credit for Dentistry Businesses
A line of credit is a credit facility extended by a bank or other financial institution to a dental business that enables the customer to draw on the facility when the customer needs funds. A line of credit is a great option for short-term loan needs. A longer-term loan will be used for anything that requires extended payment, like to buy out a dentistry business or to acquire real estate for your practice. Things to consider would be 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 for Dentistry Businesses
According to smallbusiness.chron.com, alternative lending is where many business owners are turning for creative lending solutions. Many business owners are turning to alternative lending options and steering clear of banks and their loan qualifications. Most online lenders are brokers that auction your application to the highest bidder, these agencies can offer useful flexibility in how you repay your loan and they typically have many funding options to choose from. A few things to consider about alternative lenders:
- Quick Approval – The approval process is typically quick.
- Simple Application – Dentistry business loan have simple application that take less time and are easier to navigate.
- Some Credit Issues Are OK – Having perfect credit is not an issue. Alternative lenders tend to look more at your business potential.
- Flexible Payment Schedules – Payment schedules can be made to fit your business.
- Higher Interest – The interest rate will probably be higher than the bank or other lenders but the trade off is you get a loan product, quickly, and easily.
You should focus on eligibility requirements, loan options, costs and reputation when choosing a small business loan lender. Focusing on these factors will help you identify a lender that is most likely to approve your loan, offer acceptable terms and costs, and offer good service during approval, closing, and repayment.
We hope these tips help you see all the options available to you to accomplish your individual needs and helped you determine what you intend to use the loan for before you sign on the dotted line!
>> Learn More