Financing your first practice? Start with a lender who gets dentistry

There are many factors to consider in determining how to finance your practice. Choosing the right financing partner not only helps dictate if you are able to obtain financing but also how much you may be approved for and how smoothly the process will go. Most importantly, talk with a lender that has dental-specific experience and subject matter expertise. Ask them about their approval limits, the length of their terms, graduated repayment programs, and what collateral they will require.

Additionally, discuss their ability to assist you with developing a business plan with a budget and what adjustments can be made if that budget changes over time or during your buildout. Most dental-related lenders will provide you with a specific allocation of funds broken down between hard costs (dental equipment) and soft costs, so knowing and staying within your budget is critical.

To ascertain a potential loan amount, the lender will consider many factors, including your credit history, personal net worth, liquidity (cash available), time licensed, and production ability. Your business plan, budget, and cash flow projections may also factor into the amount you are approved for.

“Many banks want as much collateral (hard assets like real estate) as possible. You need to know how that will impact your borrowing power,” says Natalie Westfall, vice president of Henry Schein Financial Services. “If the bank lumps your practice and your real estate together, that impacts your debt exposure. Having your real estate and practice loans handled by separate banks can help preserve your borrowing power, particularly if you plan to have multiple locations.”

Be sure to bring your HSFS financial adviser into the conversation. They can provide an objective view of your income stability, as well as the production stability of the region. They can also help you take advantage of tax benefits of purchasing depreciable assets, such as equipment and software.