It is vital to remember that according to the ADEA or the American Dental Education Association, the average dental school graduate had at least $250 thousand in student loan debts. As you can see that is a significant amount compared with other options.
The best way to pay off the loan is by opening a private practice. However, the typical dental practice requires approximately half a million dollars of working capital so you can start with it. The main question is how to find that type of financing when you graduate from a dental school with significant debt.
At the same time, you should check out whether you have loan options or not. However, you can rest assured, because we can differentiate special financing options for new dentists. In this guide, we will present everything dental practice loans are, potential rates, how to find them, and things to consider before choosing a financing model.
Dental Practice Loans
You can choose a wide array of options that will provide you with an attractive opportunity to open your practice. The first consideration is the healthy income that may reach a point of six digits each year, according to relevant data. At the same time dentistry, as any other profession, are recession-proof.
It means people may stop going to restaurants during economic turmoil, but if they have a toothache, they must visit someone who can help them relieve the pain. Finally, the dentist has the lowest charge-off rates compared with other healthcare professionals.
That is why you can find lenders who are willing to offer you financing options, which will help you get the practice off the ground. If you wish to search for the perfect lender, we recommend you learn more about the different options you can choose.
As soon as you visit this link: billigeforbrukslån.no/lån-til-tannlege/, you will learn more about financing a dentist or dental practice. Dental practice financing can be either a business line of credit or a lump sum loan you can use to open a practice. Generally, you can use it for various purposes, including:
- Starting new practices
- Expanding an existing one
- Buying an existing practice
- Buying out an existing one
- Purchasing a commercial real estate
You should know that a few lenders will offer dental equipment financing, meaning you can use the funds to purchase X-ray machines, dental chairs, and many more. Since these loans use collateral in the form of equipment and practice you purchase, it is simple to qualify for them.
Things to Consider Before Applying
If your goal is to get a dental practice loan, the first thing you should do is to think about your specific situation to ensure the best course of action.
You should remember that dental practice lenders must be accustomed to new dentists, especially when it comes to a slightly higher debt-to-income ratio. However, to assess this risk, they wish to ensure you have at least a good credit score.
If you have taken other business loans, and repaid them on time, the chances are high that you have taken a score to the next level. According to FICO, you should have at least 670 points, while a score of 740 and higher is very good and is more likely to be accepted. You can check the score with your credit bureau or bank, or visit sites for the process.
As mentioned above, you should discuss with a lender and try to help them mitigate risk. That is why dentists, similarly to any other business owners, must offer strong business plans that will help them meet underwriting and application criteria.
If you are not certain how to create a business plan, you can visit the ADA where you can find a starter guide. On the other hand, you can hire a professional to create a plan based on your future project, which may be more expensive, but the chances are higher that you will succeed. Still, you should include a few things inside the plan, such as:
- Industry analysis and external environment understanding
- Statement of your business concept
- Services and products offered and the ones you plan to offer as you improve your business
- Marketing strategy
- Growth strategy
- Management strategy and philosophy
- Operation details
- Risk analysis
- Financial analysis
You Can Be Eligible for Group Discount
When you search for the best dental practice financing options, you should consider the factors such as administrative and origination costs. One way to reduce them is to take advantage of group discounts when it comes to creating a single practice.
Therefore, if you are a member of ADA or any other association, you can find dental lenders that will offer exclusive discounts for members. For instance, the Bank of America offers a fifty percent discount on administrative fees, especially if you are a member of the American Dental Association.
Where Should You Get a Dental Practice Loan?
We can differentiate three essential aspects of a dental practice loan. The most common are:
Credit Unions and Banks
For most dentists, the first thing that pops into their mind when it comes to taking a loan is credit unions or banks. Therefore, these areas should be the first places to look for the best financing option. Of course, you can apply the small businesses or traditional banks. However, you should check for lenders that had experiences with dentists in the past.
You can find a wide array of options available on the market, which will help you ensure the practice loans mentioned above or lines of credit that will help you ensure the best course of action. Each practice should get a specific loan officer who will talk with you and help you create flexible rates and terms that will last up to fifteen years.
Besides, when you have a dental practice, you should know that some lending institutions will offer you a reduced percentage for origination and administrative fees, especially if you are a part of the association. For instance, US military veterans can get a twenty-five percent discount, while they can obtain special government grants that will allow them to open practices.
Alternative Funding Sources
We can also differentiate alternative funding sources you can choose for small businesses by finding a nonbank lender, including crowdfunding, peer-to-peer lending, and many more. According to recent reports, non-bank funding options are increasing when it comes to small business openings.
For instance, approximately thirty percent of businesses nowadays are using alternative methods to generate enough funds to become relevant practices, which is a twenty percent increase compared with the previous year.
In most cases, these options are online and only a few have physical locations. They are more likely to take advantage of technology, which allows them to cut expenses and speed up the process. We recommend you be wary of different options and try to choose the one that will meet your preferences.
Although online lenders are simpler to work with than banks, that does not mean they are the best choices. You should compare rates and terms among both non-traditional and traditional institutions, which will help you ensure the best course of action. That way, you can prevent making an expensive mistake.