Financing a Dental Practice
Janet Schaaf is a freelance writer, editor and proofreader who considers reader advocacy to be her calling. After taking a few roads less traveled, Janet completed a bachelor’s degree in English Literature from the University of Missouri-Kansas City, with English Department Honors. She has been correcting grammar and checking facts since she could string a sentence together. For the past three years, Janet has focused on making personal finance topics understandable and relatable. Loan terms and credit card agreements can look overwhelming, but understanding what you’re agreeing to is paramount in grasping the impact debt can have on your life.
Dental school prepared you to care for your patients’ teeth and gums, but your courses may not have taught you how to run a business, or even where to begin getting funding for your practice. We’ll dive into everything you need to know to get financing for a dental practice, so you can be as confident filling out business loan applications as you are filling cavities.
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Dental practice financing options
Some banks offer business loans specifically for dental practices. Here are some funding options for dentists:
| Lender | Maximum loan amounts | Rates | Learn more |
|---|---|---|---|
 | Up to $5,000,000 | Varies by loan purpose and term | Read our review |
 | Up to $12,000,000 | Undisclosed | Read our review |
 | Undisclosed | Varies by loan amount and term | Read our review |
 | Undisclosed | Undisclosed | Read our review |
Bank of America
Bank of America, offers loans up to $5,000,000 to purchase equipment, buy or refinance commercial real estate, acquire a practice and more. Interest-only and graduated payment options are available, and members of certain dental associations can receive a 50% fee discount on loans.
TD Bank
TD Bank offers financing for acquisitions, debt refinancing, equipment purchases and more. You can borrow up to $12,000,000 and get your practice 100% funded while gaining access to working capital.
Live Oak Bank
Live Oak Bank specializes in commercial real estate loans for the construction and expansion of dental practices. Live Oak Bank also offers SBA-backed loans, which tend to come with lower down payments.
US Bank
US Bank offers dental practice loans for acquisition, refinancing and expansion or relocation. 100% financing options are available for acquisition, and you may qualify for a six-month, interest-only program if you’re expanding or relocating. Terms as long as 120 or 180 months are available, depending on the loan purpose.
Types of business loans for dental practices
The first step to getting a business loan is deciding what type of financing makes the most sense for you and your small business. Each type of funding has its own benefits.
Equipment loans
Equipment financing can help you purchase the equipment you need to run your dental practice, such as patient chairs and x-ray imaging equipment. An equipment loan is typically a secured business loan, with the equipment serving as collateral. Some lenders may require a down payment. You repay an equipment loan in fixed monthly installments of principal and interest, generally for around five years.
Commercial real estate loans
Whether you’re building your first dental office, expanding to a new location or renovating your space, a commercial real estate loan can help. The most common type is a commercial mortgage, but commercial real estate funding can also include construction and business bridge loans. Secured by the property, a commercial mortgage works similarly to a residential mortgage. These loans amortize over a term that typically ranges from 20 to 25 years.
Lines of credit
A business line of credit is a type of revolving credit, like a credit card, from which you can draw as needed and only pay interest on the amount borrowed. You can keep a line of credit open to help you smooth out cash flow issues. For example, you might borrow from it for payroll or inventory during slower months. Business lines of credit may be secured or unsecured and they typically come with terms ranging from 12 weeks to five years.
Term loans
Business term loans, which may be secured or unsecured, are provided as a lump sum and repaid in fixed monthly installments. Both short-term and long-term options are available. While a short-term business loan can help with an unexpected expense, a long-term business loan may be useful for a large purchase or even acquiring an existing business.
SBA loans
SBA loans are guaranteed by the U.S. Small Business Administration, which allows for competitive interest rates and generous repayment terms. SBA loans are available in amounts up to $5.5 million and offer business owners a lot of flexibility — they can be used for most purposes mentioned above, including buying equipment and expanding your practice.
Decide whether to start from scratch or buy an existing business
Once you decide to run and own a dental practice, there are two paths you can take to get up and running — starting from scratch, or acquiring an existing dental practice.
Start a new dental practice
Through your work as a dental associate, you may have come up with many ideas for how a successful practice should be run. Starting a new dental practice may allow you to realize that vision more completely, since you’ll have control over choosing the location, hiring staff, marketing and every aspect of operations. However, starting a new practice requires higher startup costs and doesn’t deliver the advantage of an existing customer base.
Buy an existing dental practice
Acquiring a practice gives you the benefit of an existing office, equipment and a roster of patients, so you can begin earning revenue right away. However, buying an existing dental practice comes with risks as well. You’ll want to understand why the existing practice is selling: If it is due to low profitability, you’ll need to make improvements to ensure the practice is successful; if the previous dentist had reputational issues, you may be starting at a disadvantage. You should also expect to lose a portion of your patients and staff, a common occurrence with acquisitions.
Make a plan for your student loans
Student debt doesn’t prevent you from getting a small business loan to start your practice, but it can make juggling the student loan payments and business loan payments a little more difficult. If you’re still paying off your student loans from dental school, you might consider one of the following options to give you some financial relief:
- Income-driven repayment plans: There are a few options for repaying your federal student loans as a percentage of your income. These plans require you to contribute between 10% and 20% of your discretionary income toward student loan repayment. Income-driven repayment can make your monthly payments more manageable, but you may be in debt longer and pay more in interest over time.
- Refinancing student loans: If you can get a lower interest rate from a private lender, you may be able to reduce your monthly payments by refinancing. Our student loan refinancing calculator can help you determine your savings. However, bear in mind that you won’t be eligible for federal student loan forgiveness programs once you refinance.
- Student loan forgiveness programs: There are a variety of state and national student loan forgiveness programs for dentists. For example, you could get up to $50,000 in tax-free loan repayment for working two years in a Health Professional Shortage Area (HPSA). Or, you could get up to $40,000 in loan repayment for working two years at an Indian health program site. You can learn more about state and national programs from the American Dental Association.
Starting your own practice is a way to make the world a little healthier, one tooth at a time. Though startup costs are a significant obstacle, some banks offer 100% financing options to dentists. With the right financial tools and a comprehensive business plan, you can realize your dream of running a successful dental practice.