The Best Dental Practice Loans for Financing Your Business

Best Dental Practice Loans

• 1. SBA Loan Options for Dental Office Financing

  Across almost every industry, traditional term loans offered through the U.S. Small Business Administration’s various loan guarantee programs—known universally as SBA loans—are revered as the best of the best in the business loans market. Through these programs, the SBA partners with local intermediary lenders—typically traditional brick-and-mortar banks—to guarantee up to 85% of loans funded to small business owners. With this guarantee, banks can fund small business loans for larger amounts and at lower rates than their risk calculations would otherwise allow.

  The SBA 7(a) loan program provides a particularly strong fit for dental practice financing due to its great terms and wide flexibility in the use of funds.

  Here are the quick facts you need to know about SBA 7(a) loans for your dental office:

  • Loan Amounts: $5,000 to $5 million
  • Repayment Term: Five to 25 years
  • Interest Rates: SBA loan rates start at 7.75%
  • Time for Approval: Three weeks to several months

  As you’ll note above, a major downside of working through the SBA’s loan programs for a dental office loan is a relatively long time for approval, which can delay your timeline. That said, Fundera works with banks who are part of the SBA’s Preferred Lender Program. Preferred lending partners have more authority to underwrite applications without the SBA’s supervision, which makes the process go faster.

  Keep in mind that the application process for SBA 7(a) loans is rigorous and highly selective. You should expect to provide extensive documentation about your business before learning whether your application was approved.

• 2. Bank Loans to Finance Your Dental Practice

  When you need a business loan, shouldn’t the bank where you already manage your business finances be the obvious choice? For dentists, this simple solution may, in fact, be the right one.

  That’s because, even as business borrowers across other sectors lament that traditional bank loans carry near-impossible qualification standards, dentists tend to have better-than-average success with bank financing. Institutions including Bank of America, Wells Fargo, and U.S. Bank even have resources and specialists dedicated to meeting the unique needs of dentists and other health care providers, including relationships with the American Dental Association and other industry groups to offer reduced fees and other special offers for members.^[4]

  Here are the quick facts you need to know about term dental office loans from traditional banks:

  • Loan Amounts: $30,000 to $5 million
  • Repayment Term: Up to 25 years
  • Interest Rates: Starting at 7%
  • Time for Approval: Two to six weeks

  As traditional banks offer an array of options for dental practice financing, the exact terms of your dental office loan will vary based on your loan’s purpose, amount, and term—as well as your financial situation. If you have a good credit score and are interested in traditional bank financing, start with a phone call to your bank’s practice financing specialist to learn more about your options.

• 3. Short-Term and Medium-Term Dental Practice Loans

  For those seeking a large amount of funding to start or expand a dental practice, there’s little substitute for the customized practice solutions and enviable interest rates offered by banks’ dental practice financing specialists.

  But if what you really need is a fast dental loan with as little paperwork as possible, you’ll likely be better served by a short-term or medium-term loan from an online lender such as Kabbage, Funding Circle, or OnDeck.

  These loan options come with pros and cons: They are more expensive than the other options on our list and come with a shorter repayment period. At the same time, they can provide cash in hand within as little as one business day after a simple 20-minute application—even for borrowers with poor credit. For busy dentists facing immediate cash-flow challenges, there is little substitute for this level of convenience.

  Here’s what you need to know about short-term loans and medium-term loans from online alternative lenders:

  • Loan Amounts: $2,500 to $250,000
  • Repayment Term: Three months to five years
  • Interest Rates: Starting at 10%
  • Time for Approval: As fast as one business day

  Given the higher interest rates and quick repayment periods, short-term loans shouldn’t be used to fully finance your dental practice. But if you’re busy, aren’t worried about repayment, and just need cash quickly, these dental office loans are a convenient solution.

• 4. Business Lines of Credit for Dental Practice Working Capital

  When it comes to convenient financing, getting cash in hand quickly isn’t the only need dentists face. As you deal with the uncertainty of costs related to your dental practice, what if you aren’t entirely sure how much financing you’ll need—or exactly when costs will arise?

  Business lines of credit are specifically designed to address these circumstances. Similar to a traditional credit card, approval for a business line of credit gives you access to funds up to a set maximum amount. You’re required to pay interest only on the funds you actually withdraw.

  Imagine, for example, that you obtain a line of credit of $50,000 to meet the needs of your dental office. At first, though, you only need to withdraw $5,000 for immediate expenses. Even though the full amount is available to you should you need it, you’re only required to pay interest on that $5,000 while it’s withdrawn. And best of all? Funds are replenished once you repay what you’ve borrowed, so you can re-use the same line of funds over and over again.

  These are the terms you can expect when seeking a business line of credit for your dental office:

  • Loan Amounts: $10,000 to $1 million
  • Repayment Term: Six months to five years
  • Interest Rates: 7% to 25%
  • Time for Approval: As fast as one business day

  Since there’s no cost associated with a business line of credit until you actually use the funds, this dental practice financing option might be worth pursuing even if you have no immediate need for a dental loan. That way, you can take your time shopping around for the best possible rates and terms, then rest easy with the peace of mind that funds are available when you need them. Both banks and online lenders provide business lines of credit.

• 5. Dental Equipment Loans

  From dental chairs and lighting to X-ray equipment, basic instruments, and even office computers—equipment purchases represent a significant portion of the total startup costs for any dental practice. This is just one of many reasons why dental equipment loans are an ideal choice for many dentists.

  Another standout factor? Equipment financing is far more readily accessible for dentists with bad personal credit, and because the equipment itself can be used to secure the value of the loan, you likely won’t be asked to offer up additional personal collateral. The primary downside to equipment financing is that you might have to put down a 10% or 20% down payment, and it can be difficult to come up with the cash for that.

  Let’s take a look at the numbers behind dental equipment financing:

  • Loan Amounts: Depends on the cost of equipment and the lender
  • Repayment Term: Six months to five years
  • Interest Rates: Starting at 6%
  • Time for Approval: As fast as one business day

  Of course, if you’re opening a new dental practice, equipment purchases won’t be your only significant expense. Even so, dental equipment financing does cover one area of significant need and may even be combined with other forms of financing in order to fully fund your dental practice.