As with all members of your team of advisors, finding the right lender isn’t a cut-and-dry process. Likewise, your lender should have a strong understanding of the industry, as well as the ability to judge high-quality practices. Because the dental industry is one of the most profitable in the nation, qualified lenders are eager to jump on the proverbial bandwagon. Here are some factors to take into consideration when shopping for a dental practice lender.

Supply and demand

Part of understanding the dental industry is recognizing the supply and demand factors. Lenders with no understanding of the industry assume dental professionals are high-risk loans because they have few tangible assets and too much student loan debt. However, the truth is the loans are low risk and require little or no due diligence. Simply put, no matter the economy, people will need dentists as part of their overall health, and for every dentist retiring, at least one new one is entering the field.

Potential for growth

Dental services are in demand thanks to an aging population, as well as the availability of dental insurance, and those with dental insurance are most likely to use it at least once a year. Lenders look for longevity and continued demand in an investment, in addition to maximum payout amounts for services, which are typically high for specialists.

Capital gains

Of appeal to lenders is the fact that dental professionals require significant capital. The primary driver of financing continues to be practice start-ups and acquisitions. However, not only do new practices need as much as $500,000 for equipment, leasehold improvements, and working capital, but existing practices also need financing for new equipment.

What’s next?

Contact the experts at Professional Transition Strategies to find a lender in your area that fits your dental practice needs.