We
don't need to tell you, if you're reading this, you KNOW, opening or
purchasing a dental practice is an expensive endeavor! Many dentists,
whether they have just graduated from dental school or are already
established and thriving in their profession,
often find themselves lacking the necessary savings to cover all their
expenses.In fact, many have high student loan debt to pay and may wonder
how they can afford to open a practice.
At Titan Web Agency, we partner with dentists and dental practices
daily and often get questions related to dental practice financing. If
you’re considering opening a practice, you want to expand an existing
dental practice, or you plan to buy a practice, you should know that
business loans for dentists can provide the money you need to achieve
your goals. In this post, we’ll explain the ins and outs of financing a
dental practice with a business loan.
Understanding Dental Practice Financing
Dental practice financing isn’t difficult to understand but can take
several forms. Most businesses, including dental practices, need working
capital on hand to pay for their expenses. These expenses may include
rent, payroll, equipment, supplies, and marketing, as well as the cost
of purchasing a practice in some cases.
Financing may be private and come from investors. It may also come in
the form of a business loan or line of credit. Business lending may be
obtained from banks and credit unions, as well as from online lenders.
In most cases, the requirements to borrow money from a bank are the most
stringent. Online lenders may have more flexible guidelines, but you
should know that these typically come with higher rates than what you
would find at a traditional lender.
Debunking Myths About Business Loans for Dentists
Before we dive into the details about small business loans for dentists, here are a few common myths you may have heard.
Myth #1: You Can’t Get a Dental Business Loan if You Have Student Loan Debt
One of the most persistent myths about dental practice financing is
that you can’t qualify if you have student loan debt. That’s simply not
true. Most dentists have some student loan debt. In fact, the average student loan debt for a dental school graduate is $293,000 as of 2022.
The good news is that you can still get a dental business loan if you
have student debt. Business lending is based on the earning potential
of the practice, not on your outstanding debt. Keep in mind that it’s
essential to make your student loan payments on time since paying late
will negatively impact your credit score, which can affect your ability
to qualify for a loan.
Myth #2: You Shouldn’t Talk to a Lender Until You’re Ready to Apply for a Loan
Another myth we have heard is that it isn’t worthwhile to talk to a
lender until you’re ready to apply for a loan. That’s not true, either.
Talking to a lender early in the process, whether you’re purchasing
an existing practice or starting a new one, can help you better
understand your options and do what you need to prepare for the
application process.
Myth #3: You Can Use the Same Loan to Buy Property and Finance Your Dental Practice
If you’re buying property for your dental practice, you may have
heard that you can use a single loan to buy the property and finance
your practice. That’s not the case.
Business loans and property loans are structured differently. Real
estate loans amortize over a longer period than business loans,
typically between 20 and 30 years. Discuss your requirements and see
what they can do for you to provide the financing you need when talking
to a lender.
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