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Product Profile: U.S. Bank

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Purchasing a practice requires knowledge in law, accounting, human resources, banking and business. Dentists can avoid problems in the purchasing process by assembling a team of experts, asking the right questions, fully understanding the required business considerations and choosing an appropriate lender. Here are some tips to help you finance the purchase of a practice.

Do Your Practice Purchasing Homework

  • Prequalify for your financing to determine if you can borrow the needed money to purchase a practice.
  • Negotiate lease/purchase details up front to avoid costs and confirm terms that are acceptable to you.
  • Be aware of risks such as interest rate variability.
  • Ensure sufficient cash flow over a seven-year period for the new practice to support your living needs, tax liability, practice debt and expenses.
  • Determine if the practice purchase includes the accounts receivable and reach out to a consultant to weigh options.

Research Financing Options

  • Dental practice financing loan from a specialty lender: Specialty lender with an understanding of the dental business that uses the assets of the practice for collateral.
  • Commercial loan officer from a local bank: Banker with business lending knowledge who uses overall practice, as well as buyer's home and bank accounts, as collateral.
  • Financing from the seller: Seller's financing can be used in conjunction with one of the previous options to provide further security or eliminate some risk.

Understand Loan Considerations

  • Interest Rates: In most cases, interest rates are fixed and usually tied to long-term treasury bills, swap rates set by the Federal Reserve or other cost-of-funds indexes. Always ask for an amortization schedule, compare true APR, monthly payment and total out-of-pocket expenses.
  • Term: Standard loan terms of five to 10 years are the most common. Before deciding on a term length, discuss the options with an accountant who can evaluate the accounting and tax implications.
  • Payment Types and Terms: Take time to understand payment types and terms. Payment and prepayment penalties can impact the overall cost of your loan. Payment terms are a differentiating factor between lenders. Poor terms can cost you thousands of dollars over the course of a loan.

Payment Types

  • Equal Payments: You make equal payments over the term of the loan on a standard amortization schedule.
  • Step Plans: You make lower or no payments for an initial period of time.
  • Re-price the Loan: To obtain lower interest rate payments and greater interest savings in first three to five years. A credit review is usually not required at the re-price period.
  • Balloon Payments: You have a low rate for seven years, after which time the loan is refinanced at the current interest rate.

Payment Terms

  • Principal Reduction: Understand how soon you can make extra payments to reduce the principal without a penalty. This can shorten the term and overall interest costs.
  • Early Payoff: Often carries a penalty and varies greatly between lenders. Ask lenders what the pre-payment penalty is and how it's calculated.

Collateral

Generally, dental practice lenders will take the practice as collateral by establishing a first lien against the assets. If financing through a traditional commercial lender, they may use the practice assets and require additional collateral such as the buyer's home and bank accounts.

Conclusion

Educate yourself on the process of buying a practice and surround yourself with a team of experts. A lender that has the expertise, stability and commitment to help consider alternatives and analyze your unique situation will help ensure a suitable financing plan for your purchase.


*This information represents the opinion of U.S. Bank and is not intended to serve as a recommendation or solicitation for the purchase or sale of any particular product or service. These views are subject to change at any time based upon market or other conditions. The information does not constitute advice and is issued without regard to any particular objective or the financial situation of any particular individual. U.S. Bank and its representatives do not provide tax or legal advice. Consult a tax and/or legal advisor for advice and information concerning a particular situation.

Author's Bio
Jeramie Eimers is a practice consultant for U.S. Bank Practice Finance Services. For more information, please contact Jeramie Eimers at 800-313-8820 ext. 2 or visit usbank.com/practicefinance.
Dentaltown Magazine
September 2025
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