Owning and operating a dental practice can be an exciting and rewarding experience. Small business owners of all kinds consistently rank as being some of the most satisfied people in the country, so running your own practice can be a wonderful idea.
However, getting started with this task requires a significant amount of financial investment. It costs a lot to get started and maintain operations.
Whether you are looking to start a new dental practice or expand an existing one, securing financing is essential. How can you secure dental practice financing to make your dreams come true? What do you need to know about paying for a new dental office?
Read on and we’ll walk you through what you need to know.
DEVELOP A BUSINESS PLAN
The first step to securing dental practice financing is to develop a business plan. This is generally the first step for anyone who is trying to secure financing for any kind of project.
A business plan is a document that outlines your goals, objectives, and strategies for your dental practice. It should include details on your target market, services you will provide, marketing strategies, financial projections, and more.
A well-written business plan can help lenders understand the viability of your dental practice and the potential for success. Think of it as a blueprint for your business, created so you and others can follow it.
It should be as detailed as you can make it so that when you do get your financing, the only thing you need to worry about is following through on the plan. All your major decisions will have already been made.
CHOOSE THE RIGHT FINANCING PLAN
There are several financing options available to dental practice owners. Those include traditional bank loans, SBA loans, equipment financing, and more.
It’s important to choose the financing option that best fits your needs and goals.
Traditional bank loans are often the most common choice, but they can be challenging to obtain. SBA loans are another popular option, but they require significant documentation and can take longer to process.
Equipment financing is a good choice for those looking to purchase new equipment, but it may not cover other expenses like rent, salaries, and other operating costs.
Online lenders may offer dental practice loans for those looking to get this kind of new operating on the ground. It’s important to shop around and looks at the rates that might be available to you.
It’s also important to be aware of your credit score and your lender profile ahead of time, as these factors will impact what kind of term loans you may be able to arrange with a lender.
To improve your credit profile, it’s important to pay your bills on time, keep your credit utilization low, and avoid opening too many new credit accounts at once. This is all-important to keep in mind in the months leading up to your lending application.
Some lenders are more forgiving of low credit scores than others.
PREPARE EVIDENCE OF EXPERIENCE
Lenders want to see that you have experience and expertise in running a dental practice. This can help demonstrate that you have the skills and knowledge necessary to make your practice successful and repay your loan.
What are some ways to showcase your experience and expertise? The simplest might be to include a resume that highlights your education, work experience, and your relevant certifications.
Any references you can include, such as colleagues, other business owners, or mentors, can be helpful as well.
You may even want to include a personal statement that explains your passion for dentistry and your commitment to building a successful practice.
CONSIDER PROVIDING COLLATERAL
One thing you may want to consider ahead of seeking financing for your dental office is if you’re willing to put up collateral. If you have a low credit score, you may be able to secure better terms for yourself if you’re able to pledge against your loan.
Collateral is an asset that you pledge to a lender to secure a loan. If you default on the loan, the lender can seize the collateral to recover their losses.
Providing collateral can increase your chances of securing financing and can also help you obtain more favorable loan terms.
If you own commercial or residential property, you can use it as collateral. Valuable equipment or inventory can also often be used as collateral.
When providing collateral, be sure to have it appraised by a professional to determine its value. You should also make sure that you have proper insurance coverage to protect your collateral.
CONSIDER A PROFESSIONAL ADVISOR
Securing dental practice financing can be a complex and challenging process.
Working with a professional advisor, such as an accountant or financial advisor, can help you navigate the process and increase your chances of success.
A professional advisor can help you develop a business plan, choose the right financing option, and improve your credit profile. They can also provide valuable insights and advice on running a successful dental practice.
DENTAL PRACTICE FINANCING
If you want to open a dental practice, you’ll need the financing to make it possible. While a dental practice can be quite lucrative, it can also be expensive to get on its feet.
If you’re uncertain about where to start with this kind of financing, the above information can help. Dental practice financing doesn’t have to be hard to secure – you just need to know what you’re doing.
Have more questions or need immediate assistance securing financing? Give us a call anytime for more information.