The field of dentistry is a competitive industry, leaving many looking for dental practice loans to help them get ahead. In 2017, there were over 150,000 dentists, with 19 percent growth per year. In fact, according to the U.S. Bureau of Labor Statistics, the U.S. should expect to see another 29,000 new dentists enter the field before 2026—to the tune of about $158,000 in annual salary each.
It takes far more to run a dental practice than just a dentist, however; dental hygienists, assistants, lab technicians, and office personnel are all necessary now as practices grow. In addition, you’ll need equipment and supplies—everything from X-ray machines to dentist chairs and instruments. All of that can end up costing between $300,000 and $550,000—and that’s just to open your doors.
With those costs in mind, lets take a look at what kind of dental practice loans are available.
On this page:
- Dental Practice Loans for Small Businesses
- Common Dental Practice Costs
- Challenges of Getting Financing
Dental Practice Loans for Small Businesses
If you’ve made the decision to seek a dental practice loan, the next step is finding the best small business loan lenders. There are several lenders in the financial market that are familiar with the specific needs of a dental practice and can help guide you through the loan process.
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- Time in business: 3+ months
- $2.5K in monthly revenue
- Minimum credit score: 450
This lender specializes in loans made through the federal Small Business Administration. SBA loans offer lower rates than alternative or private market loans and can get you on the road to full financing quickly.
To pre-qualify, you simply fill out a short form on their website. The application doesn’t negatively affect your credit either; SmartBiz runs a soft credit inquiry initially and only runs a hard inquiry once you’ve accepted their offer and filled out the full complement of paperwork.
You can be pre-qualified for up to $500,000 within five minutes and can finance a long list of activities, including office space purchase, employee hiring, advertising, equipment purchasing, or even working capital.
SmartBiz loans have a variable rate of the prime rate plus 2.75% to 3.75%, which currently averages out to about 9.18% with all loan origination fees. The fees are 2% of the loan amount, and if your loan is $125,001 or more, you’ll also need to pay a guarantee fee to the SBA of between 2% to 3% of the loan.
OnDeck is a well-known lender that offers dental practice loans as well as lines of credit. Term loans can be up to $500,000, with lines of credit available up to $100,000.
Applications are reviewed with a soft credit inquiry, and you can apply online or by calling their customer service at 888-269-4246. The entire process from application to money in hand can be as short as 24 hours.
Loans through OnDeck can be for terms as short as three months or as long as three years, depending on what you need to accomplish.
Interest rates can be as low as 9% simple interest or 9.99% APR. The loans can be used to finance buying or starting a practice, buying new equipment, or infusing your practice with some working capital.
Common Dental Practice Costs
First and foremost, you’ll need a place to practice. Whether you buy or lease an existing building or build something from scratch, you will likely end up needing to remodel or build patient exam rooms, office space, and room for your supplies. Where you practice is important too; dentists who are practicing in an area with a high cost of living such as Seattle will pay more for that space than someone in a small town in Iowa.
You might be thinking you can get by with a very small office and two patient rooms, but if you’d like to expand later, you will have to build, add on, or move—and all of those options mean a lot of cost and inconvenience to your patients. They might end up going somewhere else for their dental care. It’s better to set up for the office you’d like to have in five years, even if it means you need to grow into it a bit.
Speaking of supplies, you’ll need to purchase all of them; in addition, you’ll incur plenty of costs as you’re opening your doors. Marketing is critical; you’ll pay for advertising campaigns and possibly new patient promotions to get people through the door. Staff requires salary—and possibly benefits—and you’ll also need insurance on your building and equipment. One dental assistant’s average pay is about $31,000 annually; multiply that by the number of assistants you’ll need, plus hygienists, office staff, and cleaning staff, and you might be feeling a bit overwhelmed at the cost of having a practice.
Financing Challenges for a Dental Practice
Getting a small business loan seems like the best option for making all of this happen, but there are often issues with getting that financing. One of the most obvious obstacles may be your student loans. You probably graduated from dentistry school with a significant amount of student loans; according to the American Student Dental Association, the average senior graduating from dental school carries over $287,000 in loans. With that kind of financial weight on your back, business lenders might be leery of offering you another loan.
If you have poor credit, that can also work against you. Lenders typically aren’t interested in approving loans for those they think are too much of a risk; if you have past credit problems, that’s how lenders will see you. There are lenders out there who are willing to loan to borrowers they feel will be a higher risk, but the borrower will pay far more in interest and fees over the life of the loan in return. The good news, however, is that as a rule, lenders see dentists as good credit risks.
Another issue with getting financing for a dental practice might come down to the type of dentistry you’re looking to practice. Dentists who specialize in cosmetic work might find difficulty getting 100% financing; someone working primarily in oral surgery or family dentistry, however, might have no issue at all due to the constant demand for services.
Being a dentist is expensive, and the cost might seem prohibitive if you have your heart set on being one. With some smart planning and the right dental practice loan, you can have the practice you want.