If you are starting or expanding a dental practice, you will likely require significant financial backing. For most business owners, this comes in the form of a business loan, in this case, a dental practice loan.
A dental practice loan can vary widely in its monthly premiums, interest rates, and eligibility criteria. The right loan will cover the costs of new employees, equipment, and operational expenses while offering a smooth application and approval process. However, not all dental practice loans are made equal.
Continue reading to understand your options for a dental practice loan and our advice for maneuvering the application process and maximizing your chance of loan approval.
What is a Dental Practice Loan?
A dental practice loan is a financially flexible loan awarded to a business owner who plans to start or currently owns a dental practice. Since dentistry is a lucrative and stable industry, lenders will view this loan as a safer investment than in other sectors. Due to this relative security, lenders may offer dental practice loans up to several hundred thousand dollars.
Another benefit of borrowing in a stable industry is that lenders often offer advantageous interest rates and payment schedules to allow dental practitioners to start their businesses. However, just because a dental practice loan is relatively beneficial for borrowers does not mean that applying is easy.
How are Dental Practice Loans Used?
To determine eligibility, you must first know how dental practice loans can be used. There are four primary ways:
- Starting a New Dental Practice: The loan can be used to pay for new staff, equipment, marketing, real estate, and other administrative costs.
- Expanding an Existing Dental Practice: A dental practice loan can also be used to expand your business’s property, buy a second location, expand the franchise, or move your practice to a new office.
- Hiring New Staff and Buying Equipment: New staff and functioning equipment are important to maintaining a successful dental practice. A dental practice loan can pay for recruiting, training, and onboarding costs.
- Consolidating Existing Debt: Dental practice loans can eliminate debts by paying off other loans or credit cards. The goal is to consolidate the business’s debt into a single dental practice loan, which is often more manageable.
How to Apply for a Dental Practice Loan Successfully
You must meet specific eligibility criteria to qualify for a dental practice loan successfully. The lender will primarily check these three factors to determine your risk level as a borrower:
Personal Income: Personal income may not be a significant eligibility criterion if you have an established practice. However, especially for new businesses, personal income communicates your ability to pay off loans on time to prospective lenders.
Business Income: Lenders often ask to see past returns to demonstrate your business income and predict repayment reliability.
Credit Score: Your credit score factors into your perceived risk level for a dental practice loan. The lender will review your credit history for missed due dates and outstanding balances to set your interest rates and determine your eligibility accordingly.
In addition to meeting these eligibility criteria, potential borrowers can do more to strengthen their applications and pass their potential lender’s evaluations.
How to Strengthen Your Application
When reviewing your loan application, your lender’s primary goal is to assess your risk level as a borrower. You can strengthen your application by establishing a clear business plan that outlines your projected expenses and revenue, especially if your application is for a new business.
Additionally, you should assemble financial documentation in advance to demonstrate that you are dependable, experienced, and financially stable. Offering a downpayment or collateral can also help you obtain favorable terms on your new loan.
Speak with an experienced financial advisor to learn more about how you can obtain the dental practice loan you need to start or expand your business. Choosing the right lender and advisor is important to submitting a successful application. Credit unions and banks should be the priority since they have the financial stability to offer favorable business terms.
Consult Woodsboro Bank to Obtain Secure Dental Practice Loans
At Woodsboro Bank, our team has in-depth experience helping dental practices obtain the loans they need to start or expand their businesses. We offer personalized financial advisory services to help you strengthen your application, assemble the correct documentation, and pass your credit history checks.
We've created a comprehensive checklist to streamline your loan application process. Download it here: Dental Practice Solutions Checklist.
Contact our team today to learn how we help you find the dental practice loans you need to take your business to the next level.