While no one likes going to the dentist, these businesses are able to provide a very important service to the general public. Dental practice business loans are very easy to obtain given that the practitioner is a licensed medical professional who can receive their payments not only through patience but also from publicly funded health systems and private insurance.
Unlike most other types of business loans, can carry a much higher loan to value percentage given the extensive economic stability of the revenues produced by a dentist. In fact, there are some specialty lenders out there that will provide nearly 100% of the financing necessary in order to establish a new dental practice or acquire an existing one from a practitioner. Within any documentation that is going to be provided to a financial institution, a full list of the equipment that is going to purchase with the funding should be provided. This includes an overview of dental equipment, chairs, surgical tools, x-ray machines, computers, dental practice software, and other assets that are normally purchased in conjunction with the development of a dental practice. Also, a financial institution, bank, or lender is going to want to see the resume of the dentist in order to ensure they have graduated from an accredited dental school and are properly licensed in the state in which the practice is going to be located. These are all pretty straightforward pieces of documentation to provide to a financial institution. Generally, the prior two years of tax returns from the dentist is also going to be required as part of the overall loan package.
A business plan specific for a dental practice may also need to be included especially if the dentist is seeking a small business administration loan or conventional business loan. This business plan should feature a five-year financial statement that includes a profit and loss statement, cash flow analysis, balance sheet, breakeven analysis, and business ratios page. A substantial portion of this business plan should have information regarding the demographics of the target market.
This generally includes taking a look at household income, population density, percentage of people are covered through dental insurance, and the growth of the population over a tenure.. This is going to be one of the common things that a dentist needs to be aware of as they expand their practice within any specific market. One of the other components that is going to be needed within the business plan is a pretty large scale marketing plan that showcases how the dentist will specifically differentiate themselves from other practitioners in the market. Given that in any market there are usually a number of dentist in practice – both as solo practitioners as well as group practices – it is important to have a high-impact marketing campaign that will ensure that people are going to come to the dentist on a yearly basis for their tooth care needs.
One of the key things to discuss with any financial institution or loan officer when seeking a dental practice business loan is to make sure that an overview of the cash flow is provided as well. As with most healthcare related businesses, there is usually a 60 to 120 day timebframe from which services are rendered to which the dental practitioner receives their payment. This is due to the fact that there is a complicated bureaucracy as it relates to processing medical claims. As such, keeping a close eye on cash flow is one of the be aware of when they launch business operations. In some cases, much like medical practices, a dentist will also take out a working capital line of credit that is secured by their accounts receivables. There are a number of companies out there that will factor these invoices, but this is a very expensive form of financing especially for a medically focused business that is almost guaranteed to receive these payments. A medical billing company can be hired to assist a dentist with managing the complicated cash flow issues that occur on a monthly basis.
As with any type of financial undertaking, a certified public accountant should be retained in order to make sure that the dentist isn’t getting over their head when taking out a large loan in order to develop or expand a new practice. This CPA can also be instrumental as it relates to ensuring that the documentation that needs to be seen by the financial institution is properly prepared. This is especially important as a relates to any prior your tax returns that the bank is going to request as part of the overall lending package.
Overall, obtaining a dental practice business loan is very straightforward and can be obtained very easily and in any economic climate. The ongoing demand for these services ensures that dental practices can continue to satisfy debt obligations even during times of economic recession. Additionally, if the dental practice does not work out then the dentist can find a job at a hospital or group dental practice that will allow them to continue to repay their debt obligation even if the business does not go as planned.