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Dentists often obtain dental practice financing to buy an already established business or setting up a new business. Since running a dental practice is highly profitable, it is considered a creditworthy small business enterprises (SBE). Moreover, a dental practice is one of the most recession proof businesses, earning profits even in times of economical troubles. As a consequence, there are plenty of financing options dentists can take advantage of. Still, if you need dental practice financing to start a new business, preparation is a must. To get you ready, some essential tips for business finances to start your dental practice as soon as possible are detailed below.
Make A Great Loan Presentation
The first criteria of getting dental practice funding is to make a great loan presentation. Whether you are presenting to a prospective funding partner or a bank employee, the presentation is key. Initially, the loan application should contain all the necessary information including purpose, total amount and primary collateral you can offer. Then, the loan presentation will give lenders the details of your business practice. They will ask about your debt to worth ratio, debt service coverage and management experience. If you hire a dental CPA to present the loan application on your behalf, it could help make your presentation more professional. Of course, a great loan presentation will raise your chances of getting dental practice financing.
Have Your Business Plan Ready
Before you start negotiating with lenders, preparing a detailed business plan is necessary to secure financing. This business plan should mention whether you are purchasing a running practice or starting a new practice. Additionally, it should mention how you plan to get clients, your professional credentials and required number of employees. Most importantly, a well prepared business plan shows how soon you will be able to start repaying the loan. Preparing the complete details on your start-up dental practice improves your chances of getting dental practice financing. Certainly, lenders will see your seriousness and likelihood for success.
Maintain High Personal Credit Score
When it comes to borrowing money from traditional financial organizations, maintaining a high personal credit score is necessary. Poor personal credit scores are one of the most common entrepreneur mistakes. Generally, a FICO score above 725 is sufficient to convince most lenders. By paying credit card debts and other bills on time you can easily enhance personal credit score. In addition, keep revolving debt amounts low, staying within your borrowing limits. Surely, a high personal credit score will improve your loan eligibility for dental practice financing.
Select Loan Provider With Care
While planning to get dental practice financing, select loan providers capable of providing lower interest rates and convenient loan terms. Ensure that the lender allows comparatively lower monthly payments. If you find a specialty lender who only offers loans to doctors, they may offer better terms and rates to new dental practices. On the whole, selecting the right loan provider makes obtaining dental practice financing much easier and more affordable.
Dental Practice Loan Providers
If you have a good credit rating, you have many more options available to you than those available to dentists with poor credit. This is especially true if you live in the best state to incorporate. In addition to loans from private banking institutions, you can also secure a loan from the Small Business Administration for your dental practice. There are also special lending institutions that provide credit solely to healthcare practices, like your dental practice. As long as your credit rating is above 630, this is an excellent option to consider. Weigh your options for dental practice lenders, and be sure to pay attention to APR when making your decision.
Consider Dental Practice Financing Alternatives
Dentists worried about their personal credit history or lack of collateral should consider alternative dental practice financing methods. One benefit of getting financing from alternative lenders is quicker approvals. Moreover, alternative lenders do not set stringent eligibility regulations. Two popular alternative dental practice funding sources are online lending and working capital loans. Certainly, considering alternative lending methods increases your number of financing options, increasing your chances of securing a new business loan.
SBA Loans
SBA loans are also available to help you finance a dental practice. This way, you have the money to provide a nice home office atmosphere to your dental patients. Yes, SBA loans are notoriously difficult to get. However, they are definitely worth a shot. Small business loans from the SBA offer much better APR than traditional business lenders and other dental practice lenders. Lenders who cater specifically to entrepreneurial dentists can charge anywhere from 30-50%. SBA loans, on the other hand, will only cost you 6-9.5% APR. This is obviously a sizable difference. Make sure you apply for SBA loans for dental practice ventures too, even if you do not think you have good odds of getting approved.
Securing dental practice financing is quite achievable. Due to the high creditworthiness of the business, several lenders offer loans exclusively to dental practice owners. On top of that, selecting the right lender improves your chances of getting better terms and interest rates. If you are wondering how to get money to start a business in dentistry, some easy steps like maintaining a high credit score and having your business plan ready will help expedite the process. Finally, obtaining dental practice financing just requires a bit of professionalism, credibility and patience.
