The Skinny on Business Loans for Dentists
When you first headed off to dental school, you likely envisioned a day when you would hang out your own shingle in a practice, either by yourself or with a partner or two. All of those long hours in dental school would pay for themselves when you would be able to leave the practice for the day at noon on Wednesdays and Fridays, heading to the golf course, the tennis courts or wherever you like to spend your afternoons.
Of course, the first years in independent practice are not always that easy. You may have started off in a larger group and brought some of those patients to your own private practice, but even if you have already put together a robust slate of patients, there could be times when you wanted to expand your business – moving into a larger suite of offices or into a better part of town, investing in new equipment, or relocating your practice because you decided to move to a different part of Canada – but you don’t have the liquidity that you need do pull it off. You’ve heard about dental small business loans, so you decided to go to the bank and see about getting the financing that you needed.
Unfortunately, because your practice has only been open for about nine months, the bank is a little skittish about extending you the money. It doesn’t help that you went through a divorce a few years back and your wife let some of your bills lapse without you knowing it, and one of your cars was almost repossessed. You redeemed it, but that’s a stain on your credit for a couple more years. She ran up a ton of money on some joint credit cards that you didn’t know about until the bank ran your credit report for your loan application. Business loans for dental professionals are often difficult to come by – ironically, even more so for the dentists who actually need them.
So if you’ve headed to one or more banks in search for business loans for dental practice expansion and haven’t gotten the answer that you wanted, then you’re far from alone.
Where to Get Dentistry Business Funding
One reason for Best Bridge Capital was to connect small and mid-size business owners like you with the funding they need to expand their operations and take their dreams to the next level. Far too many dentists (and entrepreneurs in a variety of fields) have felt the same frustration that you have – you’ve put together a business that’s succeeding enough to merit expansion, but you don’t have the liquidity on hand right now to make that happen. You know that there is no such thing as standing still as a business; if you’re not growing, you’re getting ready to shrink, because the competition is out there working to grow as fast as they can.
So let’s talk about how a working capital cash advance might work for your practice. You and your college roommate went to undergrad and dental school together, knowing that one day you would want to open your own practice. So you scraped your way through dental school. You spent a couple years working in a larger group to save up the money that you would need to open your own practice together.
Then, you finally did it. You pooled the money you and your partner had been saving up and opened your own practice in offices in a blue-collar part of town. Some of your patients came with you, but a lot were leery of driving across town just to keep you as their dentist. You’ve just found out that some offices are opening up in the same part of town as the practice where you worked before opening your door, and even though the rent will be three times what you’re paying now, you feel confident that you can cover it. The problem is that you will need to pay for your moving expenses, and you need to upgrade your furniture. You haven’t been open that long, but you started out with secondhand equipment and see this as the right time to upgrade, along with your upgraded clientele.
You’ve been to the banks, though, and you haven’t gotten the answer that you wanted. At Best Bridge Capital we have a number of lenders waiting to help you with a working capital cash advance to get you the liquidity that you need. You come in and go through the application process: we run your personal and business credit scores (they play a role in the final decision, but not as strong a role as they do with a bank loan), as well as three to six months’ worth of bank statements for your business, as well as records of income from credit and debit card sales. Within a business day or two, you should have at least one offer from the BBC lending network. You fill out just one application, but the information goes to multiple lenders in our network.
Let’s say that you get approved for $400,000 at a factor rate of 1.15. The factor rate tells you how much you have to pay back when you take the advance, and it generally varies between 1.15 and 1.45, with such factors as your credit scores, the length of time your practice has been up and running, and the regularity and volume of your credit and debit card income over that time. You multiply the advance amount by the factor rate to learn that you will have to pay the provider back $460,000.
What’s the term?
However long it takes you to pay it back. If that sounds too good to be true, it is worth pointing out that you will have to pay that total back whether you can settle it in six months or two years – there is no bonus for early prepayment. The factor rate reflects your cost.
So how do you make payments?
They come out of your debit and credit card payments each business day or week. You and the advance provider come to terms on a repayment percentage, and that’s how much you send to the provider each business day (or week, in some cases). So if your repayment percentage is 12% and you bring in $10,000 in credit card and debit cards on a particular business day, $1,200 of that would go to the provider.
But what if no one pays with a card on a given day?
Or what if you only take in one $50 payment via card, and the rest come from cash, cheques and ACH transactions from dental insurance payments? Then you only would pay $6 on your advance that day (12% of $50). Your payments vary as your income from the agreed sources does.
Business loans for any dental practice
If you work as a dentist in a general practice, there is quite a bit of equipment that you might need to replace or add, depending on your current state of growth. Do you want to use dental lasers instead of drills (or to whiten teeth)? Panoramic X-ray machines are helpful to view your patient’s whole mouth at the same time. If you don’t have stations set up next to each chair yet, a mobile dental cart can serve as bridge equipment until you grow your practice more.
Specializing in the pulp and nerve of your patients’ teeth, you’ll likely need much of the same equipment as a general dentist – chairs, stools, care stations, whether fixed or mobile. The electric motors that are needed to provide a smoother and more precise root canal can make a big difference in patient comfort (and patient online reviews of your practice). The latest obduration equipment and scalers are important to consider as well.
As with a general dentist, an orthodontist can most definitely benefit from having the latest panoramic X-ray and imaging technology at hand. Having the newest chairs, stools and care stations in your practice can make your office more attractive to potential clients. The equipment that you need on a daily basis, ranging from expanders and elastics to pliers and forceps and beyond, can be costly when you are setting up your practice, and a loan to help you get started can make all the difference.
You’ll need all of the equipment that a general dentist would use, but you may want to invest in sizes of chairs (and colors and decorative options) that are more suited to making children comfortable in your office. Word of mouth is a powerful force in pediatric medicine, and a friendly environment and a warm manner can go a long way toward building your practice quickly.
In this specialization, you’re often dealing with surgical issues in the mouth beyond the root canal. You’ll need scanning machines that help you determine whether your patients have oral cancer, and precisely where the tumor is located. Having up-to-date equipment in your office goes a long way toward building confidence in your patients.
Dealing with the bones and gums in the mouth, you’ll need several different types of equipment. Like other dental practitioners, you’ll want the latest in 3-D radiographic imaging, as well as treatment stations to go next to each chair. There are treatment planning software applications you can buy to help guide your procedures along the way as well.
When you’re designing implants for patients who need cosmetic dental repair, you’ll need a lot of the equipment as other dental specialists – chairs, stools, stations and radiographic equipment. You’ll also need the whole line of anesthetic equipment and products in order to perform your procedures. Keeping your office fitted with state of the art technology and equipment will patients more comfortable with patronizing your practice.
The advantages of an advance like this include a swift approval process and flexible payment terms. You can also qualify for more this way than through a traditional loan, because the advance providers use cash flow records to make the decision about how much to send you up front, instead of the assets that you already have on hand.
Curious to know more? Get in touch with BBC today. We’ll go over where your dental practice is now and make recommendations about the best path forward.