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Intro To Dental Practice Business Loans
The requirements for a successful dental practice have changed dramatically as of late. Newer technology provides less invasive ways to perform services like x-rays and fillings. Then there’s the need to market your practice to patients looking for low-cost plans consistently. Covering these expenses would be much easier if dentists didn’t have to wait weeks (or even months) to receive insurance carriers’ reimbursements. And when you’re preparing for the busy season, delinquent payments can’t stop you from obtaining the necessary resources to meet the upcoming surge in demand. United Capital Source has access to dental practice business loans that intend to stay competitive despite their tumultuous payment structure.
In this guide, we’ll answer the following questions and more:
What Are Dental Practice Business Loans?
Dental Practice Business Loans are business loans geared towards the cash flow cycles and periodic expenses of dental practices. Besides covering short-term needs and large purchases, Dental Practice Business Loans can bridge gaps in cash flow while dentists await reimbursements from insurance providers.
Business loans for dental practices can come in the form of:
- Business Term Loans
- SBA Loans
- Business Line of Credit
- Equipment Financing
- Working Capital Loans
- Merchant Cash Advance
- Revenue-Based Business Loan
- Accounts Receivable Factoring
How Do Dental Practice Business Loans Work?
Each of the products listed above can suit a different type of expense or cash flow issue. For example, let’s say you need to cover payroll and other monthly bills while awaiting reimbursements from insurance providers. Possible solutions for this common dilemma include a Business Line of Credit and Accounts Receivable Factoring.
A Business Line of Credit works best when the reimbursements are expected to come in shortly. Your interest rate depends on how quickly you can pay off the full balance. But maybe you’re not sure how long it will take for the provider to pay. Perhaps you need cash now, and the reimbursement might not come in until the following month. Accounts Receivable Factoring was designed for this exact situation.
You would sell the unpaid receivables for a discount price (at least 85%). Instead of waiting weeks or months for compensation, you’d get cash in just a few business days. It is now the responsibility of the factoring company to collect the payment from the insurance provider. When the payment is received, you get paid the remainder from the first sale, minus fees.
If you have subpar credit or rocky cash flow, you might consider a Merchant Cash Advance instead. This highly accessible option allows you to borrow against the strength of your debit and credit card sales. For many dentists, this is the preferred payment method for their patients. You could access enough cash to cover operational expenses during a slow period without making substantial payments until business picks back up.
Dental Practice Loan Options Compared
|LOAN TYPES||MAX AMOUNTS||RATES||SPEED|
|Merchant Cash Advance||$7.5k – $1m||Starting at 1.09||1-2 business days|
|SBA Loan||$50k-$10m||Starting at 5%||3-5 weeks|
|Business Term Loan||$10k to $5m||Starting at 5%||1-3 business days|
|Business Line of Credit||$10k to $250k||Starting at 8%||1-3 business days|
|Receivables/Invoice Factoring||$50k-$10m||Starting at 5.8%||1-2 weeks|
|Equipment Financing||Up to $5m per piece||Starting at 5%||3-10 business days|
|Revenue Based Business Loans||$10K – $5m||Starting at 9%||1-3 business days|
What Are The Advantages of Business Loans For Dentists?
Dental Practice Business Loans smooth out your cash flow so you can continuously obtain the resources to serve as many patients as possible. You can stay up to date with equipment, pay recurring bills on time, and stock up on supplies ahead of the busy season. When business slows down, you can maintain advertising campaigns and cover operational expenses despite decreasing revenue.
The same concept applies to gaps in cash flow due to delinquent insurance payments. You can stay current on bills and cover sudden expenses rather than waiting until compensation arrives in the coming weeks or months.
It’s also important to note that most Dental Practice Business Loans can be accessed very quickly. This means that when a piece of equipment breaks or you become low on supplies, you can have a solution in place just a few days later. You don’t need entirely consistent cash flow to get approved, so you’ll still have plenty of options during slow periods.
Lastly, even though most dentists started their careers to help people, they must stay competitive like any other business owner. This might involve ramping up their advertising or renovating their waiting area. The medical payment structure doesn’t make it easy to put money away for growth, hence the necessity for additional funding.
What Are The Disadvantages of Business Loans For Dentists?
Dentists may avoid additional debt solely because of their erratic cash flow. Appointments get canceled, patients take their time paying bills. In other words, it’s hard for dentists to predict how much cash they’ll have on-hand in the coming months. This makes it very difficult to choose the right product and the borrowing amount. Making incorrect choices in either area could put even more pressure on your cash flow and ultimately take your attention away from your number one concern, which is serving your patients.
Also, since medical technology tends to advance very quickly, leasing equipment might make more financial sense than buying. And once you’ve accumulated a fair share of leasing bills, the last thing on your mind is taking on even more debt.
Who Qualifies Dental Practice Business Loans?
Approved businesses generally met the following criteria:
How To Apply For Dental Practice Business Loans:
The amount of paperwork required for the application depends on your chosen product. For most products, funds can be approved and distributed in up to three business days. Here’s how to apply:
Step 1: Choose the Right Product
The first step is choosing the most sensible solution to the problem at hand. This should require a decent amount of research, as each product is designed for different types of expenses and cash flow cycles. Are you looking to cover a short-term or long-term expense? Is demand expected to increase or decrease in the coming months?
Considering the funds’ purpose will also help us determine the correct borrowing and terms for your needs.
Step 2: Gather Your Documents
Here are the documents and information required for all Dental Practice Business Loans:
- Driver’s license
- Voided business check
- Bank statements from the past three months
- Invoice for equipment (for Equipment Financing)
- Credit card processing statements from the past three months (for Merchant Cash Advance)
- Accounts Receivable Aging Report (for Accounts Receivable Factoring)
- Accounts Receivable (for Accounts Receivable Factoring)
- Debt Schedule (for Accounts Receivable Factoring)
SBA Loans require additional documents and information. To learn what’s needed for the SBA Loan application, visit our SBA Loan page.
Step 3: Fill Out Application
You can begin the application process by calling us or filling out our one-page online application. Either way, you’ll be asked to enter the information from the previous section along with your desired funding amount.
Step 4: Speak to a Representative
Once you apply, a representative will reach out to you to explain the repayment structure, rates, and terms of your available options. This way, you won’t have to worry about any surprises or hidden fees during repayment.
Step 5: Receive Approval
If and when you’re approved, funds for Business Term Loans, Business Lines of Credit, Working Capital Loans, Equipment Financing, Merchant Cash Advance, Revenue-Based Business Loans, and Accounts Receivable Factoring should then appear in your bank account in anywhere from 24 hours to one week. For SBA Loans, it usually takes 3-5 weeks to receive funding.
Your Dental Practice Financing Gets Set Up – Now What?
Your business loan isn’t just a way to get financing for your business. It’s also an excellent opportunity to start building (or improving) your credit.
Regardless of the type of business loan you get, make all of your required payments on time and in full. If you get a business credit line or another form of revolving credit, keep your balance below the credit limit.
Consistently making your business financing payments on time and in full will positively impact your credit. And that means preferred rates and terms when you next need business financing.
What If I’m Declined For a Dental Practice Business Loan?
If we decline your application, it might be because you applied for the wrong product for your cash flow. In this case, we would likely recommend a different product with a less hazardous repayment structure.
We might also decline your application after determining that you cannot afford to take on more debt at this time. Instead, your needs and financial circumstances might be better suited for another financing tool, like a business credit card or even a personal loan. Both options can be accessed through UCS and are usually much easier to qualify for than business loans.
If your credit score is preventing you from accessing financing, you should consider our credit repair services. We can help you identify the issues that keep your score down and develop practical solutions for eliminating them.
People Also Ask:
Can I Get a Business Loan to Purchase a Dental Practice?
Yes, you can use a business loan to purchase an existing business. However, this is only possible if you’re currently running another business with strong cash flow and profitability. You’ll also need excellent credit and (most likely) collateral. Business loan providers rarely approve loans for buying existing businesses if you don’t already own another business.
How Long Does It Take to Get a Dental Practice Business Loan?
Most Dental Practice Business Loans can be approved in just a few business days. Equipment Financing and Accounts Receivable Factoring may take 1-2 weeks. SBA Loans have the most prolonged period, often taking 3-5 weeks to be approved and distributed. This is because SBA Loans usually feature more significant amounts (i.e., more than $350,000) and longer terms. For this reason, substantial paperwork is involved, including:
- Personal Tax Returns
- Business Tax Returns
- Personal Financial Statement
- Statement of Personal Credit History
- Credit Card Processing Statements
- Debt Schedule
- Rental/Lease Documentation
Can I Get a Dental Practice Business Loan with Bad Credit?
Yes, six out of the eight Dental Practice Business Loans are accessible for borrowers with bad credit. Your rates may be higher, and your terms may be shorter because bad credit makes you more likely to default. However, if you have strong cash flow or can provide collateral, your bad credit may have less impact on your rates and terms.
The only two products that are not accessible with bad credit are Business Term Loans and SBA Loans. These products carry high borrowing limits, low rates, and long terms. The other six types of Medical Practice Business Loans usually carry shorter terms and are much easier to repay. We can also customize your terms and payment frequency to ensure that you can make payments while staying current on other bills.