Magilla tells you how much you can borrow for dental equipment.

Purchasing equipment for your dental practice can be challenging and overwhelming because not only do you have to decide what type of equipment best fits your dental practice needs but also how you will pay for it. The amount you can borrow to finance your dental practice is dependent on your credit score, years in business, profit and loss statements, and business and personal tax returns. Although challenging, financing your dental practice is possible, however, it does require a more customized financing term in order to meet the needs of your dental practice. There are various financing solutions to fit almost every situation, below are some financing solutions for your dental practice.

Traditional Bank Loan:

Being a dentist may allow you to get approved for a loan based on your income level, the collateral your practice is able to offer, and your checking and investment accounts.

Things to remember:

  • Bank loans take about 30 days to process
  • Some banks may require a personal guarantee risking your personal finances should you default on your loan
  • Bank loans consider your business and personal credit scores
  • Some banks may reject start-up loans so include your years in practice if acquiring or starting a new practice

Line of Credit:

A line of credit is best suited for a practice that is looking for a short-term loan to update an X-ray machine or purchase new dental chairs, for example. Therefore, if your practice is able to repay the financing short term, consider a line of credit. If your practice will require longer-term payment schedules, then long-term loans are better.

Things to remember:

  • Terms for lines of credit are typically 12 months
  • Lines of credit may include better interest rates than long-term loans
  • Lines of credit consider your business and personal credit scores

Alternative Lenders:

Alternative lenders may offer more flexibility with repayment options and can typically offer more creative and custom lending and repayment options to choose from. In addition, it may be safest and most beneficial to select a repayment schedule that fluctuates depending on the volume of sales and revenue your dental practice generates.

Things to remember:

  • Applications are simple and quick
  • Application approval does not typically require excessive documentation
  • Alternative lenders will typically focus on business revenue potential rather than past credit score and history
  • Approval process is quick, allowing you to speed up financing

Small Business Administration (SBA):

The SBA offers lending solutions to small businesses as well as dental practices. So, if you are pursuing financing through the SBA, you should be prepared for a lengthy application process with heavy documentation, including the exact purpose of financing.

Things to remember:

  • SBA takes your personal credit score into account
  • SBA takes dental credentials and managerial experience into account for approval
  • Application process can take anywhere from 90 days or more
  • SBA loans require collateral

Consequently, the total amount offered for you to borrow is dependent on various factors. Be sure to do your research on starting a dental practice, stay on top of your credit score and history, and determine how much you are able to comfortably budget into your monthly expenses to pay back the loan.