Did you know that roughly 73% of dentists own their own practice? Starting and running a dental practice can be the most exciting thing to do in your career!

After all, this would be something you can put your name on and be proud of for years to come. But first you need financing for your dental practice startup!

However, before you get started, you may have a few questions about financing a dental practice. Keep reading this blog to learn how to prepare and get approved. These top tips give you a place to start the journey toward owning your own private practice.

You can also watch our PODCAST EPISODE about financing a startup here –>

#1. BUDGETing and planning

Starting a dental practice can easily cost over $500,000 to $600,000 or more depending on the area, according to Bank of America; these costs include building out an office, setting up the necessary workspace and getting the proper equipment. It’s also smart to consider having enough working capital to give your business a jump start and running well.

The startup route can sometimes be scary. When so much money is on the line, overspending can be easy to do. So lacking a clear and organized business plan and budget will really bit you later on. Consider working with a dental startup consultant t get your business plan in order before approaching a bank.

Manage Debt Strategically – Lenders view student loan debt as “good debt”. The pitfall is when doctors use their income to quickly pay down student loans at the expense of other essential financial health factors, such as savings.

Control Credit Card Debt – Credit card debt is viewed as “bad debt”. Ideally, credit cards should be paid off in full every month. Racking up credit card bills due to high living expenses or inadequate savings can be a major pitfall.

Demonstrate Earnings – While a startup practice have no business tax return or profit and loss statement, a bank will look at the doctor’s earnings (salary) at their associate position(s). This is an accurate indicator of that doctor’s ability to produce in a clinical setting and pay-back the loan.

#2 FINANCING A START UP PROJECT

When embarking on your dental startup journey, establishing a solid financial foundation is critical for long-term success. The banking and lending process, while sometimes intimidating, is designed to give your new business the longest possible runway to build up revenue. So you will want to seek out a dental specific loan for a startup dental practice.

Dental startup loans are uniquely structured to support a new practice during its challenging ramp-up period. The Project Period (No Payments) – Initially, the bank gives a doctor up to 10 months to build out their project without requiring loan payments. During this time, the bank pays vendors and covers bills, allowing the doctor to focus on construction and setup before generating revenue.

Graduated Repayment – Once the practice officially opens, payments begin, but they start small and ramp up over time. Year 1 (12 months): Minimum monthly payments are interest-only.

We highly recommend talking to a start up consultant like NEXT LEVEL CONSULTANTS about lending options before signing on the dotted line. It’s wise to talk with someone who has worked with a variety of lending institutions on many occasions. They can give you a some really key insights into what makes a great lending partner when starting a dental practice.

#3 CASH ON HAND

Regardless of the lender you choose for the loan, you’ll need your finances in order! If your not confident in having enough cash-flow starting up to support the debt or lifestyle obligations, it’s ok to wait a year while you save up.

Maintain Personal Liquidity (Savings) – Having some cash saved is important. Your living situation and personal liquidity are considered because a significant hit to savings can lead to accruing credit card debt. Having cash in the bank shows you’re able to avoid being over leveraged.

Ask your rich aunt to give you a loan! Raise cash from a go fund me! Or go work a 2nd job delivering pizza! Get some cash in the bank to show the lenders you mean business!

About WORKING WITH A START UP Consultant?

Over the years NEXT LEVEL CONSULTANTS has helped hundreds of dentists startup, buy, and grow their own practices. If you have any questions about financing your dental practice, don’t hesitate to reach out