Financing a Dental Practice Purchase: An Overview
Purchasing your own dental practice is arguably one of the most rewarding stages of your professional life. Not only will you have complete flexibility and freedom with running your own business, but by providing health care and cosmetic treatments you are also helping your local community.
Whether you are looking to buy your first – or next – dental practice, the decision is a huge financial commitment. It’s normal to feel overwhelmed if you’re not familiar with the buying process, and we therefore highly recommend consulting with experienced financial brokers specialising in the dental industry, who will be able to smoothly guide you through each key phase of buying a practice.
Planning Early Is Key
For Associates who aspire to become a dental practice owner, you will be glad to know the banks are very positive about dentistry and can typically offer generous terms to first-time buyers, for both NHS and private practices. That said, most dental practice sales are “fundable”, but the key is thorough planning and preparation to present lenders with a detailed proposal and business plan.
Ultimately, most lenders will offer finance on an unsecured basis and therefore need to feel confident you have the skills and financial ability to pay back the loan. As you prepare your business plan, remember to include details of the practice (including business aims and objectives), accounts for the last 3 years, proposed working arrangements, staffing levels and opening hours.
What Lenders Assess
While banks have varying criteria for lending, most lenders will require a cash deposit from the purchaser. On average, banks are looking for a 10% to 25% deposit. Lenders do look at each case on its own merits and 100% lending may even be available in the right circumstances. First-time buyers need to prove that they have a minimum of two years’ experience managing or being an associate in a UK practice.
As a quick round up, here are some factors that are taken into consideration:
- Your expenditure to consider income required to take from the target practice
- Your overall career in dentistry and experience in managing a practice
- How you manage your personal finances and any savings
- Your living situation
- Your ability to repay the loan
Working With a Specialist Finance Broker
You are probably aware of the benefits of working with specialist dental accountants and solicitors, and the same can be said when buying a dental practice too. A specialist broker will have the knowledge necessary to offer independent advice and search for lenders on your behalf – saving you time and stress.
In fact, here at Henry Schein Financial Services, we have access to healthcare specialists within the banks to help secure the best rates (approaching banks independently limits you to a general “business department”). Once you have the relevant documentation in place to purchase a practice, we will negotiate the terms that best suit your specific needs and budget since we understand the different structures that lenders look for. With the support of a financial consultant who understands the current and ever-changing market, you can ensure that the purchase of your prospective practice represents the best value for money.
If you'd like to know more, please do not hesitate to get in touch.