Applying for a Dental Practice Loan in 5 steps
When you're looking to set up your own dental practice, or buying out your dentist partner, you know the expenses will be high - equipment, staff and premises will all cost - but the rewards of being your own boss and looking after patients in your own practice can be great. Yet regardless of whether you’re looking for your first practice, open a new branch or buy out a competitor, this particular cost outlay may feel out of reach. However, rather than using your own funds and risk destabilising your finances, you could apply for a Dental Practice Loan instead. Dental Practice Finance comes in a variety of forms, such as Secured and Unsecured Business Loans, Commercial Mortgages and Bridging Loans, or even Franchise Loans for Dentists. So if you’re thinking about purchasing a dental practice, here is our 5 step plan for applying for a Dental Practice Loan.
Review your personal income and expenses
One of the first things you need to do is review your spending against your personal income. Lenders generally show a preference towards practitioners who can show that they have the means to keep up and fully repay the agreement on time. If you’re spending more than you earn, this will cause lenders to believe that you’re not in control of your finances and will have a greater risk of default. Of course, life is never straightforward, and you may be putting money aside for a holiday, tuition fees or find yourself having to pay an unexpected expense at short notice. If lenders query any large expenses that you’ve made, make sure that you can give a full explanation on the contributing factors whilst reassuring them that it was potentially just a one-time occurrence.
Prepare your Bank Statements
Next, you’ll need to gather your latest banks statements for at least the last 6 months. Hopefully, your statements demonstrate that you have a budget in place to cover the additional outgoing, you’re not spending more than you earn and you’re not regularly going overdrawn with your accounts. If you’re able to show astute financial planning with a clear means of keeping your finances in order, you’ll be in a much stronger position to convince lenders that you will repay the agreement on time.
Review your credit profile
Before applying for a Practice Loan, you should also take the time to review your credit profile. You can do this by simply requesting a credit report from one of the UK’s leading credit agencies (such as Experian, Equifax, and Callcredit). This will provide you with the opportunity to spot any issues that may affect your application, and perhaps find a way to resolve them. If there are issues any that you believe shouldn’t be on there, you need to get in contact with the credit agency responsible for the report as soon as possible.
Your credit report is an important aspect of the application process, especially when looking for start-up finance for your dental practice, with lenders usually requesting permission to review it. The reason for this is that allows lenders to gain an in-depth understanding of your financial situation, financial management and the risk of you defaulting.
So when carrying out their checks, lenders will incorporate into their search whether you have any recent or past CCJs, Accelerated Payment Notices (APNs), arrears, unresolved debt (e.g. credit card debts) and your history of repaying debt on time. If there are any issues, they may affect your credit score which, in turn, affects the interest rate that you’re offered. So the weaker your score, the more interest you’ll need to pay throughout the agreement, and vice versa.
Assess your partner’s financial background
If you’re running or are thinking about running a dental practice in partnership with anyone else, they’ll also be subject to the same rigorous checks as you. As such, you should review their personal and business credit profiles as well. If there are any issues, whether outstanding or historically, you should try to find a way to resolve them before applying, if possible.
Choose an appropriate finance intermediary
Finally, you need to find a suitable finance expert who has experience in your sector. Preferably, they should be able to work with as many finance solutions and lenders as possible, giving you a comprehensive overview of what Dental Practice Loans are available, or even if you need to find a combination of funding solutions using Jigsaw Finance for dentists. Their experience should also allow them to identify which lenders to approach and what strategies to employ, increasing your chances of gaining a favourable and cost-effective agreement. In addition, their services should be impartial, with your need prioritised before all others.
Need help buying your own dental practice?
Deciding to buy your own dental practice is a big decision and one that requires a lot of thought and detailed planning. So whilst considering which type of Dental Practice Loan to make use of, you should also be getting the key components of your application prepared beforehand, saving you both time and unnecessary stress. By ensuring that you are organised beforehand, and have your finances sorted, you can achieve your goals in complete confidence. All you have to do now is source the most appropriate agreement from a reputable lender - whether you're looking at start-up funding, buy-ins or the finance you need to grow your dental practice.
At Rangewell, we’re an Access to Finance specialist working with over 350 lenders to offer you an overview of more than 23,000 business finance products. Our services are free to use and we’ll also guide through the application process. We work with other dental professionals just like you and we’re with you every step of the way. So if you’re looking for any type of loans for dentists - from Practice Loans to start-up finance for your dental practice - apply today or find out more with Rangewell.