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What funding opportunities are available for dental practices?

Published on 17th May 2019 - Last update on 4th July 2020

One of the biggest obstacles to overcome when running your own dental practice is the cost. From bringing on board trained staff and acquiring the latest equipment to moving into a desirable location, costs can be prohibitive and even the most well-established practice can find themselves struggling. However, it’s not something you need to manage alone. There are plenty of funding opportunities available that could help your dental practice, you just need to find the one that’s suitable for your goals and how your practice operates. So if you’d rather see to the needs of your patients and spend less time worrying about your finances, why not explore how applying for business finance could help? To get you started, here’s a rundown of just some of the funding opportunities that are available to your dental practice right now.

Secured and Unsecured Business Loans

Business Loans are a great way of raising capital for all manner of purposes, including refurbishment, extensions, equipment purchases, cash injections or any other vital key projects, since they tend to carry no usage restrictions. However, they they are all either Secured or Unsecured and can be set up as short-term (1-3 years) or long-term (3-6 year or more) agreements.

Secured Business Loans

Secured Business Loans can offer your dental practice between £5,000 to £1,000,000, but you’ll need to present collateral in the form of unencumbered assets (equipment, machinery, vehicles or property. Should you fall behind in the Fixed Monthly Repayment scheme, these assets will be at risk of repossession. But because this gives the lender more security, such agreements usually carry less interest (compared with unsecured products) and more flexible criteria requirements.

Unsecured Business Loans

Meanwhile, Unsecured Business Loans do not require you to offer collateral which, in turn, exposes the lender to a greater degree of risk. So, as well as making such products harder to qualify for, especially with an adverse credit rating, they also charge more interest.

Need help growing and maintaining your dental practice? Got a project you want to get started, but lack the necessary capital? Apply for Business Finance or learn more about how your practice could benefit.

Asset Finance

One of the most expensive areas for any dental practice to support is equipment. Fortunately, there’s Asset Finance. This package presents you with a variety of different ways to introduce new and used equipment to your dental practice, helping improve the quality of services that you’re able to provide or even expanding the range of services that are on offer.

So if you’re looking for a cost-effective way to acquire equipment such as dental chairs, x-ray machines, MRI and CT scanners, surgery units, bone fixation kits or sterilization tools, you could look at Hire Purchase or leasing. However, if you’re looking to raise capital, you could release the equity contained within your existing assets (equipment, machinery or vehicles) with the help of Asset Refinance.

  • Hire Purchase: enables you to gain access to a desired piece of equipment and eventually gain ownership of it. It works by the lender purchasing the equipment from a supplier and allowing you to make use of it in your practice, after paying an initial deposit first. This is usually in the region of 10% of the equipment’s total asking price, including interest, but is subject to negotiation. You’ll also need to make Fixed Monthly Repayments over an agreed term, which can last up to 5 years. Once the agreement has matured, with all relevant payments made, ownership of the equipment is transferred to your practice.

  • Leasing: is a great way of borrowing dental equipment for a limited period of time. Although leasing agreements usually last up to 5 years, some lenders may allow you to extend the agreement to 7 years if it involves a particularly expensive piece of equipment. Whilst the equipment is in your practice, you’ll need to make monthly rental payments, plus interest. These payments take into account both the equipment's current worth and it’s predicted worth once the agreement matures. At the end of the agreement you can choose to either return the equipment, extend the term or upgrade to another model.

  • Asset Refinance: presents you with the means to release the equity contained within any unencumbered assets such as equipment, machinery or vehicles, that your practice owns outright. The funds that you acquire using this product carry no usage restrictions, enabling you to support projects, expenses, cashflow or even the purchase of another piece of dental equipment. Such agreements can last for a term of up to 5 years, during which time you’ll need to make Fixed Monthly Repayments, plus interest. Providing that you keep up with the repayment scheme, you can continue using the asset that was refinanced in your day-to-day operations as normal.

Invoice Finance

Invoice Finance comes in two forms: Factoring and Discounting. Using either of these options, you can release up to 90% of the money owed to your practice in B2B invoices that are worth in excess of £5,000. It also a secured form of lending that take its security by using the funds tied up in the concerned invoice. Although both options require you to maintain an up-to-date ledger, there are differences between them that you need to be aware of.

  • Factoring: requires your business to have an annual turnover in excess of £25,000. The benefit of using this variant is that it allows the lender to pursue the debt on your behalf, which saves time and allows you to continue managing your day-to-day operations. However, it’s also noting that some lenders may offer you Bad Debt Protection. This prevents you from having to repay the lender should the debtor go bankrupt or cease trading for any reason.

  • Discounting: on the other hand, this option requires your business to have an annual turnover in excess of £100,000. You must also demonstrate that your practice has a reliable credit control facility in place to allow you to successfully collect the money that you’re owed. However, instead of the debtor paying you, they pay the lender. Once they’ve they’ve fully repaid the debt, the lender presents you with a balance. So if you’ve 90% of the funds tied up inside an invoice, the balance will be the remaining 10%, minus costs and fees.

Merchant Cash Advance

If your dental practice is able to accept credit and debit card payments, you could turn this to your advantage by applying for a Merchant Cash Advance. A Merchant Cash Advance offers your practice access to an advance based upon an average of your monthly card sales.

So, for example, if your dental practice usually earns around £25,000 in monthly card sales, then the amount you’ll receive will be roughly in the same region. Plus, the advance also carries no usage restrictions, allowing you to fund anything from staff wages, training, localised marketing campaigns and working capital expenses to emergency situations.

Despite Merchant Cash Advance being unsecured, lenders focus mainly on the reliable of your monthly card sales, so your dental practice could still qualify even with an adverse credit rating. Should you be accepted, you’ll be subject to a Fixed Monthly Repayment Scheme. This enables the lender to work with your card payment processing company and automatically intercept an agreed percentage of your future card-based sales until the agreement, and their fee, has been fully repaid. Plus, a Merchant Cash Advance could be established in as little 48 hours. So if your dental practice needs access to quick cash, all you need to apply is your latest card-based sales reports for at least 3 months, possibly more.

Overdraft Replacement

Overdraft Replacement presents you with another useful way of supporting your dental practice. Offering you a line of credit (LOC), it gives you access to a lender-controlled facility from which you can withdraw an agreed allowance based upon your past income. Carrying no usage restrictions, it can be used to support uneven cash flow, monthly expenses, tax liabilities, emergencies or anything else that needs addressing.

Plus, you’re under no obligation to make use of the fund it makes available. However, anything that you do withdraw is charged interest and will need to be repaid inside 30 - 90 days, depending on the agreement. Once it has been repaid, you can withdraw and repay funds in the future on a revolving cycle. As such, Overdraft Replacement works very much like a credit card and offers a protective buffer for your dental practice.

Does your dental practice need financing?

Making sure that that your dental practice has everything it needs to grow and operate successfully each day isn’t a simple matter. From operating costs, equipment, staff to rent, there are so many things you need to pay for. However, there’s no need to manage it all by yourself, not when there are plenty of funding opportunities available that can help relieve the strain upon your finances. The only obstacle you need to overcome is choosing which finance solution is suitable for your goals. Fortunately for you, there’s Rangewell.

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’re with you every step of the way. So if you’re looking for the finance you need to grow your dental practicerefurbishing a dental practicestart-up finance for your dental practice or other loans for dentists, apply for Business Finance today or find out more with Rangewell.

You can get additional support from our Dentists' Directory - from financial advisors for dentists to specialist accountants and help with sales and acquisitions for dentists.


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David Harrison

David Harrison

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