What Funding Opportunities Are Available For Dental Practices?

One of the biggest obstacles facing dentists is the cost of running their practice. As a dental professional, starting your own practice might be the next step for you, or it might already be a reality. Many dentists have embarked on their own entrepreneurial journeys over the last few years, and we've worked with several of them to find and secure the finance they need to grow and maintain their businesses, even during the most difficult of economic circumstances.

Since starting a practice requires a significant upfront investment, it's important to have a finance partner on your side who can support you from the outset. At Rangewell, we work with professionals to find and secure dental practice finance. From assembling the loan application through to scouring the whole of market, including specialist lenders, and determining the right funding options for you.

There are so many different funding opportunities available that could help your dental practice reach its goals. Here’s a rundown of just some of the funding opportunities available to your dental practice right now to get you started.

Types of business loans

The costs of opening and running a dental practice are going up. Thankfully, there are a number of different types of business loans available to dental practices. So, dental finance could be just the ticket you need, whether you're planning a refurbishment, extension, the acquisition of another practice, or simply need to boost cash flow. 

Most loans can be split into two categories: secured and unsecured. 

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 unencumbered assets (equipment, machinery, vehicles or property. 

Should you fall behind with monthly repayments, these assets will risk 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.

Goodwill loans

If you have been running your dental practice for a while, then you may be able to apply for a goodwill loan.  As the name suggests, a goodwill loan allows you to use the goodwill built up in your established practice as security for the loan. 

Asset Finance

One of the biggest financial burdens for any dental practitioner is equipment. Buying, maintaining and repairing equipment is expensive, and often costs come at the least convenient times for business owners. This is where dental equipment finance can help. 

Dental chairs, x-ray machines, MRI and CT scanners, surgery units, bone fixation kits or sterilisation tools, are often all available via hire purchase or leasing agreements and can be funded with business loans. 

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 refit finance. 

Hire Purchase

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 payments 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

This s 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 seven years if it involves a particularly expensive piece of equipment.

For the time that the equipment is in your dental clinics, you’ll need to make monthly rental payments, plus interest. These payments take into account both the equipment's current worth and its 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

This product 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, cash flow or even the purchase of another piece of dental equipment.

Such agreements can last for a term of up to five 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 is also a secured form of lending that takes 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

This 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 worth 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.

Although merchant cash advance is an unsecured type of finance, lenders focus mainly on the reliability of your monthly card sales. So, your dental practice could still qualify even with an adverse credit rating.

Should you be accepted for merchant cash advance, you’ll be subject to a 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, you could access merchant cash advance in as few as 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 three 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 within 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.

Dental finance with Rangewell

Making sure that your dental practice has everything it needs to grow and successfully operate each day isn’t a simple matter. From operating costs, equipment, and 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 a team of finance specialists working with businesses like yours to find and secure the right funding to meet your needs. We guide you through the application process and help to identify any risks or concerns that may affect what the lender can offer.

As an independent broker, we have access to the whole of market, including both traditional and online lenders, so we can help you to secure the finance you need to succeed. 

So if you’re looking for the finance you need to grow your dental practice, refurbish a dental practice or start your own dental practice, apply today or find out more with Rangewell.