A Guide to Dental Practice Loans

African American male dentist in treatment room smiling at camera
At Centric Bank, we recognize that while you know your way around the bicuspids, you may not be familiar with the wide array of financial services available to dentists. We’ve assembled this comprehensive guide to banking for dentists and dental practice loans that you can use as a reference whenever you need to make changes in your practice. Whether you are ready to open a new dental practice, buy into an existing dental group, or grow your practice, we hope you will find the resources in this guide helpful.

When Do I Need Dental Practice Financing?

There are several different reasons you may seek a loan for your dental practice. Centric Bank offers financing for dentists who are starting their own practice, buying out someone else’s practice, or upgrading with new equipment.

Loans for dentists can cover a range of items including:

• New building purchase
• Practice financing
• Equipment financing
• New building construction
• Debt consolidation
• Dental office expansion
• Facility refinancing
• Student debt

If you are starting a new dental practice, you may find that it is a particularly expensive and daunting undertaking. Even if you have saved funds for this move, you may need additional funds to get started. You may also need a dental equipment loan and a real estate loan.

When making a change to your practice, or starting a new one, you want to investigate all the loan options available to you. A community bank like Centric Bank will offer the personal attention and customized solutions that make the process go smoothly.

Lines of Credit for Dentists

In addition to borrowing a lump sum of money for a specific purpose in your dental practice, you may benefit from having access to extra cash on hand to cover operating expenses that come up unexpectedly. Cash flow, especially in a new practice, can be tight. You must pay rent or a mortgage on your building and make payroll no matter how many clients you have coming through the door. In the beginning, there could be some lean weeks.

Even after you get a full schedule of clients booked each week, you could have other unexpected expenses. Sometimes equipment breaks or needs more than just routine maintenance. You may need to purchase expensive materials. There are many situations that might threaten your short-term cash supply.
Establishing a line of credit will provide a safety net for those financial surprises in the management of your dental office. This is something you want to consider in advance. Do you have enough cash on hand for any contingencies that may arise? A line of credit can provide peace of mind, allowing you to focus on patient care and day-to-day tasks for your practice.

Cash Management for Dentists

Managing cash flow is an essential part of running any business. Running your practice can involve large expenses that are not equalized over time. One month may be just the regular expenses of payroll, rent and energy charges, but the next month could suddenly include supply costs or lab charges incurred on behalf of your patients.

The money you charge your patients for your services will cover these expenses, but the timing of those payments could present a challenge. You may be running a dental practice where the receivables exceed the payables at the end of the year, but some months may not work out that way.

One of the most important and unpredictable factors could be insurance company payments. Those payments may not always come in right away, and some may even be disputed before they are paid. When there is a large gap in time between the date of service and the date of payment, you could end up managing a financial crisis.

Another big factor in cash flow is unpredictability of patients. You may have many regular patients, but you cannot predict when each one will need your services. Your cash flow can be variable from month to month just due to the needs of your clients. It is hard to keep your practice on budget when income fluctuates too much.

The online cash management services from Centric Bank will help manage cash flow for your dental office. The banking services included in a cash management system will allow you to accept all forms of payment from your customers, transfer funds, pay vendors and employees, deposit checks from your desktop and ensure your funds and transactions are secure.

Leasing Dental Equipment

Just like buying or leasing a car, there are advantages and disadvantages to leasing equipment. The primary advantage is that you can get the equipment you need before you can afford to purchase it out right. Depending on the lease agreement, there can be other advantages, as well. You may be able to afford newer equipment in a lease deal rather than what you could buy on your budget. Maintaining or replacing the equipment may be easier in a lease deal, again, depending on the terms offered.

Buying equipment generally provides a price advantage. Since you pay for the equipment up front rather than over time, there is no interest charge to worry about. And, if you can afford to buy your equipment, it is usually a one-time transaction. You do not have to worry about fitting payments into your budget for the next several years. Maintenance on the equipment, however, is your sole responsibility unless your purchase includes some type of maintenance agreement.

Each time you need a new piece of equipment, it is a good idea to get some financial advice on the best terms for your practice. There are several different ways to buy or lease equipment for your dental office, so it would be helpful to have your accountant or banker analyze your situation and help you make the right decision for your financial future.

Centric Bank is Your Expert for Dental Practice Loans

One of the most beneficial action you can take is to find a bank that can help develop and grow your business. Your practice is going to be a part of the community wherever it is located, and it could grow and thrive there for the next twenty years or more. You’ll want to work with a financial institution that is also part of that community.

Centric Bank is part of the community where you do business, so we have a stake in your success. Our personal service and customized solutions mean you get the answers you need quickly, and we can recommend financial services that work for your individual needs. Connect with us today to find out how we can help make your dental practice a success.
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