Dental Practice Financing: Loan Options, Rates, and How to Qualify.
Whether you're buying your first practice, building out a new operatory, or replacing an aging digital scanner — the financing structure you choose determines whether the next ten years feel like growth or payments. Here's the playbook we walk dentists through.
The four financing structures dentists use
Dental practice owners encounter four common structures. Each suits a specific deal — using the wrong one is the most expensive mistake in a 25-year practice career.
| Structure | Range | Term | Best for |
|---|---|---|---|
| SBA 7(a) | $150K – $5M | 10–25 yr | Acquisitions, lowest cost of capital |
| Conventional bank | $250K – $5M | 5–15 yr | Established multi-provider practices |
| Equipment financing | $10K – $1M | 3–7 yr | Specific equipment (CBCT, laser, mill) |
| Working capital line | $25K – $500K | Revolving | Renovation bridges, slow insurance reimbursements |
How dental valuations actually work
Most dental practice valuations land between 60% and 80% of trailing-12-month collections, adjusted for production mix, payor breakdown, and operatory count. EBITDA multiples (typically 2.5–4×) get applied to larger group practices, but solo practitioners are almost always valued on collections.
Lenders cross-check the asking price against a dental-specific valuation model. If the seller is asking more than 85% of collections, expect tougher underwriting.
Qualifying for practice financing
Underwriting weights five factors for dental deals:
- Production history. Buyers — show 3 years of associate-level production. Sellers' practices — 3 years of collections trending flat or up.
- DSCR of 1.20× minimum. Practice cash flow should cover 1.2× the new debt service. Stronger ratios unlock better rates.
- Personal credit (680+ FICO). Below that, expect a co-signer or larger equity injection.
- Down payment (5–15%). SBA accepts as little as 5% on a clean deal; conventional banks want 15–20%.
- Specialty credentials. For specialty practices, board certification timeline impacts approval — get pre-qualified before completing residency.
Equipment financing vs. cash purchase
A new CBCT or CAD/CAM mill can be financed at 0–8% APR depending on credit and vendor incentives. The math almost always favors financing over cash — the equipment depreciates whether you pay cash or finance, and keeping cash on hand for working-capital emergencies has option value.
Red flags in dental loan terms
- Daily ACH debits on a multi-year obligation — typically an MCA dressed up as a loan.
- Confession-of-judgment clauses still surface in some alternative-lender paperwork.
- Equipment liens that block the practice operating account instead of just the equipment.
- Cross-collateralization with personal real estate when a practice lien would suffice.
FAQ
Can I finance 100% of a practice purchase?
SBA 7(a) routinely finances 90–95% including working capital and goodwill. The balance is typically a seller note or buyer equity injection. 100% financing is rare but available on strong deals with seller participation.
How long does SBA take for dental?
30–75 days from application to funding. Dental SBA closings are typically faster than other practice types because lenders are familiar with the underwriting model.
Can I refinance my student loans into a practice loan?
Not directly, but practice acquisition SBA loans can include limited debt refinance for business-purpose debt. Personal student loans stay separate — though some lenders offer a parallel refi at acquisition.