April 27, 2018

How to Choose a Lender

Obtaining a loan to finance a dental practice, whether to acquire or grow a business, is only made possible with the help of the right bank. As with all major life decisions, you’ll want to work with whom you feel most comfortable, not necessarily who offers the lowest price for their services. Here, we lay out your options.

Local

The obvious reason to choose a local bank is that your lender is more likely to know the local market and is known to have a better relationship with its borrowers. In fact, your business relationship could cross over, and the banker could become a patient of yours. A local banker can also make faster decisions on funding with fewer obstacles to face.

Regional/National

A larger company has the potential to become a long-term strategic partner, especially if relocation is an option since the bank is likely to have a large presence in many states with multiple branches. A higher number of transactions means the process is more streamlined than at a smaller bank, and a larger bank can typically offer lower interest rates because of the high volume of loans in the organization.

Dental-specific bankers

No one knows your needs more than a bank with a division specific to dental loans. They’re guaranteed to have the best rates and terms for this reason. These rates are only available to dental and medical professionals since the bank knows the loan will be paid due to the nature of the business. They also typically have the fastest underwriting process, ask for very little collateral, and offer 100% financing, all without having to deal with the Small Business Administration (SBA).

Small Business Administration

The SBA originated with the intent of allowing banks the leverage and ability to finance businesses and practices that would normally be turned down for a loan. Federal insurance, however, means there are fees associated with this type of loan. While the underwriting process can typically take longer, it is a great option for those also looking to secure real estate.

Equipment loan

This is the equivalent of getting a home equity loan with your mortgage to make improvements on your house. The bank incentivizes you to purchase the equipment with exceptional rates, similar to the process of leasing a car. The only collateral given is the equipment being purchased, and terms are typically done with five years.

What’s next?

Read more about assembling your advisory team in our e-book for recent graduates, learn more about the top banks for dental practice loans, then contact the experts at Professional Transition Strategies for referrals and recommendations.