:Once upon a time, negotiations with the local Bank Manager for a business loan often took place over a pie and a pint. If the loan was large enough, perhaps an expensive restaurant. Those days have largely been consigned to history.
Modern lenders now lean heavily on detailed financial and non-financial analysis, credit grading, probability of default measures, and pricing models that calculate a lender’s return on capital. The process has become more analytical, but human judgment still plays a vital role, particularly when proposals are well thought out and professionally presented.
Fortunately, seasoned banking professionals who understand what it takes to drive a successful dental practice forward in a challenging economic and competitive environment have not yet been replaced by AI. However, it is all the more important that practice owners are able to tell their business story and help the bank get to yes.
Why your practice story still matters
You might already have a pitch rehearsed in your head, but a lender needs more than a snappy introduction. A solid loan proposal should reflect the story behind your practice growth, outlining both where you have been and where you are heading.
Start by showing your trading history. Most banks will expect at least three years of accounts, but don’t stop there. Forward-looking information matters too. Forecasts that project cash flow, patient numbers, treatment mix (NHS versus private), and your ability to manage overhead expenses under different conditions all play a part in the narrative of securing funding.
For dental practice owners, this becomes particularly important. Your income may be high once established, but lenders understand it can fluctuate based on patient flow, seasonality (the summer and Christmas slowdowns are well documented), and broader economic conditions affecting discretionary spending on private dentistry. Demonstrating that you understand these patterns and have planned accordingly strengthens your application considerably.
Make sure your loan amount aligns with your objectives. Ask yourself does the funding requested match your practice needs? Too little might suggest under-preparation; too much might raise concerns about financial strain, particularly if you are already servicing practice acquisition debt alongside student loans. Explaining how the capital will support operations, equipment investment, or expansion shows that you have thought it through.
Structuring a winning practice loan proposal
Think of your practice loan proposal as your first opportunity to make a strong impression. It should clearly state:
- Why you are applying for the loan
- The loan amount required
- How the funds will be used (equipment, refurbishment, associate recruitment, marketing)
- How you plan to repay the debt, even in tougher trading conditions
Go beyond the basics. A projected profit and loss account is good, but a full financial model is better. Include a cash flow forecast and balance sheet projections for a well-rounded view. This level of transparency makes your proposal more robust, particularly if you are seeking unsecured finance where there are no tangible assets offered as security beyond goodwill.
For dentists who have transitioned from associate positions with predictable salaries to practice ownership with variable profits, demonstrating your understanding of this income shift is critical. Show how you have managed the transition, built financial buffers, and maintained stability despite the change in income structure.
Transparency also extends to existing borrowing. Detail your outstanding finance, for example lender names, balances, repayment schedules, and expiry dates. This includes both practice acquisition debt and any remaining student loans. This not only demonstrates your understanding of your financial position but builds trust with potential lenders.
The importance of creditworthiness
Your credit score remains one of the key indicators a lender will assess. A poor credit history can slow the process, limit options, or increase the interest rate offered, particularly with unsecured loans where there is higher reliance on your financial track record.
Many dentists carry significant student debt from dental school and specialisation, which can affect credit utilisation ratios. If you know your score is less than ideal, address it head-on. Explain any legacy issues and show how you have resolved them. In many cases, a strong proposal with solid cash flow and clear revenue plans can compensate for a few historical blips.
As most applications will involve a credit check, preparing in advance and checking your report yourself can help avoid any unpleasant surprises.
Cash flow: the lifeline of loan repayment
In dental practice, profit is important but cash flow is king. A lender wants reassurance that your practice can meet its obligations even during leaner periods.
Be ready to explain how you manage working capital, including how quickly patients pay (particularly relevant if you have significant private work or insurance-based income), how long suppliers and laboratories give you credit terms, and how you manage the timing mismatch between NHS contract payments and your monthly overhead commitments.
For practice owners whose income has shifted from predictable associate salaries to variable practice profits, demonstrating robust cash flow management is essential. Highlight how you have built reserves, managed seasonal variations, and maintained liquidity despite the inherent variability in practice income.
These practical insights can be more telling than a headline profit figure, particularly when lenders understand that much of your net worth is tied to the practice itself.
Non-financial strengths that make the difference
While the numbers must add up, lenders are increasingly looking at the bigger picture. What is your practice’s unique selling point? How do you compete in your local market? Do you have strong patient retention, a growing private patient base, or specialist skills that create barriers to entry for competitors?
Are you investing in modern technology such as digital scanning, CAD/CAM systems, or advanced imaging that enhances patient experience and clinical outcomes? Do you have associate retention strategies that reduce reliance on your own clinical time?
Highlighting these strengths can support your case, especially when applying for funding where tangible security may be limited or where your practice value is heavily weighted toward goodwill rather than hard assets.
For dentists whose peak earning years come later than some other professionals due to extended training, demonstrating how you are maximising those years through strategic practice development becomes particularly important.
Choosing the right lender
Not all lenders are created equal. Some specialist lenders focus on asset-based finance, others specialise in unsecured loans, and many operate with different risk appetites depending on the sector. Healthcare lending, and dental practice lending specifically, requires unique understanding.
Be sure to do your research. A perfectly sound proposal can be rejected if it simply does not match a lender’s policy or if the lender does not understand the nuances of dental practice finance, such as goodwill valuation, UDA contract structures, or the transition from NHS to private income models.
Matching your request to the right funder not only improves your odds but it can also speed up approval and reduce unnecessary stress. Specialist dental lenders or healthcare finance brokers understand the unique characteristics of practice ownership, including the challenges of managing dual debt obligations (student loans and acquisition finance) and the significance of professional indemnity insurance costs.
Working with professional advisors who have trusted relationships with specialist lenders can help to make the application process smoother. Contact Just4Dentists to get started.
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Timelines and expectations
Most mainstream lenders aim to respond within ten working days. If it is taking significantly longer, and there is no holiday period or internal delay to blame, something may be off with the application.
Delays can cost you opportunities. Whether it is ordering new equipment, hiring an additional associate, refurbishing your premises, or launching a marketing campaign to build your private patient base, access to capital at the right time is critical. Make sure your proposal is clear, complete, and compelling to avoid bottlenecks in the process.
When to consider a debt advisor
With application requirements becoming more detailed, many practice owners now turn to specialist debt advisors. These professionals understand how lenders think and often maintain relationships with key decision-makers in healthcare finance.
A good advisor will help you craft a proposal that is both financially sound and commercially persuasive. They will help you hit the right level of detail, ensure you pass the credit check, address the complexities of dual debt servicing, and shape your application to meet the lender’s expectations.
For dentists whose financial circumstances involve layered debt (student loans, acquisition finance, equipment finance), professional advice can be invaluable in structuring proposals that demonstrate affordability and sustainability.
Applying with confidence
Securing practice finance in today’s climate takes more than spreadsheets and figures. It takes preparation, clarity, and a compelling narrative. Whether you are looking to refinance existing debt, invest in new equipment, expand your premises, or acquire a second practice, make sure your proposal is aligned, informed, and balanced.
Understand your cash flow, know your credit score, and tailor your approach to the lender. Address the realities of practice ownership: variable income, seasonal patient patterns, the transition from salary to profit, and the management of substantial debt obligations. Demonstrate that you understand your market, your competition, and your strategic direction.
And if in doubt, do not hesitate to seek expert support. Because with the right plan and the right people, getting to yes is entirely within reach.
Martin How
A Just4Dentist expert
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FAQ
What types of finance are available for dental practice owners?
Dental practice finance includes practice acquisition loans (for buying a practice), equipment finance (for chairs, imaging, CAD/CAM systems), refurbishment loans, working capital facilities, and refinancing of existing debt. Finance can be secured (against practice assets or property) or unsecured (based on cash flow and goodwill). Most lenders prefer to see at least three years of trading history, although some specialist lenders will consider newer practice owners with strong forecasts.
How much can I borrow for my dental practice?
The amount you can borrow depends on your practice revenue, maintainable profits, existing debt obligations (including student loans and current practice finance), and your ability to service the debt.
Lenders typically assess debt servicing as a percentage of net practice income, preferring this to remain below 50 to 60%. For unsecured loans based on goodwill, amounts are often lower than secured lending against tangible assets or property.
How does my cash flow affect loan approval?
Cash flow is one of the most important indicators for lenders. It shows how well your practice generates income and manages expenses, particularly important for practice owners whose income has shifted from predictable associate salaries to variable practice profits. Strong, predictable cash flow reassures lenders you can meet repayment obligations. Be prepared to explain how you manage the timing differences between patient income (NHS quarterly payments, private fee-per-item, insurance reimbursements) and monthly overhead commitments.
Can I get practice finance if I still have student loans?
Yes. Many dentists secure practice finance while still servicing student debt. Lenders assess your total debt servicing capacity across all borrowing. They want to see that combined repayments (student loans plus practice finance) do not exceed 50 to 60% of your practice net income. Specialist dental lenders understand that extended training periods and student debt are standard in the profession and factor this into their lending decisions.
What is the average interest rate for dental practice loans?
Interest rates vary depending on the lender, your credit score, whether the loan is secured or unsecured, and your financial profile. Rates typically range from 3 to 4% for secured lending with strong financials, up to 10 to 15% for unsecured or higher-risk lending. Practices with strong cash flow, good patient retention, and manageable existing debt typically qualify for better terms. Specialist healthcare lenders often offer more competitive rates than mainstream banks.
How long does it take to get practice finance approved?
The approval timeline depends on the lender and complexity of your application. Traditional banks may take two to four weeks, while specialist healthcare lenders familiar with dental practice finance may approve within one to two weeks. Ensuring your financials, credit check, and loan amount request are well prepared can speed up the process. Having up-to-date management accounts, clear forecasts, and transparency around existing debt obligations helps avoid delays.
Do I need to provide a personal guarantee for practice finance?
Most practice loans require a personal guarantee, particularly when borrowing is substantial or the practice has limited tangible security. This is standard in healthcare lending where much of the practice value is goodwill rather than hard assets. Lenders view personal guarantees as demonstrating your commitment to the practice’s success. In some cases, secured lending against property or substantial equipment may reduce reliance on personal guarantees.
How can I improve my chances of getting practice finance?
Maintain a strong credit score, manage cash flow carefully, prepare detailed financial forecasts that account for seasonal variations and income volatility, and tailor your loan amount to realistic needs. Highlight your practice growth strategy, patient retention rates, and treatment mix development (particularly any transition toward private work). Be transparent about existing debt (student loans and acquisition finance) and demonstrate how you manage dual debt servicing. Work with a specialist dental finance advisor who understands lender requirements and can present your application professionally.
Can I use practice finance to transition from NHS to private dentistry?
Yes. Many lenders will support strategic transitions from NHS to private work, provided you can demonstrate a credible plan. This includes marketing investment, patient communication strategies, associate training, and equipment upgrades that support higher-value private treatments. Your forecast should model the revenue impact of losing NHS contract income while building private patient numbers, and show realistic timelines for achieving break-even and growth. Lenders understand this transition can take 18 to 36 months and will assess affordability across that period.
