Running a successful dental practice isn’t cheap. Whether you need funding to start a new practice, to purchase new equipment, to buy supplies or just to solve a temporary cash flow problem, there are a lot of lenders offering financing. It can be overwhelming trying to identify the best place to turn for a small business loan.
Here are four tips that can help you evaluate your options:
1. How much do you want to borrow?
Before getting interest rate quotes and terms from lenders, you’ll need to come up with a dollar amount. How much you’ll pay can vary a lot, based on a wide range of factors.
If you’re looking for funding to get your practice up and running, you’ll need to start with a business plan that identifies your projected cash-flow over the first few months of operations.
For an established practice that needs a cash infusion, you’ll want to document your revenues and expenses, which will serve as the basis for most lenders’ evaluations of your loan request.
2. Understand that getting a loan faster probably means you’ll pay more.
There are plenty of lenders out there offering to provide instant approval and access to cash within days, if not hours. That can be tempting when you are eager to take action with your new loan. However, be aware that companies offering speedy distributions will likely charge more – sometimes substantially more – for that expedience.
3. Evaluate the terms of each proposed loan.
In a perfect world, the interest rate and payment terms on loan offers from different lenders would be substantially similar, so you could just choose the cheapest option.
In reality, you’ll need to spend some time reviewing and evaluating your options. You may be able to stretch repayment out for as long as 25 years at what appears to be an attractive interest rate. Understand that this means you’ll likely be paying more interest over the term of the loan than you would paying a slightly higher interest rate for a shorter loan duration.
Look for terms that meet your budget, and your long-term goals for your practice.
4. Comparison shop.
As stated previously, the interest rate and repayment terms one lender offers you can vary significantly from what another lender is willing to offer. Borrowing money for your dental practice is one area where it definitely pays to do your homework before deciding on a lender.
Consider how your own credit score affects your loan eligibility and terms too; if your credit score could use some improvement, continue holding off on your loan for a few months to see if you might qualify for better terms.
Let Square Practice Manage Your Data and Provide Key Insights
When you keep these reminders in mind, you’ll be able to make an informed decision about financing that will ultimately benefit your dental practice – and your patients.
While we aren't in the business of making small business loans, our automated dental dashboard can help you analyze your practice’s key performance indicators (KPIs.) That, in turn, will help you find ways to put the money you are borrowing to good use to increase productivity and revenue.