- Why should I use a commercial finance broker?
Should I start a new dental practice from scratch or purchase an established business?
We are regularly asked this question by clients. There is obviously an attraction for starting a dental practice from scratch because the initial set up costs are lower. However, it’s worth bearing in mind that the risks are also potentially higher.
It is more difficult to secure finance on a start-up mainly because there is no any track record of prior year accounts for the banks to consider when they are undertaking their lending assessment.
Prior evidence (from Bank records) indicated that after two to three years, between 40-50% of new start ups may have either closed their doors, been put on the market for sale, or are just about breaking even. Of course, the remaining 50% may be doing very well, however the banks are aware of these statistics and as such it is more difficult to obtain funding for a start-up compared to an established practice where the success rate is closer to 97%. Established practices, under the right ownership, rarely go wrong.
Remember, whatever your plans, be it to start a practice from scratch or buy an established business, always speak to an independent adviser who will be able to provide unbiased advice as to the best way forward based on your own circumstances. We’d be happy to speak to you further about your options if you call us on 0330 88 1157.
What experience would I need to secure a bank loan for a dental practice purchase?
In an ideal world, the banks would expect you have a good mix of both clinical and managerial experience for them to consider lending to you to purchase a dental practice purchase.
In terms of clinical experience, they would expect you to be qualified for at least 3 years, so you have a track record of dealing with patients and can demonstrate your income and earning capacity.
It’s important that your CV is written in a “bank-friendly” style that incorporates both, so if you need help to draft or re-write your CV, please get in touch on 0330 088 1157.
Will the banks lend on a leasehold dental practice purchase?
The simple answer is yes. However, the key thing to bear in mind with any leasehold purchase is the length of the lease as the length of your loan is normally determined by length of the lease.
There are some exceptions but in most cases goodwill loans would be expected to be structured over a 15-year term so in ideal world, your lease would need to be for 15 or 20 years.
We do see practices on the market with shorter lease terms, say 5 or 7 years, and it is more difficult, but not impossible, to arrange finance for these purchases simply because they can pose an affordability issue for many new practice owners.
If you are buying a leasehold practice, always speak to an independent broker and specialist dental lawyer for advice.
What information do the banks need when considering a loan application?
Any bank considering a funding application will focus on 2 key areas before undertaking any loan assessment:
- The buyer
- The subject business
The bank will look for evidence of both your clinical and managerial experience and will want to see your CV, details of your prior earnings, bank statements and asset and liability profile.
They will then focus on the subject Practice you will be buying. Sight of the most recent accounts, up to date MI and ultimately a business plan & Profit/Loss forecasts based on your proposed working arrangements to gauge whether it is a viable business proposition.
If you’d like to talk to us further about what’s needed, please give call on 0330 088 1157.
Are the banks still lending?
We are often asked this question and the answer is most definitely yes. Most banks are happy to lend against dental goodwill, and even short leases, but you need to bear in mind that the policies and lending criteria may differ sizably from one bank to the next.
This where we can help. Our job as an independent broker is to match clients with the right bank, and indeed the right bank manager, to ensure a positive lending decision. Please call us on 0330 088 1157 to find out more.
Which is the best bank to approach for a dental practice purchase?
The lending criteria, policies and pricing are different for every bank – a funding proposal may fit one bank, but not another.
Please bear in mind the Bank you transact your main day to day business through may not necessary be the best option.
As an independent broker, we work with all high street banks and specialist niche lenders. Our role is to shape and mould a funding proposal to ensure our client is working not only with the right bank, but also to ensure any loan is agreed at flexible and competitive terms.
If you’d like to speak to a member of our team, please call us on 0330 88 1157.
Will an offer from my bank granted last year still be valid for my practice purchase?
In short, probably not however it will likely need refreshing. Bank lending criteria changes all the time and the Practice you were looking to purchase may possibly have changed over the past 12 months.
Most bank offers have a shelf life of between 3 and 6 months so once you’re beyond that period, any proposal you have will need to be updated. Even if you do have a previous bank offer, it would be wise to test the market to see if there are any more competitive terms available from other lenders - remember the banks lending criteria and pricing changes all the time as well so it is certainly worth double-checking what else is out there.
If you’d like to speak to us further on this, please call us on 0330 088 1157.
How much will the bank lend me for a dental practice purchase?
If you’re looking to buy a practice and want to know how much you can afford, a good starting point is to undertake a financial pre-assessment. By providing a little bit of background information such as your CV, Personal Asset and Liability profile, bank statements and summary of existing earnings, we would be able to give you a feel for the level of borrowing the banks would potentially lend to you.
With the knowledge of how much you could potentially borrow this should provide you with a price range in terms of the size of Practice you could consider. We will also provide you with a ‘pre-assessment certificate’ which would demonstrate to any sales agent and seller that you’re a serious buyer and have the ability to proceed with any new purchase.
If you’d like to arrange a financial pre-assessment or obtain more information please call the team on 0330 088 1157.
My loan is coming to the end of its fixed term - do I take a new Fixed or Variable rate or are there other options?
The simple answer to this question is ‘It Depends’ – it really is down to personal circumstances and your future plans.
Before you make any decision, always speak to an independent adviser who can assess your current position and discuss your future plans and aspirations. Armed with this knowledge they can then run through the options open to you both with your existing lender or potentially alternative providers. Do call the FTA team on 0330 088 1157 as we will be pleased to review your current position.
Do I need a business plan if I'm buying a dental practice?
In most cases, yes. A business plan would normally needed for a dental practice purchase with both your lending bank and also the CQC needing sight of one. Your business plan should provide background on the subject Practice, outline how it currently operates with specific focus on the financials of the business. You then need to expand upon any changes you are proposing (e.g. staffing, opening hours and how much clinical time you will be based there) and how this will impact upon the financials. This will normally be accompanied by a Cashflow and Profit/Loss forecast based on how you intend to run the business.
We can help you prepare and draft any business plan & forecasts you need either for the bank or CQC – contact us on 0330 088 1157 for more help and support.
Buying a dental practice, but struggling to get funding - what are your options?
Can I meet with a member of the FTA Finance team to discuss my funding proposal?
We are more than happy to meet with any client to discuss their requirements and funding proposal – this can be face-to-face, online (Teams, Zoom, Skype etc) or on the phone. Simply let us know your preferred option and we’d be happy to arrange it. Call us on 0330 088 1157 and speak to one of the team today.
What are the best banks to approach for a pharmacy purchase?
Are the banks still lending for pharmacy purchases?
How much will the banks lend for a pharmacy business purchase?
We are able to source a wide range of innovative and competitive Healthcare Finance packages specifically tailored to, and for, Healthcare Professionals such as:
You are in a specialist market so use a specialist broker who understands your sector. With access to major banks and specialist niche healthcare lenders, we know the types of proposals that are synonymous with this sector.