Loan for Dentists

If you are a dentist that needs help with funding, you may be wondering what your options are. Alternative banking options can be the solution that you need, to get the funding necessary to keep your practice going or to help your practice grow. Whether you have bad credit, no credit, or need fast cash, alternative funding options are the best choice for you. The goal here is to help dentist offices figure out the best approach to get the funding that they need.

Understanding Alternative Funding

Alternative financing is a term that is used to describe various financial channels, tools, and processes that can provide financing outside of traditional financial lenders like regulated banks. Alternative financing options tend to be found through online marketplaces, which makes it easier for people to apply for loans and get the funding that they need.

Alternative financing has grown to be one of the more popular approaches for people to find the funding to start, grow, or keep their businesses operating as normal. You are better able to find solutions that will help you get the type of funding that you need, while still working within what you can afford. You have quite a few options that you can consider when it comes to alternative financing, which allows you to get the financial solutions you are looking for.

Different Types of Alternative Finance Options for Dentists

It’s important to understand the different alternative finance options for dentists. By understanding what your different options are, you can make a more informed decision as to which option will work best for your specific needs. This section will take a closer look at the various alternative funding options that you can consider for your dental practice.

Crowdfunding

Crowdfunding is a relatively new funding option that dentists can consider. This is a funding option where a dentist can get small amounts of money from several different investors using an online platform. There are a few different options within this category that a business can consider, including:

Donations/Reward-Based

This crowdfunding type is a fundraising option where the investors offer money without the expectation of financial compensation (in the case of donations). However, reward-based crowdfunding means that the investors get a benefit to investing such as a free or discounted service.

Peer-to-Peer/Peer-to-Business

This type of crowdfunding is similar to the concept of other microfinance platforms. These platforms connect the borrowers with multiple lenders anonymously, the lenders will in return get interest. This is what makes it different from other types of microfinancing options.

Equity Crowdfunding

Equity crowdfunding is a model where the investors will get equity stake into a company, just as if they purchased stocks from the company.

Revenue/Profit Sharing Crowdfunding

With this approach to crowdfunding, the business receives a loan that is funded by several investors, and they pay back the loan based on future receivables. This is very similar to how a merchant cash advance works.

Online Marketplace Lending

This type of lending allows people to go onto an online marketplace to find one or several investors that will make either direct or indirect loans. These platforms use a data-driven algorithm, which can decide the creditworthiness of the applicants. These are often installment loans that are paid back as you would find when working with traditional bank loans. The primary difference is that dentists with bad or no credit may have better luck finding the funding that they are looking for when they use an online marketplace.

Traditional Business Loans

There are traditional loans for businesses, which can be a great option for raising the capital that your dental practice needs for whatever purposes you need the money for. This can include equipment purchases, refurbishment, cash injections, extensions, and various other major projects that you need funding for. There are 2 different types of traditional business loans to consider.

Secured Business Loan

A secured business loan can vary widely in the amount of money that you can receive. The catch is that you need to secure your business loan using collateral. The collateral is unencumbered assets, such as property, machinery, or equipment. If you miss many of your fixed monthly payments, you do risk losing the assets that you put up for collateral. However, using collateral makes you less risky to the lender, which means that you get better and terms that are flexible for your loan.

Unsecured Business Loan

You don’t need to provide collateral for an unsecured business loan, which can make it a greater risk to lend money to you. It can be harder to get this type of loan. If you do manage to get approved for an unsecured business loan, you will end up paying more in interest than if you were using a secured business loan. You will also be more likely to get denied for these types of loans if you have bad credit.

SBA (Small Business Association) Loans for Dentists

The SBA offers loans, which are provided by their partner lending institutions but are guaranteed by the SBA for up to 90%. This means that lending to you is less risky to the lender, which translates to better terms and lower interest rates for the borrower. The loans from the SBA range from between $5,000 to $5 million, with loan terms of between 5 and 25 years.

There are SBA loans available for every industry and are considered to be an excellent option due to the fact that they do back the loans. There are plenty of advantages of these loans, but there are also plenty of disadvantages for getting these loans as well.

One such downside to these loans is that they do have pretty strict requirements in order to get approved. For one thing, they have some of the most rigorous requirements for documentation when compared to many other lending options. You will need to show many years’ worth of highly detailed financial information, as well as a business plan that clearly outlines why you need this funding. It also requires the plan to include your repayment plan. After applying for the loan, it can take potentially months to process the loan without any guarantee of the approval. You will also need to provide the SBA with either a personal guarantee or collateral to get a loan.

The SBA, along with their lending partners, unfortunately tend to favor offering loans to larger businesses and reject smaller loan amounts or small business applications. This includes even dental practices that have a healthy financial history and a strong cash flow.

Asset Finance

Asset financing is a great way to get the equipment that your business needs. By now, you know just how expensive this equipment can be. Through asset financing, you can get a more cost-effective approach to getting the equipment you need. There are a few different approaches to this that you can consider for your business. This section will break down the different options you have as far as asset financing goes.

Hire Purchase

This type of asset finance allows you to get access to the equipment you want/need and eventually own it. This works by allowing the lender to purchase whatever equipment you need from the supplier, then letting you use it for the practice after you have made about a 10% deposit on the equipment including interest. However, you can negotiate this number. You will then need to make fixed monthly payments as you agreed upon. After maturation of the agreement and you have made all of your required payments, the ownership of those assets are then given to your practice.

Leasing

Leasing is where you can borrow equipment for your dental practice for a specific amount of time. Leasing agreements can vary in length but may last 5 years, but you may be able to work with your lender to get this term to a longer amount of time. While you are using the equipment, you need to make payments on a monthly basis, in addition to interest according to your agreement. The payments that you make factor in both the current value of the equipment as well as the value when the leasing agreement matures. Once this agreement is over, you can opt to extend the term of your lease, send back the equipment, or upgrade the equipment to a newer model. The biggest downside of leasing is that you don’t have ownership of the asset unless you purchase it from the lender.

Asset Refinance

With asset refinance, you get the opportunity to release any equity that you have in your unencumbered assets including your machinery or equipment that your dental practice owns. The money that you can access with this approach can help you to afford new projects, purchase equipment, and support cashflow or expenses. These agreements can typically last several years, where you will need to make fixed payments every month as well as any necessary interest. As long as you can continue to make payments to your repayment plan, you are able to continue using that asset during your daily operations.

Invoice Finance

There are 2 types of invoice finance that will be discussed in this section. When you use either invoice finance option, the practice is able to access potentially 90% of the money that is owed to you from B2B invoices. Invoice financing is a secured type of financing, which is backed by the funds that are tied up within the invoice. You will need to have an accurate and updated ledger to apply for these types financing.

Factoring

With factoring, you can sell any invoices to a factoring company at a discount. You are borrowing against the invoices, getting most of your money right away rather than waiting for weeks until the invoice is paid. The factoring company will keep a portion of the invoice as their own “interest”, as you would have to pay with any other loan. This can allow you to get your money and keep the cashflow coming that your business needs to operate. There are protections that you can opt for in case clients don’t pay their debts. Clients will know if you have handed the invoices over to a factoring lender.

Discounting

You need to have a significant number of yearly payables in order to qualify for this type of invoice financing. You will also need to show that your practice has reliable policies in place at your practice so that you can successfully collect any money that you are owed. With this option, instead of the  patient who owes you money paying your practice, they will pay your lender. Once the invoice has been fully paid, the lender will give you the balance of the invoice minus any applicable fees.

Merchant Cash Advance

Merchant cash advances are another great option for dental practices to consider. As long as your dental practice accepts debit and credit cards for payments, you are able use these transactions to get funding. You can get access to money based on your average monthly credit card sales. With this type of loan, you are able to use the money for whatever you need. You can get funding for close to how much you earn from credit card sales on a monthly basis. The lending company will either have their own equipment to process credit card sales to take their portion of your sales or they will work with your current credit card processing plan to get their money directly from them.

While this is an unsecured loan, the lender does look at how reliable your monthly credit card sales are, which means that you can potentially qualify for these loans even with poor credit. If you get this type of loan, you will have a fixed payment schedule, which allows the lender to take a specific amount of money from your credit card sales until you have paid back the loan as promised. Sometimes you can get this type of funding within a few days, giving you convenient access to the money you need.

Business Line of Credit

A business line of credit is very similar to a credit card, in the sense that you are able to get a credit limit when you first get this type of loan. You don’t even need to borrow all of the money that you get for your credit limit. You just borrow what you need, when you need it. Then, you only have to make repayments on the money that you actually borrowed. You can continue to pay off what you borrow and borrow more as you need to with a business line of credit. This allows you to always have some money on hand, which can be especially useful for when an emergency comes up. The most important part of this loan is that you only have to pay interest on what you actually borrow.

Equipment Loans

Asset financing is a great option if you are looking to lease the equipment, but if you want to have the equipment included as one of your assets you need to purchase the equipment yourself. That’s where equipment loans come in. With equipment loans, you retain ownership of the equipment that you purchase. You will be required to put down a down payment on the equipment, but you don’t need to technically secure the loan since the equipment can be used as collateral. If you don’t pay the equipment loan on that piece of equipment, the lender can take possession of the equipment. This can be a great option for a business that may not have great credit or need to establish a credit history. This is the ideal solution for businesses who need access to equipment as soon as possible.

Dental Practice Purchase Loans

Are you looking to purchase your own practice? The good news is that there are lending options that were designed to help someone purchase their own dental practice. This is a great option for people who are either just starting out in the business or are looking to expand because their practice is so successful. You do have to be careful with an option like this because it does typically require a higher loan amount as well as longer terms. These types of loans do require you to fill out a significant amount of paperwork and a lot of applicants get rejected for these types of loans.

Conclusion

Getting the funding that your business needs can be a struggle for some people. When it comes to your dental practice, you want to make sure that you have the funding that is necessary to operate your practice and even potentially grow as a practice. Whether you need new equipment or more equipment, alternative funding can provide you with the financial solutions that you need. It can be faster and easier to get alternative funding when compared to traditional funding sources. If you’ve had trouble getting funding or you just want an easier funding solution, you may find the best results with alternative lending and funding options.