Which are the best Banks to approach for a loan to buy a Dental Practice ?
The key is to ensure you are working with a bank which understands the dental sector. Each Bank will have its own separate credit criteria and guidelines and it is essential to ensure you present your application in a manner which will satisfy the individual Banks requirement – You only get ONE chance to impress….
Via FTA Finance we now work with the specialist dental divisions of NINE if the major Banks – and we will do the leg-work for you – ensuring your proposal is submitted to the right people at the Banks, packaged in a manner which will ensure the most positive outcome and negotiate best terms.
Which information will the bank need when considering a loan application ?
The Bank will of course be seeking Accounts / Valuation / Sales summary of the new Practice you are looking to purchase. Nowadays the Banks also focus quite closely on you as the purchaser and it is essential you have your own financial position in order – you should expect to provide a CV (with focus on Managerial as well as Professional experience), your last 4 months Bank statements, last 3 years Associate/Practice Accounts together with a detailed Asset/Liability and Income/Expenditure profile (we can provide templates which are acceptable to the Banks as well as guidance on the wording of your CV). Please speak with FTA Finance BEFORE you approach any Bank for guidance in how to best present your case
How much will the Bank lend me for Dental Practice purchase ?
A difficult questions to answer as a bit chicken and egg……. in that quite often the amount the Bank will lend will depend on a combination of your current financial position AND the financial strength of the Practice in question. That said there are a few simple questions we could ask you at the very outset (before you even have a Practice in mind) – the answers to which should enable us to provide you with a guide as to the level of financial support which can be expected and in turn the size/level of Practice you could consider. Please call FTA Finance for a ‘pre-assessment’ to run through these questions
What should I buy first ?? A House or a Dental Practice
If your dream is for practice ownership the answer to this question is in most cases purchase the practice first – the reason being that most banks will be seeking a cash contribution towards a practice purchase – however if your savings are put towards a house purchase they normally cannot be drawn back. Also if you buy a house first you are somewhat restricted as to where you buy the practice. By purchasing the practice first you utilise your deposit/savings towards the practice – once you own the practice you would in most cases be on a higher level of income compared with former associate role – which would enable a faster build up of savings and then ability to hopefully buy an even larger house close to the practice. Speak with FTA Finance you can provide you with guidance as to the level/size of Practice you could purchase based on your experience and the deposit you have available
My current Bank has said they cannot lend to me to purchase a Practice – what can I do ??
There could be a number of reasons why this is so. It may be as simple as speaking with the wrong manager at the bank – it is key to ensure you speak with their Specialist Dental Managers who recognise the strength of a dental proposal. It could be also that your proposal simply does not exactly fit the banks credit policy – quite common if you own say one practice already and are looking to purchase second or third.
Whatever the reason we would suggest you speak with FTA Finance to review your position and to seek alternative options. Remember no two banks are the same and they all have slightly requirements – so if one says no it is quite common for FTA Finance to obtain a more positive response from an alternative lender.
How much Dental or Managerial experience would the Banks expect me to have ?
This is the area which has been affected most by the banks recent changes in credit criteria. It is now generally expected by the majority of the banks that you would have worked as an Associate for at least TWO years (and with Accounts to verify income/earnings) before they would consider any proposal to purchase a practice. You also need to focus on your CV to demonstrate to the Bank you have the ability to take the step from Associate to Practice owner – At FTA Finance we can provide suggestions as to how to re-write your CV in to a more Bank friendly format
Will a Bank’s loan offer from last year still be valid now ?
If a bank approved a loan last year for a purchase which did not proceed, we are often asked is this offer of funding remains open.
In a word No …….. Most loan offers have a shelf life – normally maximum three months and would need a fresh assessment after that period The individual banks credit criteria is also constantly being reviewed and what was acceptable to the bank six months ago may not be now. For any potential purchase (even if you do have funding pre-approved) suggest you contact FTA Finance first for a no obligation review of your position and to negotiate best terms from the banks.
Do I need to produce a Business Plan ?
It is advisable to have a Business Plan, but not mandatory (unless your Bank insists on one). If you do produce a Business Plan there are a few rules:
- Keep it simple (you can do it yourself and do not need to incur the cost of an accountant)
- Do it for your own benefit and understand the content
- Make sure you update it on an ongoing basis
FTA Finance can provide guidance as to how best to compile such a plan – and provide templates if required