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Dental Practice Financing — Understanding the Options

By Jeramie Eimers & John Nelson, U.S. Bank

Preparation - Building a Team

Purchasing a practice requires — at minimum — knowledge in law, accounting, human resources, banking, and business. Dentists are experts in dentistry. Successful practice owners surround themselves with experts who can serve them well — accountants and attorneys who focus on dental practices, dental brokers who can help find, evaluate, and assist with the purchase, business associates who know human resources, real estate and practice management, and lenders who have expertise in practice finance.

Additional Preparation and Questions to Consider

  • Lenders can prequalify the buyer to help streamline a buyer’s search. This helps to avoid spending time on purchases that will not be approved.

  • The No. 1 reason transactions fall apart is the inability to secure space. Land purchases and lease negotiations are normally done simultaneously with the practice purchase.

  • Risk tolerance comes into play when making financing decisions as well. The buyer’s feelings toward factors such as interest rate variability will help drive a loan structure best suited to the buyer.

  • Will the cash flow of the practice and the buyer’s level of cash flow comfort support higher payments for a shorter term, or would lower payments for a longer term be a better fit?

Choosing a Lender

Buyers have two main options when looking for practice financing. They can use a lender that specializes in dental practice financing or they can go to a commercial lender at their local financial institution. A third option, using a seller’s note, may be considered for all or part of the financing package.

Offer Analysis

As previously mentioned, there are many factors to consider when obtaining financing, and what works for one buyer, might not be the best approach for another. Buyers need to educate themselves on the process, know what questions to ask, and also know what is important to them and their unique situation. It is prudent to interview lenders and receive turnaround times, standards, and finance quotes in writing before submitting a credit application to each available lender. By receiving proof of verbal commitments, proposals in writing, and amortization schedules, buyers can submit their application to one lender versus multiple lenders, and thus streamline the process.


Often times, buyers don’t take into consideration the level of service they will get from their lender — both during the actual purchase as well as throughout the term of the loan. Some specialty lenders will proactively lower your interest rate in a lowering rate environment when the banks cost of funds drop to pass the savings onto the customer. One of the main differentiating factors between lenders is how well they know the dental practice finance business. If the lender is well versed in this area, they will be able to ask the right questions to ensure all of the alternatives are considered before finalizing the financing.


Buying a dental practice can be very exciting. It can also be overwhelming. That is why it is so important not only to be educated on the process but to be surrounded by a team of experts. A lender that has the expertise, stability, and commitment to help weigh the alternatives and analyze each unique situation will help to ensure a suitable practice for the buyer now and in the future.


John (Jay) Nelson is a Vice President and Business Banking Relationship Manager with U.S. Bank in the Nashville area and Jeramie Eimers is a practice consultant for U.S. Bank Practice Finance.

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