Using a Broker to Secure Dental Practice Finance
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The process of applying for Finance to buy a Dental Practice made simple by using a specialist broker
Using a broker to secure your dental practice finance loan can come with many benefits. Here we will cover some details about using finance to buy a practice.
Funding your dental practice
Commercial finance lenders have a strong appetite for funding healthcare transactions, especially for dental practices, including both the goodwill and the freehold.
To support your dental practice purchase, we are a specialist independent broker. Thanks to our experience and relationships with lenders in the commercial sector, we can source the finance for your dental practice from a panel of lenders. This ensures we find you a great deal. We help dentists across the UK. Everyone from first-time buyers to seasoned dental group owners seeking to expand further.
Enquiry for Indicative Terms
Once you find a dental practice you want to purchase, we can propose the deal to finance providers to see if they would consider supporting the purchase.
As your broker, we put together a detailed case that covers the current status of the practice along with your plan to move the business forward.
After the lender has completed their initial review, assuming they have the interest to support the purchase, they will issue 'Indicative Terms'.
What are 'Indicative Terms'?
Indicative Terms are a summary of the proposition from the lender and typically summarises:
- Loan amount
- Term of the loan
- Fees
- Interest rate
- Early Repayment Charges (ERC) if applicable
You can think of indicative-terms stage in a similar way to that of a decision-in-principle when buying a house. However, one main difference is that there is no credit check done at this stage. With commercial finance, the credit search is typically done as part of the full application for finance.
Indicative-terms gives you a strong indication if a lender is prepared to consider a formal application for finance. Furthermore, having this knowledge provides you with confidence when viewing a practice.
Offer Accepted
Once you have an offer accepted, the next step is to submit a full finance application to the lender's credit team.
After the lender’s credit team has 'underwritten' the application, you can expect to receive a finance offer, subject to a satisfactory valuation of the business you aim to purchase.
Fifty Nine Financial - your Dental Practice Finance Broker
Supporting You Until Completion
We fully appreciate that buying a practice is a huge step, and no doubt quite daunting. Especially when you also include applying for finance at the same time. For this reason, we will be there to support you all the way through to the day of completion as your specialist dental practice finance broker.
5 Star Service
We base everything we do around delivering excellent service and fostering strong relationships with our clients. Ultimately, our aim is to ensure you come back to us time and again. Our commitment to exceptional service standards supports this goal. Check out our online reviews!
Established Relationships
When it comes to getting deals over the line, a strong relationship between your broker and the Practice Finance lenders goes a long way. Knowing the right solution so we're not wasting time and getting things done once you have found the practice you want.
Full Menu Of Services
We are fully FCA regulated. This means, as well as your commercial funding requirements, we are also brokers for many other financial services. Such as personal mortgages and insurances. Something a lot of commercial brokers can't do.
Insurance Advice
Loans to buy a dental practice often require that you have a life insurance policy as part of the loan security. As we are also FCA regulated insurance brokers, it means you don't have to go elsewhere. We can arrange it all for you.
Frequently Asked Questions
Each dental practice is unique. Financing the goodwill purchase of a dental practice depends on the target practice’s financial performance. Essentially, the dental practice’s profitability must be sufficient to service the loan repayments. Therefore, to assess whether we can finance the purchase of a dental practice, the company accounts and the financial details of the prospective buyer will be required.
The deposit requirements when buying a dental practice can vary a lot from one lender to the next. Some lenders require 20% of the purchase price as a deposit for a dental practice. However, we have secured deals for clients for 100% of the purchase price. Even for first-time-buyers.
The profitability of the business that you want to buy will also effect the maximum loan. If the business is not showing much net-profit in the accounts, it might be tricky to secure a high loan amount.
Additionally, if the freehold building is available to purchase, we can typically secure 100% funding on that when buying the dental practice goodwill also.
For the right deal, it is possible to secure finance to buy a dental practice with no deposit.
First time buyers looking to buy a practice with no deposit – there would be an expectation that the lender could take a charge on a property. That could be a residential property or perhaps a buy-to-let. There would need to be a certain level of equity in the property for this to be a consideration. The practice you want to buy would also need to be very healthy form a financial perspective.
Existing practice owners – we can often look to utilising the equity you may have in an existing practice and create a dela where you are able to buy a new practice with no cash in. Whether or not this is possible will depend on the level of equity you have in any existing practices and how profitable the new practice is.
If you are buying a practice and using finance from a bank, there will always be a requirement for the practice to be valued. The cost of a valuation ranges from £1,000 to £3,000 plus VAT, per site. The specifics of the practice will influence that cost.
You will also need a solicitor to handle the legal side of things. It’s important to also consider that if there is any additional security required by the bank providing the finance, there will be further legal costs to process that work. Additionally, depending on the deal structure, the bank may also want a separate solicitor to represent them, and this will also be at your cost.
When buying a dental practice, the term of the loan can be influenced by a number of things. Each lender also has their own criteria. You should expect a range of:
Goodwill: up to 15 years typically (depending on the terms of the outstanding lease). However, in certain circumstances, with some lenders this can be extended to 20 years.
Freehold Building: up to 25 years
When seeking finance to buy a dental practice, it is possible to use a loan from a friend as the deposit. That said, this is not something all lenders will allow. Thankfully, as a specialist dental practice finance broker, we know lenders that are ok with this. The lender would typically have to also factor in the cost of your repayments to the person providing the loan.
Indicative Terms are provided by a lender when they have reviewed our initial proposal, if they are prepared to consider a formalised application for finance. Indicative terms typically cover:
- Loan amount
- Term of the loan
- Interest rate that would be available
- Any expected fees
Yes, it is possible to get an unsecured loan to set up a squat dental practice. The lenders that can support this range from high-street names through to very specialist funders.
We are not tied to any agents. Fifty Nine Financial are a fully independent finance broker. We can help you, no matter which practice you want to buy, no matter which sale agent is marketing the practice.
Loan to Value, or LTV as it is commonly know, is the size of a loan in relation to the value of the asset you wish to buy.
As a simple example, if the asset is £100,000 and the LTV is 80%, that would be an £80,000 loan. 75% LTV would be a £75,000 loan etc.
Revolving credit facilities (RCF) are available in the market. It operates as a pre-agreed post of cash to enable you to accelerate your growth plans. However, it is a very niche area of lending. There are not many lenders that offer RCF. Thankfully, we know the lenders that do!
When seeking finance to buy a dental practice, you should provide:
– ID – passport / driving licence
– Personal fact find with Assets & Liabilities info
– CV detailing your experience (mainly first-time-buyers)
– Last 3 years finalised accounts for the dental practice you want to buy
– Current year to date management account information for the business you want to buy
– Evidence of deposit funds, typically 3 months bank statements
If you already own a practice(s), we will also require:
– Last 3 years finalised accounts for your existing companies
– Current year to date management account information for your existing companies
There may be further requirements as the application progresses. The earlier you can provide the things mentioned above, the faster we can get indicative terms. This then enables you to move forward with any offer / purchase.
Case studies
Read about some of the dentists we have helped:
Dental Practice Sales Agent
If you would like to find dental practices available to buy, or if you need help marketing your existing dental practice for sale, we work closely with expert agents Dental Practice Sale. The team at DPS have decades of experience in valuing, marketing and selling practices. From individual sites through to large groups. DPS have very well established relationships in the dental sector.
Why Fifty Nine Financial?
- Access to Whole of Market
- Specialist Finance Broker
- Exceptional Customer Service
- No Upfront Fees
