It’s no secret that starting your own business is a difficult task that not everyone can succeed at.
Opening your own dental practice is no different.
Not only do you have to worry about marketing, performance, and other logistics, but you have to worry about funding, too.
Taking out a dental practice loan is a common way to get your business up and running. But there are some things you need to know.
Not sure where to start? Don’t worry, we’ve got you covered.
Let’s look at what to keep in mind.
1. Good Credit and Payment History Will Get You Lower Interest Rates
Your credit score is a value that displays how trustworthy you are as a borrower. Similarly, your payment history on other debts lets other lenders know how reliably you can pay them back.
Having good credit combined with solid repayment history on car loans, mortgages, etc. will probably result in your lender being more flexible with their interest rate.
When it comes to large loans like these, you’re going to want the lowest interest possible. The difference between 5% interest and 10% interest on a $300,000 loan is significant.
2. Have a Solid Business Plan
Having a comprehensive business plan will affect your ability to secure a loan for your practice. This doesn’t mean, though, that you should develop one only for this reason.
A solid plan will ensure that you have the greatest chance of not only repaying your debt but also having long-term success in the industry.
Things to consider and include:
- Market analysis (and your strategy/budget for marketing)
- Expected revenue/expenses
- Other goals
You should also write an executive summary that references all of this information to provide to your potential lender.
3. Shop Around
Not all loans are equal, and you don’t have to settle for the first one that you encounter.
By allotting time to browse different loan opportunities, you might save thousands of dollars down the road.
A common mistake that dentists make is going straight to large banks. Smaller banks and credit unions can very likely offer you the loan you need at a lower interest rate, so don’t forego researching these institutions.
4. Be Aware of What The Loan Really Costs
Taking out $300,000 doesn’t mean you’re $300,000 in debt.
Depending on how long you take to pay the loan off, you could find yourself in a total of $500,000 in debt or more.
So, look at your business plan and understand how much you’ll really be paying your lender. If you’re able to, it’s best to budget for larger payments in the beginning to mitigate the interest you accrue.
Taking out a Dental Practice Loan Can Seem Intimidating
But it doesn’t have to be.
With the above information about handling a dental practice loan in mind, you’ll be well on your way toward running a successful dental practice while keeping your finances in check.
Want to learn more about business loans? This page has plenty of useful info.