Posted on Jun 13, 2011
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Posted on Jun 13, 2011
By Rod Johnston, MBA, CMA of Omni Practice Group
There is good news on the dental practice transition front. The financial climate for dental practice loan services is improving, making it easier for dentists to buy a dental practice or when selling a dental practice.
Obtaining dental practice financing can be a huge obstacle to the smooth transition of a practice from one dentist to another. Getting smart advice and guidance from a member of the National Association of Practice Brokers can facilitate making this important piece of the puzzle fit. NAPB dental practice brokers are constantly on top of the lending situation in their market areas and can offer invaluable advice that will save time and money for all involved.
A couple of years ago, in 2010, banks that financed dental practice buyers tightened their credit requirements. They began requiring dentists to be out of school at least two years, and they would only finance up to 80% of the last 12 months’ production. In some cases, they would require the seller to take a note back for part of the loan. In addition, they would absolutely not finance new dental school graduates and many would not consider lending to a dental practice start-up. Rates were up around 7% or higher.
It was a rough year for sellers looking to do a dental practice transition or sale and equally tough on buyers looking to get financing. Dental practice sales were completely in the tank. Thankfully, those conditions have changed.
Fast forward to the present: bank rates are as low as 5.25% and most around 5.75% to 6%. Many financial institutions will finance up to 85% of a dental practice’s last 12 months production, and typically no longer require the seller to take a note back. They will even finance dental real estate purchases if the real estate is available at an attractive rate. If you’re in the market and think you can’t buy a practice or sell your dental practice because banks are not financing dental practice sales, think again.
Banks are back on the field of play and ready to loan money so get in the game! The National Association of Practice Brokers (NAPB) have extensive experience helping secure dental practice financing, along with established relationships with both national and regional lenders. They can help source, evaluate, and execute the best lending solution for your individual needs.
NAPB dental practice brokers are consultants, CPAs, or attorneys with an average of 20 years of industry experience. They’re proven professionals who have executed every kind of situation: associate to partnership agreements, retirement transitions, relocations, and complex real estate sales and leasing arrangements.
Contact NAPB dental practice broker members in your area to discuss your personal situation and goals and get an up-to-the-minute picture of your local market.