Dental Practice Loan Calculator

Dental Practice Loan Calculator

Financing a dental practice means borrowing against goodwill — the patient list, the staff and the reputation — which is most of the purchase price and none of the physical assets. Lenders who understand that will lend up to 100%; lenders who do not will decline entirely.

Practice Acquisition Versus Startup

	Acquisition	Startup
Financing available	Up to 100%	80–90%, plus working capital
Revenue	From day one	18–36 months to maturity
Typical amount	$400k–$1.5M	$350k–$600k
Risk	Known cash flow	Unknown
Term	10–15 years	10–15 years

Acquisition is the lower-risk route and priced accordingly: an existing practice has a verifiable collections history, and the loan is serviced from revenue that already exists.

What the Purchase Price Is Made Of

A practice typically sells for 60–80% of annual collections. Of that, the equipment and leasehold improvements are a minority — the rest is goodwill, which cannot be repossessed.

Specialist dental lenders will finance it anyway, on the evidence that dental practices have among the lowest default rates of any small business category. General commercial lenders usually will not, which is why the choice of lender matters more than the rate.

The Costs Beyond the Purchase Price

• Working capital for 3–6 months of payroll and supplies while receivables catch up
• Equipment upgrades, since a practice being sold has often deferred them
• Practice management software migration, which is disruptive and rarely budgeted
• Marketing to retain patients through the transition, which is where acquisitions fail

Transition Is the Real Risk

Patient attrition after an ownership change runs 10–20% and is the single largest threat to the projection. The mitigation is a transition period with the selling dentist staying on for several months — introducing patients personally rather than through a letter.

Build the debt service against 80% of current collections, not 100%.

Student Debt Sits on Top

A dental graduate typically carries $300,000–$500,000 of student debt before borrowing anything for the practice. Lenders in this space expect it and underwrite around it, but the combined monthly obligation is what determines whether the first two years are survivable.

Where the Money Goes

On $400,000 at 8% over 10 years, paying $4,853 a month:

Point	Principal repaid	Interest paid	Balance
Year 1	$27,221	$31,016	$372,779
Year 3	$72,347	$73,246	$327,653
Year 5	$160,653	$130,534	$239,347
Year 8	$268,438	$168,341	$131,562
Year 10	$400,000	$182,372	$0

Early payments are mostly interest. That is not a fee structure — it is arithmetic: interest accrues on the outstanding balance, which starts at its largest. It is also why an extra payment made early saves far more than the same payment made late.

What a Rate Change Costs

Rate	Monthly	vs 8%	Total repaid
7.00%	$4,644	-$209	$557,321
7.50%	$4,748	-$105	$569,768
8.00%	$4,853	—	$582,372
8.50%	$4,959	+$106	$595,131
9.00%	$5,067	+$214	$608,044

Half a percentage point moves the monthly payment by $106 and the total by $12,759. Shopping three lenders usually beats any amount of negotiating on price.