Factors That Influence Banks’ Decision to Lend To Dentists

Many banks are interested and eager to lend money to dental professionals.  Some of the reasons why they are interested are; the enormous size of the industry, it has been relatively resilient during recent recessions, favorable demographic trends and technology advances.  However, dental professionals are also appealing because they require significant capital for equipment, leasehold improvements and working capital.

Although dental professionals are an exciting prospect for most banks, the days of easy lending are far behind us.  They do have their requirements for underwriting and they do have specific areas they review and focus on.  Some of those factors are:

  1. Location
  2. Payer mix
  3. Payment policy
  4. The strength of the dental team
  5. Number of patients
  6. Favorable income and expense metrics relative to industry standard
  7. Cash Flow in the practice and if it is enough to cover the office expenses, service the new loan and cover the doctor’s personal debt

However, they may also consider some other factors:

  1. First impression of the clinic
  2. How many operatories are there?
  3. Is technology used and promoted?
  4. Is scheduling efficient?
  5. Does the practice stay on schedule?
  6. Does the dental team build relationships with its patients?
  7. How soon can they schedule a new patient?
  8. Does the practice seek patient referrals and does it thank existing patients for referrals?
  9. How many new patients is the practice generating?
  10. How much revenue is generated by hygiene?
  11. Is Hygiene profitable?
  12. What is the relationship with other dental professionals in the area?

The interesting thing is that all of these things are also important when one is looking to increase profits, grow their practice, set their practice apart from the completion and eventually sell their practice.

If you need help with any of these areas, do not hesitate to contact us; we can help.

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