GDAENDORSEDPARTNER: As one of the largest lenders to private dental practices, we routinely encounter borrowers at various stages of their financial lives. They may have just graduated and are anxious about what seems to be insurmountable student loan debt. They may be a 5-year associate who is focused on becoming an owner and is more established financially. Or they may already be a practice owner who is looking to expand and add locations to an already thriving business and personal financial status. No matter where you may be in your financial life, take a moment to consider these tips. That way, when you do take that leap to buy or start your first (or additional) dental practice, you can be better prepared for when you meet with your banker to talk financing. Know your production capability As an associate, it’s important to know and understand your dental production when you begin to think about whether you’re ready to buy or start a practice. When it comes to buying or starting a practice, a lender will want to hear from you and see (through reporting) what type of procedures you’re performing and what your dental production has been as an associate. If your compensation plan has a bonus tied to it, then it’s a great idea to get the reports that correlate to your bonus. Annual production reports are a good idea too. It’s smart to have benchmarks for yourself, so you can see if your production and procedures are growing and evolving as you get more comfortable as an associate. If you are seeking to buy an existing practice, one of the first questions you’ll be asked by a lender is “do you think you can handle the non-hygiene production being done in the practice?” Having a good storyline with key data points on your dental production will bring a great sense of comfort to the lender you are working with as opposed to just winging it. Keep up-to-date financial books and records Similar to an associate knowing their production abilities and capacity, as an owner you already have created a track record of how well you operate a practice. You can demonstrate that to a bank through accurate and up-to-date financial reporting. Spending a little extra time on the books before engaging with a lender is a great idea. When you work with a lender, demonstrating a sound understanding of your practices’ financial performance is always a plus. The typical bank package will include business and personal tax returns, current year profit and loss statements, and a background on each location you own. This should include the date the practice started, dental vs hygiene production, number of equipped and plumbed operatories, staff, etc. Invest the time to ensure your financial systems are up to date, work with your accountant to complete a financial review, and make sure your taxes are current. These are all important when you’re considering expansion and financing needs. 42 | Nov 2024
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