Dental SBA Loan FAQ

Yes. SBA loans are one of the most common financing methods for dental practice acquisitions. Both SBA 7(a) and SBA 504 programs can be used. You'll need relevant dental experience, adequate down payment (typically 10%), acceptable credit (680+), and practice cash flow sufficient to cover debt service.

The SBA minimum is 10% equity injection. Most dental practice acquisitions qualify for 10% down with experienced borrowers and strong practice cash flow. Seller standby notes can count toward equity if on full standby for 24 months.

Student debt is included in your global Debt Service Coverage Ratio (DSCR) calculation. Lenders add your monthly student loan payments to total debt obligations. With average dental school debt around $300,000, this can significantly impact borrowing power. Income-driven repayment plans can help by lowering monthly obligations.

Most SBA lenders require a minimum credit score of 680 for dental practice loans. Some will consider 650+ with compensating factors like strong practice cash flow, higher equity injection, or significant management experience.

Most lenders require a minimum DSCR of 1.20x to 1.25x for dental practice loans. This is calculated using practice cash flow after all debt payments, including student loans. Acquisitions use historical financials; startups use projections.

SBA 7(a) is the most common choice for dental practice acquisitions because it covers the business purchase, equipment, and working capital in one loan. SBA 504 is ideal when you're also buying the building. Many expansion deals combine both programs.

Yes. SBA 7(a) can finance de novo (startup) dental practices. You'll need strong projections, a detailed business plan, a signed lease, and relevant clinical experience. Expect 10% equity injection. The lack of historical financials makes these loans more challenging but not impossible.

Yes. Many dentists transition from DSO employment to independent ownership using SBA financing. Key factors include your non-compete agreement (geographic and time restrictions), ability to demonstrate business management skills, and a solid business plan showing your readiness for ownership.

Expect 60-90 days from application to funding for SBA 7(a). SBA 504 loans take 90-120 days due to CDC involvement. Start insurance credentialing 90-120 days before your target closing date to avoid billing gaps.

SBA 7(a) loans go up to $5 million. SBA 504 CDC portions can reach $5.5 million. Most dental practice acquisitions fall between $400,000 and $2 million. Multi-location or practice-plus-building deals may be larger.

Lenders use income, market, and asset-based approaches. The key challenge is that 60-80% of a dental practice's value is goodwill (patient relationships, reputation), which has limited liquidation value. Lenders focus on collections, EBITDA, active patient count, and provider retention.

Yes. Seller standby notes can count toward your 10% equity injection if the note is on full standby for 24 months (no principal or interest payments) and subordinate to the SBA loan. This is common in dental practice transactions.

You must get credentialed with insurance panels before billing under your own provider number. Start 90-120 days before closing. Many deals include a transition period where the seller stays on to maintain billing continuity until your credentialing is complete.

Yes. Dental equipment (chairs, imaging systems, CAD/CAM, sterilization equipment) can be included in your SBA 7(a) loan for acquisitions or startups. Equipment-only purchases may qualify for SBA Express loans (up to $500,000) with faster processing.

The practice and its assets serve as primary collateral. However, dental practices are goodwill-heavy (60-80% intangible), creating a collateral shortfall. Lenders must take available collateral but cannot decline solely for insufficient collateral. Personal guarantees from 20%+ owners are required.

Yes. Use SBA 504 for the building (fixed rates, lower down payment) and SBA 7(a) for the practice acquisition, equipment, and working capital. This dual-program structure optimizes your terms and is common for established dentists.

Lenders want to see clinical experience and some evidence of business acumen. For acquisitions, your dental experience is usually sufficient. For startups, lenders look for evidence you can manage a business—running a department, managing staff, or business coursework.

The lender will attempt to recover from practice assets, any real estate collateral, and personal guarantees from 20%+ owners. The SBA guarantee protects the lender, not the borrower. Default will damage your personal credit and finances.