Dental practice finance for equipment and growth

Dental practice finance is shaped by two things: expensive clinical equipment that dates quickly, and income that is regular but often split between NHS and private work. Lenders tend to view practices favourably, but they look closely at how that income is earned.

The same applies to medical, veterinary and optical practices. Veterinary practices also carry stock of medicines, and opticians hold frames and lenses, so working capital needs can differ from a dental surgery.

Much practice income arrives in a predictable rhythm, which lenders like. NHS contract income is typically paid monthly, and many private practices collect monthly fees through patient membership plans.

Pressure usually comes from one-off costs rather than day-to-day trading: replacing a chair or scanner, a fit-out, recruiting an associate or buying another practice. In England, NHS dental contracts are measured in units of dental activity, and under-delivery can lead to money being clawed back, so a practice that falls behind target may face an unexpected repayment.

• Chairs, imaging, scanners and lab equipment: equipment leasing spreads the cost and can make upgrades easier, while business hire purchase suits equipment the practice wants to own.
• Surgery fit-outs and refurbishments: an unsecured business loan can fund building work, decoration and compliance upgrades inside premises the practice already occupies.
• Buying another practice through your company: acquisition finance can fund goodwill and equipment, usually alongside a deposit from the buyer.
• Associate recruitment, stock and clawbacks: working capital finance covers short-term gaps.

We arrange finance for the practice business. We do not arrange loans to buy premises, and we do not arrange finance for patients to pay for treatment.

A company can buy a practice either by buying the shares of the company that owns it, or by buying its business and assets. The choice affects tax, liabilities and contracts, so take legal and tax advice early.

Lenders will want to see the target's accounts, its NHS and private income mix, how much depends on associates who might leave, and the buyer's clinical and management experience. Transferring or continuing an NHS contract can involve the commissioner, so check this before you commit. Our guide to buying a business with acquisition finance explains the wider process.

• Registration with the relevant regulator and any recent inspection findings
• Performance against NHS contract targets, where relevant
• Dependence on a single principal or a small number of clinicians
• Patient plan numbers and how stable they are
• Existing finance commitments, including equipment agreements

Useful documents include recent accounts, management accounts, bank statements, equipment quotes and, for an acquisition, the heads of terms and the target's figures.

• Get written quotes for equipment and fit-outs, including installation and training, so the full cost is financed.
• Check whether an equipment agreement can be upgraded or settled early, and what that costs.
• Build any NHS clawback risk into your cash flow forecast.
• Expect directors or members to be asked for personal guarantees, and understand what you are signing.

Welcome Finance is a commercial finance broker, not a lender. We work with practices run as limited companies, LLPs or partnerships of four or more partners.

A dedicated relationship manager supports you by phone, email and chat from first enquiry until the lender pays out. We check eligibility in about 60 seconds without affecting your credit score, and lenders on our panel run their own checks only if you choose to apply.

We charge you no fee. The lender pays us a commission when the finance completes. You can ask how much it is, and it can differ between lenders. See how we are paid.

Can a dental practice company finance used equipment?

Some lenders will finance refurbished or used clinical equipment, depending on its age, supplier and resale value. New equipment is usually easier to fund.

Is dental practice finance regulated?

Lending to limited companies, LLPs and partnerships of four or more partners is generally unregulated, and Consumer Credit Act protections generally do not apply. Read the agreement carefully and take advice if unsure.

Can veterinary and optical practices use the same options?

Yes. Equipment finance, fit-out loans, acquisition finance and working capital are available to veterinary and optical practices too, assessed on each practice's own figures.

Will lenders approve a practice purchase on the strength of the target's income?

The target's income matters most, but lenders also weigh the buyer's experience, deposit and plans. Each lender makes its own decision.