It has been widely reported that lending to small and medium-sized firms (SMEs) via the government’s Funding for Lending Scheme (FLS) fell again in the second quarter of the year.
The Bank of England said that net lending to SMEs dropped by £435m, and the Bank’s figures also show that net lending to all businesses under the FLS contracted by £3.9bn.
The FLS is meant to help banks release loans cheaply, mainly to SMEs, who have reported difficulty in securing funds.
So, for all the dentists out there who have a vested interest in funding and that will be either sellers or buyers, the good news is that David Brewer, Managing Director of FT&A Finance, has reported another substantial year of bank funding. To date in 2014, he and his team have submitted over ONE MILLION POUNDS of loan applications to the 14 banks that specialise in dental healthcare funding, and the even better news is they have a 94% success rate in the applications they submit.
Before any bank is approached for finance, the applicant does need to be fully prepared and be able to show preparation – this will quite often be a business plan and associated cash flow and profit/loss forecasts to demonstrate the purchase is viable. The recommendation is always to work with an independent adviser who understands the dental market and can provide a full whole of market overview, as well as prepare the necessary proposal and forecasts in a format the banks prefer to see.
This highlights a number of points – one is to use a specialist who knows and understands the market, the banks, and, more importantly, the right bank manager.
The Bank of England report also highlights the importance of not taking all information at face value…
The recent NASDAL survey reported in the quarter ending April 30th, the average goodwill value of NHS dental practices in the survey increased by 20% to 138% of turnover, and mixed practices stood at 106% of turnover. The average goodwill for all practices, according to Alan Suggett, who represents NASDAL, was 97% of turnover. We are delighted to be able to report that we have recently completed on a mainly NHS practice where the goodwill value achieved was 212% – yes, this may be exceptional, but it is certainly not unusual for us to complete on sales with goodwill values ranging up to 130% for private practices, and many NHS practices can be between 140% to 182%. Of course, location and a number of other factors are key drivers, but we are confident we will continue to achieve higher figures than the NASDAL survey and secure the very best for our clients.
The dental market continues to be strong with demand exceeding supply, and, as we have already mentioned, funding is readily available. We continue to see the drive and desire to be practice owners, evidenced by an ever-increasing number of dentists registering with brokers and coupled with this, we also have over 4,000 dentists registered with us looking to buy a practice, a number that continues to grow month on month.
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