The key is to ensure you are working with a bank which understands the dental sector. Each Bank will have its own separate credit criteria and guidelines, and it is essential to ensure you present your application in a manner which will satisfy the individual Banks ‘ requirements – You only get ONE chance to impress….
Via FTA Finance, we now work with the specialist dental divisions of NINE of the major Banks – and we will do the leg-work for you, ensuring your proposal is submitted to the right people at the Banks, packaged in a manner which will ensure the most positive outcome and negotiate the best terms.
The Bank will, of course, be seeking the Accounts / Valuation / Sales summary of the new Practice you are looking to purchase. Nowadays the Banks also focus quite closely on you as the purchaser and it is essential you have your own financial position in order – you should expect to provide a CV (with focus on Managerial as well as Professional experience), your last 4 months Bank statements, last 3 years Associate/Practice Accounts together with a detailed Asset/Liability and Income/Expenditure profile (we can provide templates which are acceptable to the Banks as well as guidance on the wording of your CV). Please speak with FTA Finance BEFORE you approach any Bank for guidance in how to best present your case.
A difficult question to answer as a bit of a chicken and egg……. in that quite often the amount the Bank will lend will depend on a combination of your current financial position AND the financial strength of the Practice in question. That said, there are a few simple questions we could ask you at the very outset (before you even have a Practice in mind) – the answers to which should enable us to provide you with a guide as to the level of financial support which can be expected and, in turn, the size/level of Practice you could consider. Please call FTA Finance for a ‘pre-assessment’ to run through these questions.
If your dream is for practice ownership, the answer to this question is, in most cases, to purchase the practice first – the reason being that most banks will be seeking a cash contribution towards a practice purchase. However, if your savings are put towards a house purchase, they normally cannot be drawn back. Also, if you buy a house first, you are somewhat restricted as to where you buy the practice. By purchasing the practice first, you utilise your deposit/savings towards the practice. Once you own the practice, you would, in most cases, be on a higher level of income compared with your former associate role, which would enable a faster build-up of savings and then the ability to hopefully buy an even larger house close to the practice. Speak with FTA Finance, you can provide you with guidance as to the level/size of Practice you could purchase based on your experience and the deposit you have available.
There could be a number of reasons why this is so. It may be as simple as speaking with the wrong manager at the bank – it is key to ensure you speak with their Specialist Dental Managers who recognise the strength of a dental proposal. It could also be that your proposal simply does not exactly fit the bank’s credit policy – quite common if you own, say, one practice already and are looking to purchase a second or third.
Whatever the reason, we would suggest you speak with FTA Finance to review your position and to seek alternative options. Remember, no two banks are the same, and they all have slightly different requirements – so if one says no, it is quite common for FTA Finance to obtain a more positive response from an alternative lender.
This is the area which has been affected most by the bank’s recent changes in credit criteria. It is now generally expected by the majority of the banks that you would have worked as an Associate for at least TWO years (and with Accounts to verify income/earnings) before they would consider any proposal to purchase a practice. You also need to focus on your CV to demonstrate to the Bank that you have the ability to take the step from Associate to Practice owner. At FTA Finance, we can provide suggestions as to how to rewrite your CV into a more bank-friendly format.
If a bank approved a loan last year for a purchase which did not proceed, we are often asked if this offer of funding remains open.
In a word, No …….. Most loan offers have a shelf life – normally a maximum of three months, and would need a fresh assessment after that period. The individual bank’s credit criteria is also constantly being reviewed, and what was acceptable to the bank six months ago may not be now. For any potential purchase (even if you do have funding pre-approved), suggest you contact FTA Finance first for a no-obligation review of your position and to negotiate the best terms from the banks.
It is advisable to have a Business Plan, but not mandatory (unless your Bank insists on one). If you do produce a Business Plan, there are a few rules:
FTA Finance can provide guidance as to how best to compile such a plan – and provide templates if required.
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