Dental practice loan: SBA options, rates and requirements

Key takeaways

The numbers lenders use

Many lenders look for DSCR of about 1.25x or higher. Each lender sets its own standard.

Worked example (illustrative numbers)

A dentist buys a general practice with one associate. All numbers are illustrative.

• Annual collections: $1,200,000; hygiene share 30%
• Adjusted EBITDA margin: 22% → $264,000 a year
• Loan: $1,000,000 at 10.00% for 10 years → about $13,215 a month, $158,581 a year
• DSCR = $264,000 ÷ $158,581 = 1.66x
• Break-even collections (DSCR 1.00x) = $158,581 ÷ 22% ≈ $720,822

Illustrative only. Real terms depend on the lender, the SBA and your file.

What lenders look at

Expect a lender to review:

• Collections and production for three years, plus year to date
• Hygiene production, recall rate and active patient count
• Payor mix: fee-for-service, PPO, public programs
• Associate agreements, pay and whether they will stay
• Adjusted EBITDA and owner add-backs
• Goodwill, the valuation and the seller's transition period
• Real estate and lease terms

What drives dental practice loan rates

The rate a lender offers usually reflects the program (SBA vs conventional), the term, whether the rate is fixed or variable, collateral, your experience and credit, and the practice's cash flow. Fees and points change the true cost, so compare offers with the loan fees and points calculator.

What dental practice loans pay for

Common uses:

• Acquisition, including goodwill
• Partner or associate buy-in and buyout
• Startup office
• Equipment: imaging, chairs, digital scanners, milling
• Build-out, expansion and real estate

SBA vs conventional vs equipment financing for a dental office

SBA 7(a): long acquisition terms (often 10 years) help when the price reflects a strong hygiene and recall program that will take time to transfer to a new dentist. It also fits an associate buy-in that needs lower equity, at the cost of SBA paperwork, guarantee fees and a personal guarantee. SBA 504 fits an owned office condo or building; SBA Express suits a smaller operatory addition.

Conventional bank loans: lenders that specialize in dentistry often offer long conventional terms to dentists with clinical experience and a clean payor mix history. Expect a closer look at PPO dependence and the length of the seller's transition period.

Equipment financing: chairs, CBCT, intraoral scanners and milling units back their own loan, with terms matched to useful life. Use it to add hygiene capacity or technology, not to fund goodwill or an associate's ownership stake.

Equity injection and timing for a dental purchase or buy-in

Most acquisition lenders want the buyer to contribute cash. SBA lenders typically look for a minimum equity injection on a change of ownership (commonly cited as 10% of total project costs), and part of that may come from a seller note only if the note meets current SBA standby rules. Conventional lenders often ask for more.

Plan on 60 to 120 days from signed letter of intent to closing for many dental purchases. Associate buy-ins often move in stages, and the seller's transition period (how long the selling dentist stays to introduce patients) should be agreed before the lender finalizes terms.

• Week 0–2: letter of intent; share tax returns, hygiene production and recall reports with a lender
• Week 2–6: term sheet, practice valuation, payor mix and fee schedule review
• Week 6–12: underwriting, SBA authorization if applicable, insurance network applications, associate and transition agreements
• Closing: final legal documents, funding, patient letters and the start of the seller's transition period

Common mistakes in dental practice deals

Lenders see these avoidable problems in dental purchases:

• Valuing the office on total production without checking hygiene recall rates and active patient counts
• Ignoring payor mix changes, such as a planned PPO drop that could cut patient volume
• Forgetting working capital for payroll in the first 60 to 90 days
• Agreeing to an associate buy-in without a written valuation method and timeline
• Accepting a seller transition period too short to transfer patient relationships
• Comparing loan offers by rate only instead of total cost and term

SBA program limits (checked against sba.gov on November 2, 2026)

• How these limits apply to a dental office: most purchases fall well inside the 7(a) cap, and the 504 program is relevant mainly when the buyer is also acquiring the office condo or building.
• SBA 7(a) maximum loan amount: the SBA lists $5 million.
• SBA 7(a) maturity: generally up to 10 years for business acquisitions, equipment and working capital, and up to 25 years for real estate.
• SBA 504 maximum (CDC portion): the SBA lists $5.5 million, for owner-occupied real estate and long-life equipment.
• SBA Express maximum: the SBA lists $500,000 with up to a 50% guarantee.
• Equity injection and seller-note standby rules for changes of ownership are set in SBA SOP 50 10 and have changed more than once. Confirm current requirements with a lender.
• Associate buy-ins and seller transition agreements are part of the deal structure the lender reviews; confirm how a staged buy-in fits current SBA change-of-ownership rules before you sign.
• Interest rate caps and guarantee fees change; we do not state them here. See sba.gov.

Rates, caps and fees change. Check the official source before you rely on any figure: SBA.gov: 7(a) loans.

• SBA SOP 50 10: Lender and Development Company Loan Programs
• SBA.gov: 504 loans
• SBA.gov: Terms, conditions and eligibility

Common questions