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Starting Your Finance Journey
We analyse your assets & liabilities to provide you with a theoretical budget to use when shopping for practices
We stress test practices as you view them to ensure you can both afford them and advise you on likely debt capacity
Once your offer is accepted we’ll write a tender for the banks to ensure you get the most competitive terms
We stay with you until completion ensuring the terms of the facility letter are met promptly and supporting you with the CQC
Helping you through
Making such a huge financial commitment to buy a practice can be a daunting experience. Especially if you have never owned your own business before or have borrowed/procured funds from a family member to fund your first foray into Dental Practice Ownership.
Dental Elite operate DE Finance independently to the core practice sales division. DE Finance’s core focus is on negotiating dental practice finance for buyers seeking to acquire a dental surgery not only through Dental Elite but also through other agents or without an agent at all.
Frequently Asked Questions
If you’d like an indication of how much a lender would be willing to lend to you, please feel free to fill out our quick finance assessment form here: As soon as it’s completed, we’ll get an email to notify us and aim to provide you with an affordability report the same day.
In simple terms Dental Practices are valued by applying a market multiplier to the net profit of the dental practice. There are two known multiplier methods, Fair Maintainable Trade which looks at what an individual or ‘efficient provider’ can earn from the business if working clinically. The second multiplier is to multiply the profit after all expenses and clinical treatments are paid out as if the business is Associate Led.
The multiplier is based on a number of points such as location, income risk, appetite (demand), property and so on. The demand for dental practices fluctuates throughout the year and therefore multiples are changing all the time.
This is based on the serviceability of the business. The general rule of thumb is, that if you purchased a practice under £500k we would expect the deposit to be approximately 10%, over £500k – 20% and it can be up to 30% for a Private practice. However, this is not a hard and fast rule, and for the right practice and the right situation, a lender may offer 100% lending if there is enough security to support in the background. It is also worth bearing in mind that if the business is strong enough to sustain the debt of the freehold, we can normally secure this element of the loan at 100%. Here’s a guideline that in our experience, we’ve found to be consistent.
- £500K – 10% – 20% Contribution
Any Value – 10-25% Contribution, your deposit could potentially be a blend of cash and security, providing you have property with enough lending value available for a second charge. In theory, with enough security, you could reduce your cash input to 0%, allowing you to borrow with 100% lending.
Not necessarily. In most cases, there will be an unsecured option available to you as a buyer when seeking bank funding. However, using a property as security can be an effective way to reduce your cash input on a contribution. Theoretically, an NHS practice worth £750K would require a 20% contribution of £150,000. Hypothetically, if the buyer has £75,000 in cash available (10%) but also has a property with lending value of £75,000 (10%), the two can be combined to form a 20% contribution overall and fit the banks’ lending criteria. Having a reduced cash contribution can be a great way to allow for future improvements in the practice, improve cash flow, or to even help preserve your funds for your next acquisition.
Though there are a few options, typically, lending for the goodwill of a dental practice is done over 10-15 years. In terms of funds for the dental practice freehold, this is usually lent over 25 years
No! Dental Elite operates DE Finance independently to the core practice sales division. DE Finance’s core focus is on negotiating dental practice finance for buyers seeking to acquire a dental surgery not only through Dental Elite but also through other agents or without any agent at all.
On any bank funded transaction, a buyer would be required to instruct an independent bank valuation on the practice. The cost for this can range from £750 to £3,000, ex VAT. Typically, your lender will present you with a few options from independent RICS valuers asked to quote for the business. If using any property as security, you will likely incur additional legal costs to have a second charge taken over the property; the cost of this depends on your solicitor but would likely be between £1,000 and £3,000. Further, some banks will insist on a third-party solicitor to represent their interest which will also come at a price! All of these fees need to be factored into deciding the best overall lending proposal – deciding purely based on interest rate could lead to a poor decision.
We’ve found that most lenders tend to divide their pricing into levels of borrowing: £0-£250k, £250k-£500k, £500K-£1M and then £1M+. Although pricing varies from lender to lender, typically, the more you borrow, the lower the margin tends to be with the £1M+ bracket offering the lowest margin. As you might imagine these fluctuate all the time across all the banks.
95% of the time NO! – This is as our fee is typically taken from the bank’s arrangement fee which you would have paid anyway if you had approached them without a broker. Our other add-on services; the affordability assessment, the stress testing, bank proposal and transaction management is at no extra cost to you.
The lenders on our panel are made up of the specialist healthcare divisions of the usual high street lenders, with some challenger banks involved as well. Our contacts have been working on healthcare lending, financing dental cases for many years, developing strong relationships with their underwriters. Making sure you have the right bank manager championing your application for funding is a crucial part of buying a dental practice. As the old adage goes: ‘it’s not what you know, it’s who you know’.
Book a free Dental Practice Finance consultation
As every practice and loan proposal is individual it is very difficult to provide any buyer with cast iron budget. Especially with dental practices now often selling with high goodwill premiums, which more often than not require a higher cash contribution than if a practice sold for just the marketing price. However, when a buyer first makes contact with DE Finance we ask you to complete an Initial Finance Assessment Form which you can now complete online once you have registered. This will enable us to give you an indicative idea of the kind of practices you can consider viewing and bidding on.
When you shortlist a practice, you can make contact with DE Finance as often as you wish and our team will conduct an affordability test on the target so you can bid with confidence. Furthermore, we will provide you written confirmation of the viability of your bid provided you are bidding within the constraints of the affordability check.
When your offer is accepted, the real work begins. We will populate a profile for circulation amongst all the lenders that we know would consider your proposal and we work a competitive tender process to ensure we come back to you with the best deal on the market. Thereby providing you with a full comparison of all the indicative terms provided. Book a free consultation today.
Why choose Dental Elite Finance?
- Instant Indication of Upper Lending Limit
- Bespoke Practice Analysis to Indicate Affordability
- Tailored Application for Banks to Suit Your Needs
- Negotiate the Best Rates the Market Will Offer
- Refinance Your Existing Debt if Required
- Full Loan Term Cost Analysis
- Full Credit Application Support
- Free CQC Application Support
- Full Sales Progression Support until Completion
- Zero Additional Cost on 76% of Transactions
“We all have the dream of owning our own practice, however the thought of making that transition is often frightening. My first thought was, what can I afford? The only loan I’d ever got was for my home, and that was in the days banks were handing out money to anyone and everyone. This is where DE Finance were invaluable.”