Dental Practices: Conventional & Alternative Equipment Financing Options
Conventional Equipment Financing
Conventional equipment financing refers to traditional lending options, such as loans and credit lines, that are used to finance the purchase of equipment for a business. These options can be a good choice for dental practices that need a large lump sum of money upfront to purchase equipment and have the ability to make regular payments over time.
Dental Practice Loans
Loans are a common form of equipment financing for dental practices. They involve borrowing a lump sum of money from a lender, such as a bank or credit union, and repaying the loan over a set period of time, with set repayment terms and interest rates.
Loans can be secured or unsecured. A secured loan is backed by collateral, such as the equipment being financed or other assets.
An unsecured loan is not backed by collateral. Secured loans tend to have lower interest rates and more favorable terms, but may require a down payment and may put the collateral at risk if the loan is not repaid. Unsecured loans may have higher interest rates and less favorable terms, but do not require collateral.
A credit line is a flexible source of financing that allows a business to borrow up to a certain limit as needed, with the option to repay and re-borrow as needed. Credit lines can be secured or unsecured, and may have variable or fixed interest rates.
Credit lines can be a good option for dental practices that need ongoing access to funds for day-to-day expenses or to invest in growth. They offer more flexibility than loans, as they allow you to borrow and repay as needed, rather than taking out a fixed loan.
Pros and Cons of Conventional Equipment Financing
Conventional equipment financing options, such as loans and credit lines, offer a number of benefits for dental practices:
Quick access to funds: Both loans and credit lines can provide quick access to a large lump sum of money upfront, which can be especially helpful when you need to make a large purchase or invest in growth.
Fixed repayment terms: With a loan, you know exactly how much you need to pay each month and when the loan will be fully repaid, which can help with budgeting and financial planning.
Potential tax benefits: The interest on a loan or credit line may be tax-deductible, which can help reduce the overall cost of financing.
However, there are also some potential drawbacks to consider:
Credit requirements: Both loans and credit lines typically require a good credit score to qualify, and may also require collateral. If you have a low credit score or limited assets, you may have difficulty securing conventional financing.
Fees and interest: Conventional financing options may have fees, such as origination fees or closing costs, as well as interest charges. These costs can add up over time and increase the overall cost of financing.
Repayment obligations: Both loans and credit lines require regular
Business Cash Advances
Business Cash Advances are another alternative source of working capital or equipment capital for dental practices.
A business cash advance involves borrowing a lump sum of money in exchange for a percentage of future sales. The lender advances the money to the business and then collects a percentage of the business's credit card sales until the advance is paid back, plus a fee.
Another type of business cash advance is a cash advance based on an automatic ACH withdrawal from the practice's business bank account. With this type of cash advance, the lender advances the money to the business and then automatically withdraws a set amount from the business's bank account each day or week to repay the advance, plus a fee.
This type of cash advance can be a good option for dental practices that have a stable cash flow and want a more predictable repayment schedule.
It can also be a more affordable option, as the fees and percentage of credit card sales collected are typically lower than with a traditional business cash advance.
However, it's important to carefully consider the terms and fees of an automatic ACH cash advance before committing to one. The lender will need access to the practice's business bank account, which can be a potential risk.
It's also important to make sure that the practice has sufficient funds in the account to cover the automatic withdrawals, to avoid overdrafts or other fees.
Term Loan for Equipment Capital
A Term Loan used as an equipment loan has some features that many dentists prefer. You own the equipment and it is not subject to being repossessed if you get in a financial bind at some point for some reason, as term loans are unsecured loans.
With traditional equipment financing, the finance company will come and take the equipment if you cannot make your payments for some reason, as the equipment acts as collateral for the loan.
Also, with a term loan, no down payment is needed, so you can acquire the new dental equipment needed without coming out of pocket at all.
You may also may have leftover funds to cover any soft costs involved in the installation of the equipment.
Because the term is short, you finish paying for the equipment much faster. However, this also means a higher payment, as you are paying off the lump sum you received, in two to three years instead of five to seven years or longer as with traditional dental practice equipment financing.
Conclusion - It's Good to Have Options
In conclusion, whatever method of dental equipment financing your practice needs, Americapital Solutions has what you are looking for because we have access to every type of financing, lending and funding connected to USA Dental Practices, in any way.
We consult with you for free, even if you are just doing research for future plans, to help you determine your realistic options which will include what you can be approved for based on your current credit and financials.
If there is something you want to be approved for but do not currently meet the qualifications for that loan or line of credit product, we will help you build a roadmap to get there as quickly as possible.
AmeriCapital Solutions Makes the Financing World Your Oyster
We have established working relationships with:
Equipment Finance Companies
Term Loan Lenders
Business Cash Advance Platforms
Accounts Receivable Financing Companies
Purchase Order Financing Companies
Commercial Real Estate Lenders
Mergers & Acquisitions Lenders
Home and Property Equity Lenders
Whatever the Funding Needs for Your Dental Practice, AmeriCapital Solutions has you covered.
Call/Text (442) 222-9429 to schedule your Free, Zero Stress, No Pressure, No Obligation, Consultation Today
Or Visit www.AmeriCapitalSolutions.com
Written by - Rodney Wood
Senior Business Funding Consultant for AmeriCapital Solutions and the Oasis Funding Network.