Can You Get an SBA 7(a) Loan for a Dental Office?
There are nearly 200,000 dentists across the United States, many of whom are looking to start, expand, or purchase a dental practice. If you’re one of them, an SBA 7(a) loan could be a great way to get the financing you need. SBA 7(a) loans are available for all kinds of dental practices, including orthodontists, periodontists, endodontists, and oral and maxillofacial surgeons.
SBA 7(a) loans are offered by a variety of different lenders, including banks, credit unions, and online lenders. They offer terms up to 25 years for commercial real estate, and loan terms as large as $5 million. Since SBA 7(a) loans can be used for working capital, some dentists chose to use them for purchasing dental equipment, as well as other expenses, such as marketing and employee salaries. In many cases, dentists may need to invest $350,000 or more into starting their own practice, and an SBA loan may be able to provide part or all of that financing.
Specifically, SBA 7(a) loans can be used for:
Buying out a dental partner: When one or more dentists decide to retire from a dental practice or move to another location, it’s common for the other partner or partners to purchase their stake in the practice— but they might not always have the cash to do so, and an SBA 7(a) loan may be able to help.
Building a new dental practice: Almost all new construction costs can be funded by an SBA 7(a) loan, including furniture, lighting, security systems, and even landscaping.
Refinancing a dental practice: SBA 7(a) loan funds can be used for refinancing the debt on a current dental practices. However, the debt must have been used for purchases that would be eligible under SBA guidelines (i.e. real estate, working capital, and not personal expenses.)
Buying or expanding a dental practice: SBA 7(a) loans can be used to purchase existing dental practices, or to expand a dental practice that you currently own.
Buying dental equipment: Dentists can use SBA 7(a) loans to purchase dental equipment, but usually only as part of a larger SBA 7(a) loan.
While SBA 7(a) loans are great, they might not be the right choice for every dental office. In particular, larger dental practices may find that the SBA 504 loan is a better fit, especially if they primarily want to use the funds to purchase real estate and build a new dental practice. While SBA 504 loans can’t be used for working capital, they do allow slightly larger loan amounts than 7(a) loans (up to $5.5 million), and have substantially lower interest rates than SBA 7(a) loans.