Dental practice finance for setting up, buying or growing a practice

Dentistry is one of the most capital-intensive small businesses in health care. Each surgery needs plumbing to the chair, suction and compressed air lines, sterilisation flow, imaging and a lot of cabinetry. A general practice can open a consulting room with a desk, a bed and a computer. A dental room costs several times as much before the first patient sits down. That’s why dental practice finance is less about “can we borrow” and more about structuring the borrowing so the practice still has room to breathe.

What can dental practice finance fund?

Dentists and dental groups typically borrow for one of five reasons:

• A greenfield surgery. Leasing an empty tenancy and fitting it out from scratch.
• Buying an existing practice. Paying for goodwill, equipment and the patient base.
• Buying into a practice. Purchasing a share from a principal, often as an associate stepping up. See practice buy-in loans.
• Refurbishment or expansion. Adding a surgery, upgrading sterilisation or modernising a tired front-of-house.
• Equipment. Chairs, imaging, intraoral scanners and milling units, covered in detail on our dental equipment finance page.

How do lenders read a dental practice?

The headline figure is collections: what the practice actually receives, not what it bills. From there, a lender who understands dentistry will look at:

1. Chair utilisation. How many days each chair is staffed and booked. Spare chair capacity is a growth story; a fully booked practice with no spare room might need to expand before it can grow.
2. Provider mix. How much revenue comes from the principal, from associates and from hygienists or oral health therapists.
3. Patient base. Active patients, recall rates and new patient numbers month by month.
4. Revenue concentration. If one dentist produces most of the income and is the one selling or leaving, goodwill is worth less.
5. Lease and location. Remaining term, options, and whether the landlord will consent to an assignment.

A lender isn’t auditing your clinical work. They’re checking that the income that repays the loan will still be there after settlement.

Secured, unsecured or a mix?

Situation	Common structure
New surgery with no trading history	Property-secured loan, with a buffer for the ramp-up months
Buying an established practice	Property-secured loan over residential or commercial property; sometimes combined with vendor finance
Trading practice adding a surgery	Secured loan, or unsecured if the amount suits turnover
Short-term cash need (tax, a slow quarter)	Unsecured facility or line of credit

Property-secured loans run from $20,000 to $5,000,000 and can be first mortgages, second mortgages or caveats over residential or commercial property. Unsecured, cash-flow and line-of-credit options for trading practices typically sit between $5,000 and $500,000, based on what your turnover and bank statements show. Earlier credit problems and ATO debt are assessed individually, never as an automatic no.

If you’ve got a quote in hand, a 60-second enquiry tells us enough to say which structure is realistic.

How much should a new dental surgery budget for?

Every build is different and we won’t publish averages we can’t stand behind. What we can say is what to include, because owners who leave items out are the ones who run short:

• Builder and fit-out costs, including services to each chair
• Chairs, delivery units and lights
• Imaging (intraoral, OPG or CBCT, depending on your model)
• Sterilisation equipment and the sterilisation room layout
• Practice software, IT, phones and data cabling
• Professional fees: designer, certifier, council or building approvals
• Signage and marketing for opening
• Working capital to cover wages and rent until the books fill

Our fit-out and equipment calculator lets you enter each of these, then shows the funding gap, what could be property-secured and how many months your buffer would last.

Which income does a lender actually count?

Dental revenue comes from several hands. A principal’s own production, associates paid on a percentage of collections, and hygienists or oral health therapists who may be employees or contractors. A lender working out repayment capacity looks at what’s left for the practice after those shares are paid, not the gross figure on the appointment book.

That’s why a practice with a strong hygiene program and long-standing associates often borrows more comfortably than one where the principal does almost everything. It also explains why buyers should look closely at how associates are engaged before settlement. If a key associate leaves in the first year, the income supporting the loan leaves too. Written agreements, reasonable notice periods and a plan to keep the team together are worth as much to the lender as they are to you.

An illustrative example

Illustrative only. An associate dentist has worked in the same regional practice for several years. The principal wants to retire over three years and offers to sell a half share now and the rest later. The associate has equity in an investment property. A lender could use that property to secure the first tranche, looking at the practice’s collections and the associate’s own production as the repayment source. The second tranche would be reassessed when it falls due, on the practice’s performance by then.

Before you commit: sensible checks

business.gov.au’s guidance on buying a business suggests reviewing three to five years of financial records, checking the lease and whether the landlord will consent to transfer, and searching the Personal Property Securities Register for anything registered over the equipment. For a dental practice, add a review of equipment age and service history, and the terms on which associates and hygienists are engaged. Our due diligence checklist goes through each step.

See if your practice qualifies

You’ve spent years building clinical skill. The business side deserves the same care. The enquiry takes about a minute, and there’s no credit check at that stage. We won’t circulate your details to a string of lenders, so your phone stays quiet between patients. A person who understands chair days and collections reads your enquiry and calls you.

Please answer the questions accurately, especially the amount, the purpose and any property you could offer, so the first conversation is useful.

Start my dental practice enquiry →