The Structure
Capital Stack Breakdown for a $1.8M Dental Practice Loan
Three products, one file. The four operatories are the most financeable thing in a dental practice — chairs, delivery units, imaging, sterilization — and they carry themselves as equipment. That takes $450K off the table before anyone prices the practice. Only $1.15M of practice value needed a term loan, and that number was set by the buyer’s own collections, not by what a credit committee thought the seller’s goodwill was worth.
A bank quoted 75 days on one acquisition loan. Three products underwritten together funded it in 8
Representative structure
| Layer | Amount | What it covered |
|---|---|---|
| Practice acquisition term loan | $1.15M | Practice value across both locations, against the buyer’s collections and operating history |
| Equipment financing | $450K | Four operatories — chairs, delivery units, digital imaging, sterilization — each securing its own piece |
| Working capital | $200K | The 90-day transition: payroll across two locations, patient-record migration, the seller’s hand-off period |
| Total | $1.8M | Funded together on one application |
Larger practice groups fund the same way when collections, cash flow, and story qualify.
The Transaction
What the Buyer Was Acquiring
Bobby Friel
Founder, Basecamp Funding
The dental version of the acquisition nobody warns you about: a good practice, a fair price, a seller who would rather sell to a dentist — and a corporate buyer whose only advantage is that it can close.
A dentist moved on a two-location group — four operatories, an established patient base, a retiring seller — and the bank quoted a 75-day process. The seller was 30 days from accepting a corporate offer. The specialist desk structured a $1.8M stack on the buyer’s own practice revenue rather than the seller’s tax returns: a term loan carried the practice value, equipment financing took the four operatories as their own collateral, and working capital funded the 90-day transition. Funded in 8 days. The corporate buyer lost.
Underwriting
How a Dental Practice Loan Actually Gets Underwritten
A bank underwrites the practice being sold. This structure underwrote the dentist doing the buying — and that difference is the whole reason one path takes 75 days and the other takes 8.
The Bank
What a bank sees.
A retiring dentist’s tax returns, four operatories of depreciated equipment, a patient list it cannot pledge, and a purchase price that is mostly goodwill. It orders a practice valuation, waits on it, discounts the goodwill, and lands on a timeline the seller cannot wait for.
This Structure
What this structure saw.
A producing dentist with existing collections, deposit history, and years of running the same kind of chair — buying more capacity in a market they already work in. Three separate assets, three lenders, each pricing the piece it underwrites every day.
Why a Bank Prices Goodwill and Stalls
What the buyer is actually purchasing is an active patient base attached to two locations and a hygiene recall schedule. None of that appears on a balance sheet in a form a credit committee can lend against, so the committee falls back on what it can appraise: the equipment and the lease. The practice value becomes goodwill, the goodwill gets a haircut, and the gap becomes the buyer’s problem to close in cash — after a 75-day process that the seller was never going to wait out.
Financing a Dental Practice Acquisition on the Buyer’s Collections
Revenue-based practice financing reads the acquiring dentist’s file: their collections, their deposits, their production record. That is the true test of whether this practice gets serviced after close, because the buyer is the one who will be in the chair. It also means there is no fixed down-payment rule to satisfy on the acquisition piece — what the structure supports is a function of the buyer’s collections, not a percentage a policy manual chose in advance.
Four Operatories Finance Better as Equipment Than as Goodwill
This is the layer that changes the arithmetic. Dental equipment is among the most readily financed collateral in any practice acquisition — chairs, delivery units, digital sensors and pan units, sterilization — and equipment lenders price it every day. Bundled into an acquisition loan, it gets discounted with everything else. Financed separately, four operatories carried $450K of the purchase on their own, which is a quarter of the transaction resolved before anyone argued about practice value.
Why the Corporate Buyer Usually Wins — and Didn’t
A dental service organization does not offer a retiring dentist more money most of the time. It offers certainty: it can close on its own capital in the time frame the seller names. A private buyer waiting on a bank cannot, and sellers know it. The only way a dentist beats that offer is by matching the one thing it has — speed. A $1.15M decision underwritten on a known producer’s collections moves in days. A $1.8M decision at one bank, against the wrong dentist’s tax returns, moves in months.
The Transition Is a Line Item, Not an Afterthought
The last $200K covered what practice-acquisition guides skip: two payrolls running before the combined collections settle, the seller’s hand-off period, and moving patient records and recall schedules onto one system. Practices that fund the purchase and not the transition spend the first quarter short on cash at exactly the moment patients are deciding whether to stay.
What Two Locations Actually Buy
A second location is not twice the chairs — it is a different kind of practice. Hygiene capacity that was turning recall patients away becomes capacity that holds them. An associate has a place to produce. And the group is now the kind of asset a corporate buyer pays a premium for, which is the buyer’s exit to think about later, on the buyer’s timeline.
Run the arithmetic your own way: how many hygiene recalls has your practice pushed out more than sixty days in the last year because the schedule was full?
For most producing dentists at this scale, the structure is serviced out of collections the added operatories make possible. That is a different question than whether the purchase price pencils against the seller’s last two tax returns.
The Products
The Products That Funded This Transaction
| Product | Role here |
|---|---|
| Business Acquisition Financing → | Practice value across two locations, against the buyer’s collections |
| Equipment Financing → | Four operatories — each chair, unit, and imaging system its own collateral |
| Working Capital → | Two payrolls, records migration, and the seller’s hand-off period |
Financing this whole sector: Medical & Dental Practice Financing →
The Result
What Changed After Close
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Related
Similar Structures
Representative scenarios — illustrative, anonymized figures, not specific client transactions.
FAQ
Getting a Dental Practice Loan — Questions, Answered
How do you get a loan to buy a dental practice?
Rarely with one loan, if speed matters. A dental practice acquisition contains at least two assets that finance better separately: the operatories, which are equipment and price as equipment, and the practice value itself, which is underwritten against the buying dentist’s collections. Financing each with the lender that does that piece every day is what makes the full number reachable inside a seller’s deadline.
Do lenders look at the practice you’re buying or the one you already run?
For revenue-based practice financing, the buying dentist’s file carries the transaction — collections, deposit history, production record. That is the measure of whether the combined practice gets serviced after close, because the buyer is the one in the chair. A bank does the opposite: it underwrites the seller’s tax returns and orders a valuation, which is where the 75-day timelines come from.
How much do you need down to buy a dental practice?
There is no fixed percentage on the acquisition piece. What the structure supports is a function of the buying dentist’s collections and cash flow, not a policy figure. The equipment layer is different — operatories are underwritten against the equipment itself, and that typically requires materially less of the buyer’s cash than a bank blending the same equipment into a single acquisition loan.
Can a private dentist beat a DSO offer on a practice?
Yes, but only on the one thing a corporate buyer actually competes on, which is certainty of close. A DSO rarely pays a retiring dentist more; it promises to be done in the time frame the seller names. A private buyer matches that by funding on their own collections in days rather than waiting on a bank valuation. In this transaction the seller had 30 days and a corporate offer in hand; the structure funded in 8.
Can you buy a dental practice without an SBA loan?
Yes, and most of the guidance online assumes otherwise. Search for a dental practice loan and nearly every result is framed around SBA 7(a) parameters — one path, and often a slow one. The timeline is the usual problem: a seller with a corporate offer does not wait for it. Revenue-based structures underwrite on the buying dentist’s collections and can fund in days, and a multi-layer structure can reach a number a single loan caps out below. The trade-offs are real, and a specialist should walk you through both before you commit to either.
Does dental equipment financing cover a practice you’re acquiring?
It does, and it is one of the most overlooked ways to reduce what the acquisition loan has to carry. Operatories that come with the practice — chairs, delivery units, digital imaging, sterilization — can be financed as equipment at close, with each asset securing its own piece. In this structure four operatories carried $450K of the $1.8M purchase before the practice value was priced at all.
How long does it take to finance a dental practice acquisition?
A prepared file — clean bank statements, a signed letter of intent, production reports from the buying practice — can fund in days to a few weeks; this one funded in 8 days across three layers. What slows a transaction is almost never the lenders; it is assembling documents after the seller’s clock has already started. The dentists who beat corporate buyers have the application and statements ready before they need them.
