What does an acquisition loan usually cover?
A dental acquisition loan usually covers the purchase price, which includes goodwill, the equipment and furnishings in the office, and often supplies on hand. Many packages also add working capital for the transition months and sometimes a planned budget for equipment upgrades. What is included depends on the funder, the deal size and the buyer's profile.
When you buy a dental practice, most of what you pay for is not the chairs. It is the patient base, the recall schedule, the staff and the practice's reputation, all grouped under goodwill. A typical financing package can include:
- Purchase price: goodwill plus the practice's equipment, furniture and technology
- Working capital: payroll, supplies and rent while billing moves to your name
- Upgrade budget: a planned replacement of an aging sterilizer or sensors, if the funder allows it
- Closing costs: sometimes rolled in, sometimes paid from your own cash
Real estate purchases are a separate conversation. If the seller owns the building, you will usually sign a lease or explore property financing on its own track.
How do funders decide whether to fund a practice purchase?
Funders look at two stories together: whether the practice's collections can support the new loan payment, and whether you can keep the patients and staff after closing. The seller's financial history covers the first; your production history, credit and transition plan cover the second. A clean seller file paired with an experienced buyer makes the strongest case.
Requirements vary by product and funder. Many look at the following:
The practice
- Several years of collections and production trends
- The seller's tax returns and profit and loss statements
- Payer mix, active patient count and new-patient flow, in summary form
- Equipment age and lease terms on the space
The buyer
- Clinical experience and production history as an associate
- Personal credit and existing debt, including student loans
- A transition plan: how long the seller stays, how patients are introduced
Many dentists carry strong personal credit alongside heavy student debt, so dental-focused funders typically weigh the practice's cash flow as well as the score. See what lenders review before funding a dental practice.
What steps does a practice purchase usually follow?
Most dental purchases move from a letter of intent to financing review, valuation and due diligence, then a purchase agreement, lease assignment and closing. Financing usually runs alongside due diligence rather than after it. Starting the funding conversation early, even before you pick a practice, shows you what size of purchase makes sense for you.
- Early conversation: get a sense of what size purchase your profile supports.
- Letter of intent: price, terms and the seller's transition period in outline.
- Application: submit the seller's financials, your personal documents and the letter of intent.
- Valuation and diligence: review the practice's numbers, equipment, staff and lease.
- Purchase agreement: drafted by your attorney, not the funder.
- Lease assignment or new lease: a lease that outlasts the loan term is a common expectation.
- Closing: funds move, and billing and insurance participation transfer to the new owner.
This is a financing overview, not legal advice. Involve a dental-experienced attorney and CPA from the letter of intent onward.
How much of the purchase can be financed?
For well-documented practices and qualified buyers, many acquisition funders typically finance most or all of the purchase price. The actual amount depends on the practice's cash flow after a reasonable owner salary, the supported valuation, and your credit and other debts. Funders rarely lend above what the practice's numbers and valuation support.
Funders often start with a simple question: after paying staff, rent, supplies, lab fees and a fair salary for the dentist, how much cash is left for the loan payment? If that cushion is comfortable, the loan can be larger. If the practice is barely profitable or its collections are falling, the loan shrinks or the funder asks for more cash from the buyer.
A seller note, where the seller carries part of the price, can bridge a gap. Funders review its terms and whether it is paid before or after the main loan.
Is an SBA loan the only way to buy a dental practice?
No. SBA loans are one option, and conventional and specialty dental practice funders also finance acquisitions. SBA loans can offer long terms but typically involve more documentation and a longer process. Conventional options can move faster for strong buyers. Compare total cost, timing and collateral requirements before choosing, especially if the seller has other interested buyers.
Speed matters in competitive markets. A seller choosing between two buyers may favor the one whose financing is further along. On the other hand, a longer SBA timeline can be worth it if the terms fit your plan better.
Read how SBA loans compare for dental practices and dental practice term loans.
What are the risks, and when should you walk away?
The biggest acquisition risks are patient loss after the seller leaves, staff turnover, overpaying for goodwill and underestimating deferred equipment replacement. Walk away, or renegotiate, when collections are declining without a clear reason, when the lease cannot be secured, or when the price only works with optimistic assumptions about growth.
- Patient attrition: a seller who leaves on closing day can take trust with them. A transition period helps.
- Hidden equipment costs: a vacuum system or compressor near the end of its life becomes your problem in month two.
- Transition cash flow: claims can slow while billing moves to your name. Plan working capital for it.
- Lease risk: a short lease without renewal options weakens both the practice and the loan.
If you are also weighing whether to start fresh, see de novo dental startups.
What you’ll typically need
- Letter of intent or draft purchase agreement
- Seller's tax returns and profit and loss statements
- Seller's collections and production summaries (totals only)
- Your personal tax returns and personal financial statement
- Your production history as an associate
- Current lease or proposed lease for the office
Frequently asked questions
How much of the purchase price can be financed?
Many acquisition funders typically finance most or all of a well-documented purchase for qualified buyers. The final amount depends on the practice's cash flow, the supported valuation, your credit and your other debts. Weaker numbers usually mean a smaller loan or more cash from you.
Does the seller's history matter more than mine?
Both matter. The practice's collections show whether the loan can be repaid. Your clinical experience, production history and credit show whether you can keep patients and staff after closing. Funders want both stories to hold up.
Can working capital be included in the purchase loan?
Often, yes. Many buyers include working capital so payroll, supplies and rent are covered while insurance billing and patient payments move to the new owner. Including it at closing is usually simpler than applying separately a few months later.
What if the seller stays on after closing?
A seller transition period is common and funders often view it favorably, because it helps patients and staff stay with the practice. The length and terms belong in the purchase agreement, which your attorney should review.
Will funders need patient records during diligence?
No. Funders need financial summaries such as collections, production and active patient counts in total. Never send charts or patient-identifying reports. Any clinical records review during diligence is between you, the seller and your advisors.
Know your buying range before you make an offer
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Updated September 14, 2026 · SmileBright Capital Funding Team