How to Buy a Dental Practice With an SBA Loan
A dental practice is worth what its patients and production are worth once the selling dentist stops seeing them, and in many states only a licensed dentist is allowed to own one.
See if your deal qualifies →SBA FOIA 7(a) loan-level data, NAICS 6212*, FY2021 through FY2026.
What you need to put in
Ten percent of the total project cost is the SBA minimum for buying a business, and the project cost is everything the loan pays for: the purchase price, the closing costs, and the working capital you are borrowing to get through the first months.
Half of that ten percent can be a seller note, which is the structure most buyers are hoping for. The catch since June 2025 is that the note has to be on full standby for the entire life of the SBA loan, meaning no principal and no interest paid to the seller for ten years. A note on two year standby, which used to qualify, no longer counts toward your injection. The other five percent has to be real money, and the lender will trace where it came from.
On rate, an acquisition loan of this size prices near Prime plus 2.75 percent, with Prime plus 3.0 percent the SBA ceiling above $350,000. Ten year term, no balloon, and no prepayment penalty at that maturity. If real estate is part of the purchase the term stretches and the arithmetic changes.
What to diligence in a dental practice
The generic acquisition checklist covers the financials. These are the ones specific to this sector, and they are where deals here actually go wrong.
Check who is allowed to own it
Who may own a dental practice is set state by state, not federally. Some states, such as Michigan, require every shareholder of a professional corporation to be licensed in the profession it practices, while others are more open to non-dentist ownership as long as a dentist controls clinical decisions. Your buying entity, and any partner or spouse who wants a share, has to fit your state's rule before the lender can close. Have a dental healthcare attorney confirm the structure early, because it is hard to fix after the loan documents are drawn.
Production by provider, not just total collections
Split collections between the selling dentist, any associates, and the hygiene department. If the seller personally produces most of the dentistry, or does procedures you do not do, such as implants or molar endodontics, part of that revenue leaves with them unless you plan for it. Ask how the practice defines an active patient and check the hygiene schedule and recall rate, because a full hygiene book is what keeps patients coming back after the name on the door changes. Compare gross production to actual collections, since insurance write-offs can make production figures look much bigger than the cash.
Payer mix and insurance credentialing
Find out what share of the practice is fee-for-service, PPO insurance, and Medicaid or other government plans. Credentialing belongs to the individual dentist, while network contracts are often held by the practice's business entity and tax ID, and plans differ on whether a contract survives a change of ownership. Check each plan the practice relies on, one by one, and expect that some will require you to credential in your own name and sign a new contract. Start as soon as you have a signed agreement, because if you are not in network at closing, you may not be able to bill those patients at the rates the seller was getting.
Equipment age and the registrations that come with it
Note the age and condition of the chairs, sterilization, imaging (panoramic, cone beam, digital sensors) and the practice management software, and whether the software license and patient data move to you cleanly. Dental X-ray machines are registered with the state radiation control program, and in many states a change of ownership means notifying the state or registering the units in the new owner's name. If the practice keeps controlled substances on site, the seller's DEA registration does not pass to you without DEA's written consent, so plan for your own registration and a documented inventory on the closing day.
Licensing and regulation in this sector vary by state and change. This is a general description, not advice on your deal, so check anything you are going to rely on against your own state's current rules.
What the lender will ask you about
Beyond the usual credit questions. Have these answered before the file goes in and you save a round trip.
- ·How much of collections does the selling dentist personally produce, and what is the buyer's own production history?
- ·What is the payer mix, what does each main insurance plan require after the sale, and will the buyer be in network by closing?
- ·How long will the seller stay to introduce patients, and is there a non-compete?
- ·Is the buyer licensed in this state, and does the ownership structure meet the state's rules?
Who actually lends on dental practices
Live Oak Banking Company has approved more loans in this sector than anyone else since FY2021, at an average of $1.8M. A lender who has done dozens of these already knows what the licence transfer looks like, which is worth more than a slightly better rate.
| # | Lender | Loans | Total Volume | Avg Loan |
|---|---|---|---|---|
| 1 | Live Oak Banking Company | 626 | $1.2B | $1.8M |
| 2 | The Huntington National Bank | 371 | $342.2M | $922K |
| 3 | Bank of America, National Association | 200 | $132.8M | $664K |
| 4 | Newtek Bank, National Association | 166 | $69.5M | $419K |
| 5 | Wells Fargo Bank National Association | 148 | $144.1M | $974K |
| 6 | United Midwest Savings Bank National Association | 121 | $153.7M | $1.3M |
| 7 | BayFirst National Bank | 118 | $25.0M | $212K |
| 8 | Northeast Bank | 106 | $17.7M | $167K |
Source: SBA FOIA 7(a) loan-level data, NAICS 6212*, FY2021 through FY2026. Lenders with fewer than 3 approved loans in the sector are excluded.
Full dental practices lending data →Busiest states for dental practices
Buying a dental practice: common questions
Do I have to be a dentist to buy a dental practice?
In many states, yes, or at least the ownership has to sit with licensed dentists. A few states are more open, but even there a dentist must control the clinical side. Check your state's rule before you make an offer, not after.
How long should the selling dentist stay after closing?
Long enough for patients to meet you and for the hygiene schedule to roll over at least once is a sensible starting point, but it is negotiated deal by deal. Put the transition period, the seller's working days, and a non-compete in the purchase agreement. Lenders read those terms, because they are the main protection on patient retention.
Does the patient base count as collateral?
Not in any practical sense. Patients are goodwill, and the lender's comfort comes from the practice's cash flow and your ability to keep it. The equipment is pledged, and when the business assets do not fully secure the loan, SBA's rules require the lender to take available equity in your personal real estate as well.
How much does it cost to buy a dental practice?
Across the sector, the average approved SBA 7(a) loan is $939K, taken over 3,863 loans since FY2021. That is the loan, not the purchase price: the loan usually also carries closing costs and working capital, and the buyer puts in at least ten percent on top. Use it as a sense of scale rather than a quote.
How long does an SBA loan to buy a dental practice take?
Sixty to ninety days from a complete file is the honest range for a straightforward acquisition, and it is the FILE that sets the clock rather than the bank. A lender with SBA Preferred Lender status approves in house instead of waiting on SBA review, which takes weeks out. Anything that needs a third party, an appraisal, an environmental report, a licence transfer, runs on its own schedule.
What can the loan actually pay for?
The purchase price of the business, the closing costs, working capital for the transition, and the real estate if you are buying the building too. A 7(a) loan for goodwill is typically a ten year term with no balloon and no prepayment penalty. Add owner-occupied real estate and the term stretches, up to twenty five years where the property is the majority of the project.
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