Roger Levin, DDS, MBA
Over the last six to 12 months, I have noticed that banks have been more restrictive and less flexible in lending money to dentists. As an example, most practice brokers are well aware that the most important part of the deal usually is the ability to provide financing for the buyer of the practice or the associate hoping to buy into the practice.
Not long ago, banks throughout the United States were eager to lend money to dentists. Not only would banks lend any amount of money dentists wanted, but they also would encourage them to take more. Dentists were a smart risk for banks in terms of paying back the money plus the interest.
Today, the environment has changed dramatically. Many banks consider dentists too risky because they are graduating from school with extensive loans and no collateral. This makes it more difficult to start a practice, buy into a practice, or invest in many of the exceptional new technologies available.
In a previous column, I mentioned "good overhead." Good overhead involves investing in the practice today for an immediate return. Many dentists wait until they have cash in hand to purchase equipment, not realizing that purchasing equipment sooner actually helps build the practice to a much more successful and profitable level. The longer a practice waits to invest, the longer it takes to see a return. Investing in the business is how businesses grow!
Getting the financing you need
Financing is becoming one of the biggest challenges for investing in areas such as new technology. The good news is that opportunities exist for dentists to easily access financing through dentist-oriented credit companies such as Mid Am Credit Corp. As one example, Mid Am Credit Corp. has specific formulas for lending to dentists. Mid Am Credit Corp. accepts approximately 85 percent or more of dentists` requests for credit for practice startups, practice purchases, partnership buy-ins, and financing on new equipment and technology. Personal lines of credit and the consolidation of business debts are available for dentists who have pushed the limit on their personal and business credit cards. Consolidation includes paying off the credit cards, moving the debt under one lender, and taking some of the pressure off the dentist. This is a major step to financial independence.
According to Joe DiNicola, senior vice president of Mid Am Credit Corp., a company that provides extensive financing for dentists [(800) 870-8321]:
"We enjoy providing financing for dentists. The opportunity to provide funding for a dentist to purchase a practice or add new equipment or technology to the practice is an opportunity to invest in that dentist`s success. These are the people we like to have as our customers. Additionally, new grads are in need of an institution that will assist them with a startup from scratch or practice purchase analysis. We understand this business and are always willing and available to consult with these doctors."
The finest practices invest in themselves. If you read the article on the 1997 Dental Practice of the Year (Dental Economics, June 1998), you will note that the winning practice had extensive technology to increase efficiency, speed, and patient motivation. I believe that the role of technology in the dental practice will increase dramatically. Dentists who invest in technology to help build the practice will see a rapid increase in profitability.
Summary
Dentists must invest more heavily than ever before in their practices. Fortunately, the investment of "good overhead" is exactly what it takes to help a practice increase its business. As I state in all of my seminars, "Your practice will either grow or it will decline, but it will not stay the same." The proper investment will help you grow your practice to the next level.
Dr. Roger Levin is founder, president, and CEO of The Levin Group, an international, practice-management and marketing-consulting company that has worked with more than 3,300 practices throughout North America. Dr. Levin has been elected to Who`s Who in Sales and Marketing annually since 1987. He can be reached at (410) 654-1234.
