Starting a new dental practice requires a sizable loan since you’ll need to purchase equipment, lease or purchase office space, and hire staff. The needs of a mobile or teledentistry practice don’t differ much, since even a practice offering teledental services treats patients in person, too. You do need to include more information in your business plan and loan application since these two specialties remain unfamiliar territory to most banks and credit unions. Let’s consider how to apply for a business loan and what to include in a loan application for a mobile dentistry practice.
Getting a Loan to Start a Mobile Dental Practice
Your journey to obtain a business loan to fund your mobile dental practice begins while you remain in dental school. During medical school, you build relationships with professors and dentists who will offer your references in your loan application. Typically, the same dentists and professors who serve as your references for your residency and intern applications serve as the references for obtaining your loan.
Your grades represent an important part of your loan package, too. The higher your grade point average, the better. Also, while in school, participate in as many learning experiences and volunteer opportunities as possible. These contribute to your resume and your community involvement.
Start the formal process of applying for your business loan about six months before graduation. You’ll first need to research and write your business plan, an integral part of your loan application. This plan includes your opening financial statements and financial forecasts for your first year to five years in business.
What Text Goes in the Business Plan
Applying for a business loan differs from applying for an auto loan or a school loan. Those loan types offer rather generic applications. You complete the paperwork and your credit score decides everything.
Because a business usually involves more than one person, its loan application hinges on more than just your credit score. You still will need a good or excellent credit score to qualify for a business loan, but financial lending institutions do consider more than that raw number in determining the risk involved in loaning you money. The business plan offers the bank a detailed look at the following:
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- How you will structure and grow your business,
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- Your business’ viability,
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- The realistic financial forecasts for business profits,
- Your business mission, vision, and goals.
Your business plan needs to include a higher level of information than other dental practices if you plan to open a mobile or a teledentistry-focused practice. Financial lenders have less familiarity with those emerging service areas, and unfamiliarity equals uncertainty in finance. Uncertainty increases risk, so your business must overcome this by educating the loan officers about every aspect of your potential practice, from its mobile dental software to the RV or conversion van used in the mobile services operation.
Educating them means explaining what an item is, such as mobile dental software, and providing examples of it. In this case, Teledentix software offers an example of comprehensive mobile and teledentistry software. The business plan should explain what mobile dental software does, how it does it, and its cost. Your explanation should succinctly cover how software designed specifically for mobile dental operations differs from other dentistry management software, such as the following features:
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- Providing a secure, HIPAA-compliant environment
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- Multisite scheduling
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- Video consultations
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- Continued care
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- Remote patient monitoring
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- Sending and receiving referrals in-app
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- Continuing dental education, including virtual study groups, discussion threads, and video conferences.
Your business plan should explain the “what and why” of each aspect of a mobile or teledental practice, not just mobile dental software. We’re merely using it as an example of one item, so you can understand the type and level of details the business plan needs to include.
You’ll also need to include all the details of a typical dental practice plan, such as your intended office space, the number of staff you’ll hire and their salaries, and the office equipment you’ll need. If you operate a mobile practice and maintain an office, you may need two sets of equipment, unless you don’t mind unloading your mobile practice vehicle at the end of each service day. That method lets you bring the portable equipment into the office for use there.
Describe the services you will offer in your mobile dentistry practice, such as dental fillings and emergency dental services. The services you include depend on your specialty as a dentist. A cosmetic dentistry practice differs in services from sedation dentistry, so the service list and descriptions differ. We mention this because as tempting as templates are to follow, they can show you didn’t thoroughly prepare for the business loan application process or for opening your business.
The plan also includes a section on your competition. This competition analysis identifies how many dentists practice in your immediate area, their names, and an analysis of their client base. Conducting this research unveils if an existing dental practice offers mobile services or teleservices, the length of time it has offered them, and its success with the service. If your research shows that patients in your area don’t use existing mobile services, financial lending institutions won’t likely provide you with a loan to launch such a service.
Ultimately, your business plan needs to show that your area needs and wants the services you want to offer. It also needs to reflect that either you’re entering an underserved area with demand for your services, or that you can take business away from the existing operations because you offer something that the other dentists don’t. For example, perhaps the area in which you intend to offer services only has general dentists, but you specialize, working as a cosmetic dentist. You don’t have to know which mobile dental software each dentist uses, but it’s good if you can broadly discuss their business processes.
Which Financial Statements Goes in the Business Plan
This might seem confusing. How can you have financial statements without having a business? When you apply for a loan to start a business, you create forecasted financial statements. Each begins with the loan amount and names it as such in the line item description; banks like line item budgets and reports best because they provide the most significant amount of information.
The financial reports you must include in a business plan reflect your current state of business, the recent past, and reasonable future projections. If you want to impress the banks, include three sets of future projections – the worst-, mid-, and best-case scenario projections. For an initial business loan to start a mobile dentist business, you’ll need to include three reports:
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- Business income statement (also called a profit and loss statement)
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- Balance sheet
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- Cash flow projection.
The business plan also includes your startup budget and your monthly operating budget. Items that you must purchase once to get started, like your mobile dental software or dental x-ray machine, go on your startup budget. Items that you pay each month, such as rent for dental offices, staff salaries, and cloud storage, go on the monthly budget. For items you pay once or twice per year, divide by the number of months covered and budget the smaller amount monthly, noting parenthetically the month the full bill gets paid.
Here’s an example of how to handle a bill you pay every six months. You typically pay your commercial auto insurance policy premiums every six months, but you need to set aside money for those premiums each month. Let’s say that the insurance coverage on your mobile dental conversion van costs $600 every six months. You divide $600 by six months, and budget $100 each month under the line item “Commercial Auto Insurance Policy Premiums.”
Getting Help Developing Your Business Plan
Since your business plan comprises one huge component of your dental practice startup loan, it makes sense to invest in its development. Like purchasing mobile dental software when you found a mobile dental practice, purchasing something made for the job makes sense. That means hiring a professional business plan consultant to help research and write your business plan.
Choose a business planning consultant who has experience writing business plans specifically for dentists. This saves you from needing to explain why your practice will offer traditional, ceramic, and Invisalign braces. An experienced consultant already knows what’s important when you say you’re launching a sedation dentistry practice in an area with no sedation dentists.
Also, consider their turnaround time. Unless you want to begin the process earlier than six months before graduation, you’ll need your business plan on a pretty tight deadline. That means the consultant needs open time in their schedule to meet with you, so they know the details of whether to include a line item for dental cabinet makers or pre-fabricated cabinets.
Filling Out the Loan Application
While every financial lender typically requires a business plan and an application, the loan application itself differs between banks, credit unions, and alternative lenders. This isn’t just bank-to-bank differences; peer-to-peer loan groups use a different process and application from banks.
What does each loan application have in common? Every business loan application requires copious information. These applications often total 20 pages or more before you add the business plan. Many of the items on the application repeat in your business plan, but you must state them in both places.
The Small Business Administration (SBA) offers loans through partner banks. The SBA doesn’t underwrite the loans, but it works with the lenders to negotiate lower interest rates for the individuals or business groups who apply for its loans. The SBA also offers many guides and tutorials on how to write a business plan, how to create business budgets, and how to complete a business loan application. Start by reading each of these to learn how all of these things work together and how to properly complete a business loan application.
The term business loan application makes the form sound a bit like a job application or housing application, but it differs vastly. A loan application offers more than fill-in-the-blank questions. It requires essay-type answers to questions, and some may ask for detailed information, such as a planned services list. In this area, you’d repeat the dental bridge information in the business plan.
Double- and triple-check your work on the application form. All the information in the application should precisely match the information given in your business plan, right down to the discussion of the mobile dental software you plan to purchase and your reason for choosing the one you named. The lender will want to know why you didn’t pick a less costly or more feature-rich application.
Complete every applicable blank on the form. Make sure you sign the application in every area it requires. Phone or email the loan officer with whom you began your banking relationship to ask what, if anything, their institution requires you to write in a non-applicable area. Some want N/A written on the area, rather than simply leaving it blank.
Request an appointment with the loan officer to review your loan application before you submit it. This meeting lets you learn of any areas in which your loan application falls short. You can correct this information before submitting the loan application.
Submit all pieces of the loan application together as a packet. Don’t make the financial lending institution wait to receive any portion of your loan packet. Your care and attention to the preparation of these items go a long way toward showing the bank that you’re a low-risk investment. Banks favor low-risk, well-organized businesses.
The Waiting Game
Unlike buying your mobile dental software online with its cloud delivery, waiting to learn whether a bank or credit union said yes to your loan package takes time. You may need to patiently wait weeks to hear back from the lender. The loan officer may contact you for clarification of certain points or to obtain more information.
Getting Started on Your Mobile Dental Practice Loan Application
If you want to open the doors of your dental practice as soon as you graduate from dental school, you’ll need to start early on your business loan application. Getting loan approval takes time, but once approved, you could receive funds within a week, letting you purchase your office chair, desk, conversion van, mobile dental software, and much more.
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