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Do student loans affect my chances of buying a dental practice?
Hey everyone! I’m graduating next year and I”m starting to think about my long-term goals. I will have about $455K in student loans (yeah, I know…) and I’m wondering how much this will impact my ability to buy a practice in the next 2-3 years.
I’ve been looking at some smaller practices in my area (Southern California). My question is: will banks even consider me for a practice loan with that much student debt? Should I focus on being an associate for longer, or are there financing options that work around high student loan debt?
Any recent grads who’ve been through this process? Would love to hear your experiences!
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4 Replies
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Hey @newgraddds Welcome to Embrasure Space.
Banks look at cash flow. So as long as the practice you’re acquiring can support your monthly obligations, you should be able to buy a practice relatively soon after graduation. Most banks want to see at least one year of experience and your current production reports because you’ll need to show them that you can at least do the dentistry you’re buying.
Since you’re graduating soon, I believe you’re still going to have all your loans eligible for one of the income-driven repayment plans? If so, that helps a lot because your student loan payments are tied to your earnings, and dental-specific lenders understand that. You’ll be able to get a letter from your loan servicer that provides your monthly payment that you can send to your banker.
Since you have some time, it’s probably a good idea to just talk to a banker and get an idea of the size of practice you’ll need to target. Let me know if you need any references.
I am a general dentist and founder of Proximal Contact, LLC where we operate:
American Dental News, Embrasure Space, DentWoo. -
I was in a similar situation but with “only” $380K in loans here in Orange County. Took me 6 years as an associate before I could make the numbers work for practice ownership in SoCal. I had to pay down some debt (got rid of an auto loan), moved in with my parents so I wasn’t locked into a lease and found a decent-sized practice that was collecting around 800k.
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You’ll want to keep the monthly payment on your student loans as low as you can to keep your options open. The hirer your payment, the bigger the practice you’ll need and they can be hard to find.
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don’t get stuck in the “I have to own a practice immediately” mindset. Some of the most successful dentists I know worked as associates for 5-7 years, learned the business side, built relationships, and THEN bought practices when they were truly ready.
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