Financing Isn’t One-Size-Fits-All
If you’re preparing to buy a dental practice, you’ve likely heard the advice:
“Get pre-qualified for a loan.”
That’s smart advice — but it’s only the beginning.
Many first-time buyers mistakenly believe that pre-qualification means they’re guaranteed financing for any practice they want. In reality, being pre-qualified is not the same as being approved. Lenders evaluate both you and the practice before issuing final approval.
In this post, we’ll break down what buyers need to know about dental practice financing — and how to approach lenders with clarity and confidence.
What Does It Mean to Be Pre-Qualified?
Pre-qualification is a preliminary step in the lending process. It tells you:
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How much money a lender might be willing to loan you
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That your credit profile, dental experience, and income potential meet basic lending standards
To get pre-qualified, you typically submit:
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Personal credit report
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Recent tax returns and income verification
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Resume or CV with work history
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Student loan and other debt info
The purpose of pre-qualification is to give you a general loan range — say, up to $800,000 — and to demonstrate to brokers or sellers that you’re a serious, financially viable buyer.
What It Doesn’t Mean: Automatic Approval
Here’s where buyers get tripped up:
Just because you’re pre-qualified for up to $800,000 doesn’t mean the bank will approve a loan for any $800,000 practice.
Lenders also want to know:
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Does this specific practice generate enough profit to support the loan?
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Does the practice have clean financial records and stable collections?
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Will the buyer (you) be able to operate the business successfully?
This is called practice-specific underwriting — and it determines whether you get a “yes” on your loan application.
Practice Approval Depends on These Key Factors
Cash Flow and Profitability
Lenders want to see that the practice:
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Has consistent collections
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Can cover operating expenses, debt service, and your doctor compensation
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Has a healthy profit margin (typically 35–45% or more after overhead)
Purchase Price vs. Valuation
If the price is too far above the practice’s appraised value, lenders may reject the loan or require additional cash down.
Location and Patient Demographics
Rural or high-competition areas may pose higher risk for lenders. Lenders may also weigh local economic conditions.
Your Clinical Fit
Are you comfortable performing the types of procedures this practice offers? If the seller places implants and you don’t, the lender will want to know your plan to maintain production.
Why This Matters to You as a Buyer
If you fall in love with a practice and assume your pre-qualification is enough, you could:
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Waste time negotiating a deal that ultimately won’t be financed
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Miss another opportunity while waiting for a denied application
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Strain relationships with brokers, sellers, or lenders
Instead, work with your lender early and often during the buying process to make sure the practice you’re pursuing qualifies for financing.
How to Strengthen Your Financing Position
Get Pre-Qualified Early
Before actively shopping for practices, get pre-qualified with a dental-specific lender. This helps narrow your search and signals professionalism.
Share Practice Details With Your Lender ASAP
As soon as you find a practice of interest, provide the lender with:
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3 years of profit & loss statements
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Tax returns
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Production reports and staff payroll
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Asking price and seller expectations
Have a Business Plan (Even a Simple One)
Lenders love to see you’ve thought about:
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How you’ll maintain or grow collections
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Your staffing plans
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Your transition timeline with the seller
Work With a Dental Broker Who Knows the Lending Landscape
Experienced brokers can steer you toward practices that are likely to be approved based on your background and budget.
Conclusion: Know the Difference — and Plan Accordingly
Pre-qualification is an important first step, but it’s only a green light to start looking — not a blank check. Final loan approval depends on the practice’s financial strength, your clinical fit, and your plan for long-term success.
Understanding this distinction will save you time, reduce frustration, and increase your odds of a smooth, funded transaction.
Ready to Buy a Practice? Let’s Talk Financing Strategy
At American Practice Consultants, we help dental buyers across New Jersey and Eastern Pennsylvania navigate the entire purchase process — including connecting you with trusted dental lenders who understand what it takes to get approved.
📞 Contact us today for a confidential consultation and referrals to the dental lending experts in the region!