How to Apply for a Dental Practice Loan: What Lenders Look For

Getting dental practice finance sorted is often treated as something that happens once the deal itself has been agreed. In practice, it works the other way round. Before a lender seriously considers the dental practice you want to buy, start or refinance, they look at you first, your financial history, your paperwork and your honesty. 

This guide isn’t specifically about buying, starting or refinancing a practice. It’s about the borrower and the application process itself, how you move from deciding you want to apply to actually getting an agreement in principle. Whether you’re buying an existing practice, starting one from scratch, refinancing, or arranging asset finance for new equipment, the basic process is largely the same, with some differences in the paperwork required. 

For this article, Samera spoke to Uros Turcic, Samera’s commercial finance broker. Uros arranges acquisition, startup, asset and working capital finance for dental practice buyers across the UK. He also works directly with lenders’ business development managers on each application. What follows is based heavily on that conversation, including his own words, about what actually happens once you decide to apply. 

Before getting into the detail, it helps to understand who you’re actually applying to, because it isn’t always a bank: 

• Buying an existing practice or starting from scratch: a bank. There’s currently only one lender that works with startups at all, which is worth knowing before getting too attached to a startup plan. 
• Asset finance (new equipment, kit, fit out): specialist asset lenders rather than the banks. As Uros explained, “asset finance is not really as profitable for banks, and they want over a certain amount, so they usually do a higher interest rate, while the smaller lenders that specialise in it will do a very, very competitive rate.” 
• Working capital: usually the banks, although smaller lenders can help if the amount you need is too small for a bank to consider. 
• Refinancing: an existing bank, or a completely different one. It’s simply “a bank in general,” as Uros put it. 

Interest rates also vary quite a lot depending on the type of finance. Startups currently sit at roughly 7% to 9%, while buying an existing practice tends to be more like 5% to 7%. Uros put this difference down to risk. This is one of the few sectors where lenders will fund a business with no trading history at all, “based on the fact that you have no goodwill,” essentially betting on projections rather than an established track record. Naturally, that comes at a higher cost. 

Refinancing tends to happen for one of two reasons. Either the original loan came from a smaller lender at a high rate because a traditional bank loan wasn’t available at the time, and the borrower is now in a strong enough position to move everything over to a bank. Or the loan was arranged during a weaker economic period and the borrower now wants to renegotiate. 

Refinancing isn’t free, though. Moving to a different lender usually means paying the arrangement fee and valuation fee again, so the saving needs to be greater than those costs. As Uros put it, “you might pay £25k to refinance with another lender, but if you’re saving £5k a year over 10 years, you’re still making a saving. Sometimes it doesn’t make sense, so it’s better just to stick it out.” 

What Lenders Actually Look at in the Borrower 

Before looking closely at the practice being bought or the projections for a startup, lenders first assess the person applying for the finance. As Uros summarised it, the question is simply: 

“The bank is going to look at you as a person first, what you need to achieve to be financeable. That’s what they’re going to judge you on: your personal financial position and existing commitments, your credit history, if you had any late payments and your professional experience and background.” 

Uros Turcic
Commercial Finance Broker

This comes down to a few specific things: 

• Personal financial position and existing commitments. What’s already owed, what’s going out each month, and whether taking on this new loan is realistic. 
• Credit history, and particularly how any problems are viewed. Lenders are stricter about this than most people expect, although not always for the reasons people might assume. 
• Professional experience and CV, as evidence that the applicant has the ability to run or support the proposed practice. 
• Available cash or equity, as part of the applicant’s overall financial strength, alongside the deposit itself. 

When it comes to credit, dentists need at least three years’ experience in the UK and a clean record. Uros was direct about what “clean” means in practice: 

“A good credit history means no gambling, no large debts, no late payments. If something pops up, that will put the brakes on the deal straight away. Some banks, as soon as they see an adverse marker on your file, even if it’s five or ten years ago, they cannot continue.” 

Uros Turcic
Commercial Finance Broker

That three-year period doesn’t start from the date someone first qualified overseas. It starts once they have passed the UK statutory exam because, as Uros put it, “working in every country is a completely different ballgame.” Previous management experience, such as managing staff rotas, ordering stock or leading a team, can also help. However, Uros noted that it isn’t decisive on its own, as a practice manager can take on much of this work once the practice is up and running. 

It’s also worth highlighting a compliance point early on: therapists, hygienists and nurses aren’t currently able to get this type of finance to buy a practice outright. Uros’s advice in this situation is to team up, either through a partnership or a limited company with fifty-fifty shares, with an associate dentist who can hold the finance in their name. 

Gambling is often misunderstood, so it’s worth being clear about what actually counts: 

• A regular flutter on the lottery: not an issue. “If you play the lottery every week, who doesn’t?” 
• Trading platforms such as Trading212: also fine, as this is treated as investing rather than gambling. 
• A recurring pattern of money going into slot machines, casinos or poker: this is the problem. As Uros put it, “what they’re looking at is a continuous stream of money going into the typical places gamblers go, anything that goes into large unpredictable amounts.” 

CVs matter too, although not in the way most applicants expect. Lenders aren’t looking for a long list of qualifications: 

“Banks don’t need a seven-page CV. They’re not hiring you, they need the important parts. They just want to see how long you’ve been in the field, and especially additional experience after qualification, specialisms, special interests like implantology, ortho, and so on.” 

Uros Turcic
Commercial Finance Broker

The Business Plan as Part of Your Application 

When a lender reads a business plan, they’re not marking it for its writing style. They’re looking at: 

• Whether the commercial logic of the proposal makes sense. 
• Whether the assumptions and forecasts are realistic. 
• Whether the applicant, or their management team, has the experience to run what is being proposed. 
• Whether the obvious risks have been considered rather than ignored. 
• Whether the plan matches everything else in the application. If the forecasts say one thing but the accounts, or the conversation with the broker, say something different, the lender will notice. 

What’s less well known is how little weight a business plan carries when you’re buying a straightforward existing practice. According to Uros: 

“It’s not that essential for buying an existing goodwill and freehold, because the business plan is essentially already there. If a client sends it to me, perfect. If they don’t, it’s rarely a barrier. The bank can already see how the practice is performing in reality. It’s not like a start-up where you need to show your vision.” 

Uros Turcic
Commercial Finance Broker

A business plan matters much more for startups or if you’re purchasing practices that are already making a loss: 

“Business plans are mostly important for startups, because they’re brand new, you need to show what your plan is. Or if you’re buying a practice that’s not doing well, so you need to show what your plan is on turning it around. When a business is already doing well and you’re just replacing one person, what is there to explain?” 

Uros Turcic
Commercial Finance Broker

How to build the business plan itself, and what to include in each section, is covered in full in Creating a Business Plan for a Dental Practice.

Documents and Underwriting 

Once you’ve found a practice, or your startup plans are taking shape, the paperwork begins. For buying a freehold and existing goodwill, the personal and practice documents usually needed are: 

• Three years of full statutory accounts (not draft or abbreviated accounts, but the full set) 
• A sales brochure, where there is one 
• The NHS contract, if there’s an NHS element (this can sometimes be provided later, as it isn’t always quick to obtain) 
• A CV 
• Six months of recent bank statements 
• Two to three years of tax returns 

Startups are different because there is no trading history to provide. Instead, you’ll need a proper business plan, along with a CV, building quotes and fit-out estimates, and financial projections. Ideally, these should be prepared through Samera rather than another accountant.  

Uros explained why this matters more than it might seem: 

“The financial projections go to the bank, and if the banks question them, it goes back to me. If the financial projections are done with another accountant, I have to send those questions back to the client, they have to talk to their accountants, the accountants do the fixes, it goes back to the client, back to me, back to the banks. That line is very long. If we do them, if there’s something questioned, we can correct it, we can answer straight away, and it doesn’t delay the whole process as it is all handled in-house by myself and the Samera dental accountants’ team. The client won’t experience any major delays.” 

Uros Turcic
Commercial Finance Broker

Asset finance and working capital are slightly different. For asset finance, only three years of the existing practice’s accounts are needed to show that the loan can be serviced, along with recent bank statements. 

It’s also worth knowing that asset finance can offer 100% loan to value on the equipment itself. This compares with roughly 70% (up to a combined cap of £500,000) if the same equipment costs are included in the main bank loan during a startup. 

The trade-off is that an asset finance loan reduces the EBITDA available to the main bank, which can make that part of the application more complicated. 

Working capital is assessed in broadly the same way as asset finance, using three years of statutory accounts to show that the practice is making enough money to justify releasing more funds. Refinancing is assessed in a similar way, based on the existing practice’s trading history rather than new projections. 

So, what does underwriting actually mean in plain English? It’s the point where an application stops being a conversation and starts being properly tested. Uros described how the application moves between teams: 

“The application goes over to the credit team, and they do their checks, their credit scores, their stress tests on the provided documents. It’s like due diligence, essentially. (But it’s not to be confused with the formal financial due diligence that also can be done).” 

Uros Turcic
Commercial Finance Broker

There is a set process. The relationship manager at the bank carries out an initial check to make sure the application makes sense. It then goes to the credit team, who look at it in much more detail: credit searches, stress testing and worst-case scenarios. Only once the credit team is satisfied does the deal move from indicative terms to something more definite, an agreement in principle. 

What usually slows underwriting down is the same thing: gaps. 

“Missing, not disclosing and hiding information slows or stops the whole process. If you did anything in the past that’s damaging your credit score or even worse have a marker on your GDC register, and you don’t disclose it, the underwriters will find it, so you can’t do anything like that. Just be honest, be clear, and give all the documents needed.” 

Uros Turcic
Commercial Finance Broker

Uros also pointed out that even one missing document can cause a delay that seems much bigger than the issue itself. Something as simple as an outstanding year’s accounts can hold up the whole underwriting process, even when the broker is comfortable moving forward without it. 

Getting an Agreement in Principle: The Mechanics 

The documents needed to request an AIP are, in Uros’s words, “essentially the same documents as I already got from you previously.” There isn’t a separate hoop to jump through. What changes is what happens to those documents once they’re submitted. It’s worth reading through the process exactly as he explained it: 

“You find the practice you like. You’ll send me the documents and the information that I need for the application. I drive the application for the banks. I send it over to the BDM along with all the documents that are required. The BDM will let us know if they have appetite for the deal. I go back to the client, say these are all the terms and we talk them over, the client needs to make the decision with which bank and rate they want to continue. I go back to the bank of their choosing to inform them that the client wants to work with you. The BDM sends the application pack over to the underwriters. They do their due diligence, about ten working days. Once they’re satisfied, you will receive an offer letter. They will send it you and you sign it. After that, the valuations are instructed, solicitors are involved, and the process starts.” 

Uros Turcic
Commercial Finance Broker

When it comes to choosing a lender, a broker doesn’t simply submit the application to whichever lender is closest: 

“We have a huge network of lenders, we know which ones have the appetite for each situation – whether that be startups or acquisitions, refinancing or asset finance. However, we always send the deal applications to the wider market, just to make sure we cover all bases, get all the options and keep things competitive. ” 

Uros Turcic
Commercial Finance Broker

In short, expect a broker to package the application and target it at lenders that are likely to say yes, while still checking the wider market for the terms available. Before an indication is issued, the credit team carries out the same underwriting checks described above. It’s essentially a first check to make sure the numbers and the applicant’s profile stand up before anything is put in writing. 

It’s also worth being realistic about what an AIP (Agreement In Principle) actually promises, because it’s less than the name might suggest. 

“AIP doesn’t guarantee anything. It’s like buying a house. Until the keys are in your hand, nothing’s guaranteed.” 

Uros Turcic
Commercial Finance Broker

It can be withdrawn by either side, although this generally only happens if something significant changes or comes to light. As Uros explained, “If the valuation comes significantly lower than expected or if they find out something during the process that wasn’t correct, or wasn’t honest, they’re going to pull out, because they’re not confident with you being able to afford it anymore.” Terms such as the interest rate aren’t locked in either. They’re only fixed once completion actually takes place. 

After the AIP, the bank sends over a panel of valuers, usually three or four, and the applicant chooses one. They assess the goodwill, or the goodwill and freehold together where both are involved. This is often where deals hit a wall: 

“They’ll say either we agree with the value, or we think it’s lower, and that’s usually where deals break apart.” 

If the valuation comes in below the agreed price, there are a few options: 

• Ask the seller to reduce the price to match the valuation. 
• Split the shortfall between the buyer and seller. 
• Cover the whole gap personally, since the bank will only lend against the valuation, not the agreed price. 
• Walk away. You’ll lose the money already spent on the valuers’ fees, but not the much larger amount you would otherwise have overpaid. 

Solicitors typically get involved once the valuation is back, partly because there’s little point paying for legal work on a deal that might not go ahead. Some buyers, however, choose to bring solicitors in earlier for their own peace of mind. 

For startups, there is no valuation stage because there’s no existing business to value. Once the projections and estimates have been agreed, the bank releases funds periodically as the building work progresses, rather than providing the full amount as one lump sum. 

Common Reasons Applications Are Declined 

The reasons applications fall through aren’t particularly unusual. They tend to come down to a handful of common issues: 

• Credit or profile weaknesses, most often undisclosed adverse credit. 
• Not enough evidence or a poorly prepared application, where documents are missing or incomplete. 
• Unrealistic forecasts or business plan assumptions, where the figures don’t stand up to closer examination. 
• Experience or management concerns, where the size or complexity of what’s being taken on doesn’t match the applicant’s experience. 
• Inconsistencies between the borrower’s explanation, the figures and the supporting documents. 

Deal-specific issues can also cause an application to fail, such as when a practice’s own financial figures simply aren’t strong enough to support the amount being borrowed.

The issue Uros kept coming back to is simple and, in many cases, preventable: the numbers don’t add up. 

“When I get the documents and I can see that your yearly loan repayments are pretty much the same amount as your EBITDA, and you still have to make profit from it, it’s a no-go. Straight away, no-go.” 

Uros Turcic
Commercial Finance Broker

Loss-making practices are the hardest to finance, for an obvious reason: 

“If you’re going to work five days a week and you’re not going to make any profit, where are you going to make money from? You still have to live.” 

Uros Turcic
Commercial Finance Broker

Overly optimistic forecasts can also cause problems. Uros described one case that stayed with him: 

“I received financial projections from an accountant saying they’re going to make £1.7million in the first year. I couldn’t stop laughing. It was ridiculous.” 

Uros Turcic
Commercial Finance Broker

A mismatch between experience and the size of the deal can also be an issue. Uros recalled one case where the size of the practice, rather than the figures, was the main concern: 

“They did not trust a young dentist with four years’ experience to run a seven surgery practice. For your first practice, they always expect something smaller, two, three, four. Something that’s more foreseeable, because if all the associates leave, what are you going to do?” 

Uros Turcic
Commercial Finance Broker

One reason these issues rarely reach the stage of an outright decline when applying through Samera is that stress testing is carried out internally before anything is sent to a lender. 

“I’m not going to proceed to the banks if I’m not confident myself. If I see the the application doesn’t make sense, that’s a red flag. We’re not going to move forward with an application we know will be rejected.” 

Uros Turcic
Commercial Finance Broker

That’s less a boast than an explanation of why a broker with in-house accountancy support can often identify problems before a lender ever sees the application. 

How to Improve an Application Before Submitting 

Most things that improve an application come down to preparation rather than persuasion: 

• Check your credit records early, and correct any genuine errors before a lender finds them. 
• Prepare all supporting documents before anyone asks for them. Missing information is what slows the process down. 
• Make sure your forecasts are realistic, based on how the business actually operates rather than optimism, and that you can explain and defend them if a bank questions them. 
• Deal with obvious weak points before the bank raises them, rather than hoping the underwriting team won’t notice. 

That last point is something Uros sees as genuinely useful, rather than just a cosmetic tip. His example was an NHS practice on the first floor with no disabled access: 

“The banks will pick that up straight away. But if the practice has been operating for thirty years without an issue, your defence is that you don’t foresee there being one in the future. That’s part of the application as well. I have to mitigate these weaknesses before the bank comes to me and asks.” 

Uros Turcic
Commercial Finance Broker

Behind all of this is one important habit: honesty, applied consistently. Don’t hide an adverse marker, gloss over a difficult year in the accounts or leave an overly optimistic projection from an accountant unchallenged. Every delay and decline described above comes back to something that either wasn’t disclosed or wasn’t realistic. 

What to Do After a Rejection 

A rejection isn’t necessarily the end of the road, but what happens next depends entirely on why the application was declined. The reason matters much more than the rejection itself. 

Some issues simply need time. An adverse GDC matter, for example, has to run its course: 

“You have to wait until that period expires, whether it’s six months, one year or two years. You have to wait until that is cleared and you have a clear GDC record.” 

Uros Turcic
Commercial Finance Broker

Other issues are about the size of the deal rather than eligibility. If a lender felt a practice was too ambitious for the applicant’s level of experience, the answer isn’t to apply to the same lender again with the same figures. Instead, it may mean looking for something more in line with the applicant’s current experience and building up to a larger practice later. 

If affordability was the issue, it can sometimes be improved by how personal spending is presented. It’s worth knowing that lenders generally use a standard “professional wage” figure of around £45,000 for drawings when assessing serviceability, regardless of what an applicant actually lives on. This means a track record of genuinely modest personal spending can help the application more than it might appear on paper. 

Some rejections simply mean the numbers don’t work, full stop. In that situation, the more realistic option is to find something cheaper rather than trying to force through a deal that was never affordable. 

When it comes to timing, decisions can move faster than most people expect. Indicative terms usually come back within a couple of days of an application being submitted. Where underwriting does decline a case, that typically happens within around two weeks of the indicative terms being accepted. 

How Much You Could Actually Raise 

How much you can borrow depends on the specific deal. There’s no fixed figure per dentist – lenders look at three things together:

• The loan-to-value the lender will offer. This varies by lender, by the type of practice and by whether you’re buying an existing practice or starting from scratch. Startups are usually viewed as higher risk, so expect a lower LTV and closer scrutiny of your projections.
• The practice’s ability to repay. Lenders look at the practice’s profit (usually EBITDA) and check it can comfortably cover the loan repayments, with room to spare. A strong, stable practice supports a bigger loan.
• Your contribution. You’ll need cash for a deposit, plus legal fees, valuation costs and any lender fees. The more you put in, the less risk the lender takes on.

What’s important to understand at this stage is the basic principle, which Uros summarised simply: 

“It’s not just how much can you can afford, it doesn’t only matter about you as a person. What matters is the business you’re buying and how much it is worth, as well as what you can afford.” 

Uros Turcic
Commercial Finance Broker

Conclusion 

Getting your application ready is mainly about honesty and preparation, rather than persuasion, leave that down to the broker. Knowing your own credit position, having your documents ready before anyone asks, keeping your forecasts realistic and dealing with weak points before the bank finds them can all reduce the chances of delays or rejection. 

Using a broker who carries out their own stress testing before anything is sent to a lender can also mean that many of the problems mentioned above are dealt with before they ever become a formal decline. 

“Every case is different, everything is looked at differently, and it’s never the same situation twice.” 

Uros Turcic
Commercial Finance Broker

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