Building a practice from nothing is a genuinely different funding proposition to buying one. It is achievable, and it needs a different case.
Why it is harder
When you buy an established practice, a lender is assessing something that already works. There are accounts, a patient list and a cash flow to test the borrowing against.
A squat has none of that. There is no goodwill to lend against and no trading history to assess. The lender is being asked to fund a plan.
That does not make it unfundable. It changes what the decision rests on: you, the location, and the credibility of your numbers.
What lenders assess instead
- You. Your track record as an associate, your clinical specialism, your list-building history and whether patients are likely to follow you.
- The location. Local demand, competition, NHS provision in the area and the demographics of the catchment.
- The financial model. Realistic patient acquisition rates, sensible chair utilisation assumptions, and a cash flow that survives being stress-tested.
- Your contribution. Expect to put in materially more than you would for an established practice purchase.
- The fit-out cost and whether it is proportionate to the projected revenue.
How the funding usually splits
Squat funding is rarely one facility. In practice it tends to combine:
- Asset finance for chairs, imaging and equipment. This is often the most accessible element, because the security sits in the equipment itself. See dental equipment finance.
- A commercial mortgage or lease for the premises
- Fit-out funding, which can sit within asset finance or a separate facility
- Working capital to carry you through the period before the list builds
That last one is what most first-time squat owners underestimate. The practice does not break even on day one, and running out of working capital in month eight is a more common failure than the original plan being wrong.
Being realistic about the model
The single most common weakness in a squat proposal is an optimistic patient acquisition curve. Lenders in this sector have seen a lot of them.
A model that shows slower growth, holds more contingency and still services the debt is far more persuasive than one that looks impressive but breaks under a modest stress test. Build the pessimistic version and lead with it.
Squat or acquisition?
Worth asking honestly. A squat gives you a practice built exactly as you want it, with no inherited problems and no goodwill premium. An acquisition gives you income from day one and a much easier funding route.
If your primary constraint is capital, an acquisition is usually the easier path. If you have a specific clinical model and a location you believe in, a squat can be the better business. We will give you a straight view on which your case suits. See dental practice purchase loans for the acquisition route.
Common questions
How much do I need to put in?
Materially more than for an established practice purchase, where high loan-to-value funding is available. Squat contributions are assessed case by case and depend heavily on your own track record.
Can I fund a squat entirely on equipment finance?
Rarely all of it, but equipment finance usually carries the largest share of the fit-out, because the security is the equipment rather than a trading history.
How long before it services the debt?
That is the question your financial model has to answer credibly. Build in a longer ramp-up than you expect to need and fund the working capital to match.
All figures are indicative and subject to lender assessment, your circumstances, valuation and prevailing market conditions. Commercial mortgages and unregulated bridging loans are not regulated by the Financial Conduct Authority. Property offered as security may be at risk if you do not keep up repayments.