Funding growth from an established base: another surgery, a second site, or the start of a group.
Adding surgeries within your existing practice
Usually the highest-return expansion available to a dental practice and the easiest to fund. You already have the premises, the reputation and the demand data. The lender is being asked to fund incremental capacity in a business it can already assess.
Typically funded through a combination of asset finance for the chair and equipment, and a facility for the building works. Where the practice has headroom, it may be simpler to release equity from an existing facility instead.
A second site
A different proposition. Lenders will look at whether your management capacity stretches to two locations, whether the second site is close enough to share resource, and how the first practice performs while your attention is divided.
Buying an established practice as a second site is materially easier to fund than opening a squat as one. There is trading history to assess and income from day one. See dental practice purchase loans.
Building a group
Once you are acquiring a third or fourth site, the funding conversation changes. Lenders assess the consolidated position rather than each practice in isolation, and asset-based structures become available, underwritten into the millions for acquisitions, management buy-outs and buy-and-build strategies.
Group structures also open up funders who will not look at a single practice. If a buy-and-build is the plan, structure the first two acquisitions with that in mind rather than retrofitting later.
The working capital nobody budgets for
Expansion consumes cash before it produces it. A new surgery has fit-out costs, a recruitment lead time and a period of low utilisation while the list builds. A second site has all of that plus duplicated overhead.
Funding the capital cost and not the working capital is one of the more common ways a sound expansion becomes stressful. Size the facility for the whole ramp-up, not just the equipment. See working capital finance.
Common questions
Should I use practice cash or borrow?
For an income-producing asset with a clear return, borrowing usually makes sense and preserves your cash for the unexpected. The exception is small equipment purchases where the cost of arranging finance outweighs the benefit.
Can I borrow against practice one to fund practice two?
Yes, and it is common. Equity in the first practice, whether goodwill or property, can support the acquisition of the second. See practice refinance.
How many sites before a group structure makes sense?
There is no fixed number, but around three sites is where consolidated assessment and asset-based structures usually start to become the better route. Worth planning for before you get there.
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.