Over the years we have helped many Dentists and Dental Lab owner’s setup their businesses from a squat site into a beautiful working location. Here at WestWon Dental our priority is to support you and your business’ success. That is why we provide a range of services that enables you to get setup with your dream location and practice.
In this pack we will cover the fundamentals on what is needed to support your equipment finance requirements and what the lender will be looking for when opening a new squat practice or dental lab. This will also apply to an existing practice you may have purchased and are looking to refurbish or replace equipment.
The following is on the assumptions the building is already secured, and the change of use has all been confirmed.
When looking to organise the equipment finance for a new dental practice or lab, quite simply, the lenders will seek key information to ensure that the risk to them is minimal and they are comfortable with the lend. Most lenders request the same information. Some may wish to dig a little deeper on information provided. So be prepared for further questions as the application progresses. For example, “will you continue to be an associate part time as the new practice grows, if so for how long?”
The application will always be looked upon favourably if you are qualified and can evidence your work history, not essential to the application however any management experience should also be highlighted for any new start.
It isn’t part of the criteria to be a homeowner now, so if you are in rented housing the application can still be filled. However, being a UK resident for 3 years is advantageous to majority of lenders. Additionally, being on the voter’s roll is crucial.
If you are in a partnership with a non-dental professional, this can in fact have a detrimental impact on the amount you can borrow.
What is required?
1. A business plan
Showing you have complete knowledge of the new dental practice, equipment finance or new lab location and competition in the area is key. The age demographic will also impact your dental practice and marketing strategy. Therefore showing you have an understanding and grip on this will prove you have done your homework! In these instances, Google is your best friend! Always remember, you cannot give too much information. Download our FREE business plan template.
2. A cash flow forecast
Will you break even in the first year? If you don’t, it might not necessarily impact the decision. Yes, in an ideal world, in the first year you break even and book a holiday to the Maldives during the UK’s winter months for some R&R. But the lenders want to see an honest, transparent approach to what the business will look like. In this instance worst case and best case scenario is always a good idea. The cash flow forecast must show all the outgoings, by month. This should also include the cost of the finance repayments and all income from the new practice or new lab. Download our FREE cash flow spreadsheet template.
3. Personal Net Worth
All our finance applications are unsecured. However, giving the lender a snapshot of your personal net worth gives them great insight into the affordability of any finance agreement. The stronger the net worth the more likely you will achieve the amount you are seeking. Download our FREE Personal Net Worth template.
4. Bank Statements
Regardless of the entity of the company (whether you are a sole trader, partnership, or Limited company), bank statements will always be requested for a new start up. If you have a business bank account that is trading, three months will be requested. If there is no business bank account trading, then three months personal bank statements will be asked for. Bank statements give the lender transparency on your outgoings. It also ensures that the affordability is there for any finance facility, red flags to a lender are going over your agreed overdraft and gambling outgoings.
5. Evidence of any personal funds being put into the project.
What lenders like to see is if you can show that you plan to or have already, invested your own funds. This shows the lender that not only are you committing your own money, but also making the underwriters look at the application more favourably.
Lease or Hire Purchase – Tax breaks
This is a big topic to cover, so if you wish to discuss more, please contact me.
On a new start business, we would always advise you to base the application on a lease rather than a hire purchase. There are tax breaks available on both. However, with a lease the tax breaks are spread over the entire term of the finance. This is better for you as a new start. Initially the profits will not be as high as years 3, 4 or 5 which enables you to make the most of them. A hire purchase enables you to claim all the tax breaks within the first year. This is advantageous for established businesses, and now limited companies can take advantage of the new 130% tax breaks.
Finally – The wish list
Working with leading suppliers we have a complete understanding on what’s required when setting up a new practice or lab. We will even attend joint meetings from the start to help support you initially. There
should always be a wish list, what you would ideally like, and what is operationally critical. For example, funding for a new dental chair over a £3k coffee machine is more of a priority. Working with our suppliers we can give you an unbiased, honest, and transparent approach on what is realistic and what may have to be delayed 6-9 months as the practice grows.
What we finance and what you should know
We have a duty of care to you to ensure everything we provide is affordable and realistic. Yes, on some occasions we have had to decline a proposal. However, 99.2% of our applications are nearly always approved internally prior to proceeding. With the use of the highlighted information above, we expect a 98% approval rate on the application.
All dental equipment, soft furnishings and building works can be funded by WestWon Dental. With our chosen supplier relationships, we can even include the supplier deposit payments, installation costs and required pieces of equipment. If multiple suppliers are involved, we can even look to secure on one lease. This will save on admin fees, end of term fees, and give you one manageable outgoing. However, not all lenders will risk the full amount as on occasions they may feel it’s too rich for them. On this occasion we look to split out across other lenders to ensure we secure the funding you require.
Equipment financing is one of the most used methods for purchasing any dental equipment. This is because it enables the practice to keep up with the latest equipment and technologies whilst continuing to operate at a profit. If you are a new start, we would always advise you speak to an accountant on the best approach for your finances.
We are more than just money, and will support you every step of the way. For more information on how we can help get your dental practice and dental lab established, please get in touch by emailing us on firstname.lastname@example.org. Alternatively, call us on 01494 611 456.