Loans vs. Credit Lines: Financing Options for Dental Practices

Loans vs. Credit Lines: Financing Options for Dental Practices
Matthew Elling
Founder & CEO of Line of Credit Depot
October 18, 2023

When it comes to financing major purchases, equipment, expansion, or managing cash flow, dental practices have two main options - loans or business lines of credit. What are the differences and how do you choose?

Business Loans

Loans provide a lump sum upfront and are repaid in regular installments over a set term.

The pros of loans:

  • Fixed regular payments - This helps with predictable budgeting.
  • Can fund large expenses - Loans finance major one-time costs.
  • May offer lower rates for qualified borrowers - Interest rates can be competitive.

The cons:

  • Less flexibility - The funds are dispersed upfront and payments are fixed.
  • New funding requires new loan - No ability to re-access repaid amounts if more funds are needed.

Apply for a Business Line of Credit at rates as low as 8.5%. How much are you looking for?

Business Lines of Credit

A line of credit provides access to a preset borrowing limit that can be tapped as needed. Only interest is paid on amounts used.

Benefits of lines of credit:

  • Access funds anytime - Ongoing available capital for varying needs.
  • Interest-only payments - Pay only for what you actually borrow.
  • Revolving credit - As money is repaid, it can be borrowed again.
  • Flexible spending - Funds are not restricted to one purpose.

Drawbacks include:

  • Variable payments - Fluctuating interest expenses based on usage.
  • Lower limits - Maximum borrowing caps may be under $250k.

For dentists, lines of credit tend to provide more convenient access to working capital that can smooth out cash flow timing issues. Loans may be better suited for large one-time investments. Assessing your practice's needs and financing options will determine the best funding structure.

Before you apply, check to see if you qualify.

No application or obligation.