Practice acquisition
What a practice acquisition loan covers, and what it does not
Buying an existing practice, with working capital added to the note
Direct answer
A practice acquisition loan finances the purchase of an existing practice, in the market up to 100% of the price with working capital added, over 10 to 15 years. Lenders read the seller's collections history first and the buyer's personal finances second. Practition Finance explains the structures and, by state, refers the request to funding partners.
As of October 2026
Held for review and not shown until it is checked.
Whether this fits you, and when it does not
Commonly a fit
- A licensed buyer with a letter of intent or a signed purchase agreement on an operating practice
- An associate buying the practice they already work in, where the seller stays through a transition period
- A first-time owner with a completed residency or associate period and consistent personal credit history
- An existing owner adding a second operating location by purchase rather than by build-out
- A buyer who accepts that goodwill, not equipment, is the majority of the price
Commonly the wrong instrument
- A practice with no collections history, which is a de novo project financed on projections instead
- A buyer with an unresolved tax lien, an open judgment, or a recent discharge, where the file stalls at the guarantor review rather than at the practice
- A price supported only by production, where collections trail production by a wide margin and the lender sizes on the lower number
- A transaction where the seller refuses to release monthly collections detail, since an annual summary cannot be underwritten
- A purchase of a business that is not clinically licensed, which belongs on a conventional commercial credit path
How your money moves
- 01
Assemble the sources and uses on one page
Purchase price, working capital, equipment additions, leasehold work, and closing costs on one side. Senior loan, seller note, and buyer equity on the other. A lender reads that summary before anything else, and a request without one reads as early.
- 02
Deliver the seller's collections, not the seller's production
Three years of tax returns, three years of monthly collections, and a current production-to-collections comparison. Where the two diverge, the underwriter sizes on collections and asks what happened in the gap.
- 03
Show the transferability of the revenue
Hygiene share of collections, active patient count, reappointment rate, and the payer participation mix. A practice with a high hygiene share and a stable recall base reads as recurring revenue that survives a change of owner.
- 04
Complete the buyer file in parallel
Personal financial statement, three years of personal returns, a schedule of real estate owned, a credit report the buyer has already read, and a resume that establishes clinical production capacity. This half of the file moves on the buyer's schedule, so it should never be the thing that delays a term sheet.
- 05
Take the structure apart before signing it
Term, amortization, whether the rate is fixed or floating, the interest-only or graduated window, the prepayment step-down, the personal guarantee, and any covenant on distributions. Two offers at the same headline rate can differ by a full year of cash flow once these are compared.
- 06
Clear the third-party items early
Practice valuation, lease assignment or a new lease with a term at least as long as the loan, UCC and lien search, tail coverage from the departing provider, and a key-person policy with a collateral assignment. These sit outside the buyer's control, so they are started first, not last.
- 07
Close, then fund the first 90 days
Payroll, supply accounts, and the lab bill continue through the transition while the deposit rhythm resets. A working capital tranche added to the note is normally cheaper than solving the same gap after closing.
Directional terms
Directional terms the market currently publishes for practice acquisition. Ranges, never quotes.
| What it measures | Market range | Confidence | How to read it |
|---|---|---|---|
| Financing against price | Up to 100% financing, 6-month interest only, 15-year practice, 25-year CRE6 | VerifiedAugust 2026 | Where 100% financing is offered, the working capital tranche is normally the negotiated part, not the price. |
| Working capital added | Up to 15% of the transaction, capped at $200,0007 | VerifiedAugust 2026 | One lender's published cap. Ask each lender for its own, in writing, before comparing offers. |
| Credit band | 650 floor, 680 and above for premium pricing, 640 at Live Oak for new graduates8 | DirectionalAugust 2026 | The band moves pricing and the size of the equity ask, not simply the yes or the no. |
| Liquidity behind the deal | Roughly 5% of the loan amount in liquid cash9 | DirectionalAugust 2026 | Post-close liquidity is read as the buffer that keeps the first slow month from becoming a default. |
| The credit weighting | About 60% practice cash flow, 40% buyer personal strength10 | DirectionalAugust 2026 | It explains why a strong buyer cannot carry a weak practice, and why a strong practice tolerates a thinner buyer. |
| Coverage floor | 1.15x minimum on SBA 7(a) credit, measured on the borrower's operating cash flow11 | DirectionalAugust 2026 | Global coverage includes the buyer's household debt, which is why a personal mortgage can resize a practice loan. |
| Pricing against collections | 65% to 85% of collections, clustering 70% to 80%, specialty 80% to 100%12 | VerifiedAugust 2026 | Private-buyer pricing, useful for reading whether a letter of intent sits inside the observed market. |
| Closing speed by channel | Specialty lenders 30 to 60 days, SBA 45 to 90 days, banks 30 to 45 days8 | DirectionalAugust 2026 | The channel is chosen against the closing date in the purchase agreement, not against the rate alone. |
These are ranges the market publishes, current as of the date beside each one. None of it is a quote, an offer, or an indication for your file.
What you will be asked for
Nothing on this list is unusual and none of it is a credit application. A complete file shortens the review because the underwriter stops asking and starts sizing.
| Document | What it answers |
|---|---|
| Three years of practice tax returns | The baseline the underwriter reconciles every other number against. |
| Three years of monthly collections | Monthly detail shows seasonality and any recent decline an annual figure hides. |
| Production-to-collections comparison | A persistent gap raises a billing or adjustment question that is answered in writing or priced. |
| Procedure and provider mix | Shows how much of the revenue depends on the departing owner personally. |
| Hygiene revenue and reappointment detail | Recurring revenue that survives the transition supports the price. |
| Active patient count and new patient flow | The demand base behind the projection, stated as a count rather than an adjective. |
| Aged payables and equipment list | Tells the lender what is being bought and what is being assumed. |
| Letter of intent or purchase agreement | Fixes the price, the allocation, and the closing date the credit is sized to. |
| Practice valuation | A third-party report the lender uses to test the price it is being asked to fund. |
| Lease or assignment with the remaining term | A loan is rarely written longer than the buyer's right to occupy the space. |
| Buyer personal financial statement and returns | Global coverage is calculated on the household, not only on the practice. |
| Buyer resume and license verification | Establishes clinical capacity to produce what the projection assumes. |
How long it takes you
Specialty lenders, SBA channels, and banks run on different calendars. The timeline figure above is the market range, attributed to the source named beside it, and it is not a commitment by any lender or by Practition Finance.
| Stage | Market range | Note |
|---|---|---|
| File assembly | 1 to 2 weeks | Buyer-controlled. This is where most delay is created and most delay is removed. |
| Term sheet | 3 to 10 days after a complete file | A term sheet is an interest in lending, not a commitment. |
| Underwriting and third-party reports | 2 to 5 weeks | Valuation, lease, lien search, and insurance items run in parallel. |
| Commitment and closing | 1 to 2 weeks | Funding is coordinated with the seller's transition date. |
The structure, drawn
The practice acquisition capital stack
The 4 layers a transition deal is funded from, in the order the senior lender sizes them
Source: Practice lender program pages, aggregated · As of October 2026
What the underwriter actually reads
An acquisition file is read in a fixed order. Collections first, because they are cash the practice has already proven it can capture. Overhead second, because it converts collections into the earnings the debt is paid from. Transferability third, since a practice whose revenue leaves with the seller is a payroll obligation rather than an asset. The buyer's personal file comes last, and it decides pricing and structure far more often than it decides the outcome.
This ordering explains the two most common surprises. A buyer with excellent personal credit is still resized when the practice's overhead runs above the range general dental normally reports. And a buyer with a thin personal file still closes when the practice's collections are steady, the hygiene share is strong, and the seller agrees to carry part of the price behind the bank.
Goodwill is the reason this is a specialty rather than a general commercial credit. Most of the price is intangible, and a lender outside practice finance will discount it toward the value of the equipment. Practice lenders underwrite the intangible directly, which is why the same file can produce two offers that are not comparable at all.
Three ways an acquisition file goes sideways
Signing a letter of intent before reading monthly collections
An annual summary can hide a declining second half. Ask for monthly detail before the price is agreed, since the lender will size on the same numbers the buyer skipped.
Leaving the working capital tranche until after closing
Solving a post-close cash gap on separate short-term paper costs more than adding the tranche to the note. Ask for it while the credit is still open.
Treating the lease as a formality
A loan is rarely written longer than the right to occupy the building. A short remaining term with no renewal option shortens the amortization and raises the payment.
Run your numbers
Model the payment
Move the amount, the term, and the rate to see what the note costs per month and across its life
The price on the agreement, plus anything financed alongside it
Move this to the range your bank or the market is quoting
Monthly payment
$10,134
120 months at 9%, principal and interest
Interest across the term
$416,087
Before any origination, packaging, or guarantee fee the structure carries
Total repaid
$1,216,087
Principal plus interest, if the note runs to maturity with no prepayment
Educational arithmetic on the numbers you entered. It is not a quote, a promise to lend, or an indication of offers to come, and no funder has priced this file. Program availability varies by state.
What owners ask about this program
01How much of the purchase price can be financed?
The market publishes structures up to 100% of the purchase price at practice lenders, with a working capital tranche added on top rather than carved out of the price. That is the market's published structure, not an outcome anyone can commit to before reading a file. Buyers are commonly asked to hold liquidity behind the deal even where the price is fully financed, because the lender is sizing the first slow month as well as the closing.
02Why do lenders underwrite collections instead of production?
Production is billed work at the fee schedule. Collections are cash actually received after adjustments, write-offs, and contract discounts. Debt service is paid out of cash, so collections are the number that matters. When the two diverge by more than a few points, the underwriter treats the gap as a question about billing, adjustments, or contract mix, and expects an answer in writing rather than a reassurance.
03What is the 60/40 rule and does every lender use it?
It is a shorthand from the transition market describing roughly how the credit decision is weighted between the practice's historical cash flow and the buyer's personal financial strength. It is directional, not a formula any lender publishes as policy. Its practical value is directional too: it tells a buyer that improving the personal file cannot fix a practice with weak or declining collections, and that a strong practice tolerates a thinner buyer file than most first-time buyers expect.
04Is goodwill really financeable?
Yes, and financing it is the reason practice lending is a separate discipline. In a typical dental transition the intangible portion is the majority of the price. Practice lenders and SBA channels underwrite that intangible against the practice's collections and transferability. A generalist commercial lender tends to discount toward hard asset value, which is why the same request produces offers that look nothing alike.
05How long does an acquisition take to close?
The market range runs from roughly a month at specialty lenders to several months on an SBA file, attributed to the transition lender sources named in the sources section below. The part a buyer controls is file assembly, which routinely adds or removes two weeks on its own. Third-party items such as the valuation, the lease assignment, and the lien search sit outside everyone's calendar and are started first for that reason.
06Does the seller have to carry part of the price?
Not always. A seller note is used when the appraised or underwritten value sits below the agreed price, when the buyer's equity is thin, or when the parties want the seller economically attached through the transition. It sits subordinate to the senior lender and runs a few years in the market. Some lenders read a seller note as a positive signal about the transfer, and some cap how much of the price it may cover.
07What does Practition Finance do on an acquisition request?
It explains these structures in the context of the specific practice and then, depending on the state, either refers the request to our funding partners, who present any offer and its terms directly, or transfers the inquiry to a funding partner that contacts the practice and arranges any financing itself. The practice is never charged. No number published here is a quote, and no conversation here is a credit decision.
Sources
- 1US Bank practice financing
- 2SBA 7(a) program terms
- 3Dental Transitions, valuation and pricing data
- 4Dental Practice Insider, transition benchmarks
- 5IRS Publication 946, depreciation of acquired assets
- 6usbank.com
- 71stmedfinancial.com
- 8dentalpracticeloanguide.com
- 9toothandcoin.com, Wells Fargo practice finance interview
- 10American Dental Association, Health Policy Institute
- 11U.S. Small Business Administration, SOP 50 10
- 12dentalpracticeinsider.org, dentaltransitions.com
This program, field by field
- Practice acquisition financing for general dentistry
How a practice acquisition loan is structured around a general dentistry purchase, from collections history to working capital added onto the note.
- Veterinary practice loans for buying an existing practice
How veterinary practice loans are structured for an acquisition, from consolidator pricing pressure to average client transaction underwriting.
- Acquisition financing for independent pharmacy
Buying an independent pharmacy or its script files. How lenders weigh PBM contracts, payer mix, and gross margin after DIR fees on an acquisition.
Take the checklist with you
Practices
Practice Financing Readiness Kit
What a lender reads before it reads your numbers
PDF · 9 pages · v1.0
- The practice document checklist, in the order a lender asks for it
- The valuation ladder: percent of collections, SDE multiple, and EBITDA multiple
- The acquisition capital stack, drawn
- The de novo cash curve to break-even
- The lease versus loan after-tax comparison worksheet
- The 12 questions to ask before signing a letter of intent
Our team reviews the request and looks for a funding partner that fits. The partner covers the structure and the document list.