Startup and de novo
How a de novo note is built, and why it carries a ramp
Building a first location, with the ramp period financed into one note
Direct answer
De novo financing funds a practice built from nothing: build-out, equipment, leasehold improvements, and the working capital that carries the schedule until collections start. Dental projects in the market run $400,000 to $950,000, with graduated or interest-only periods of 6 to 24 months. Practition Finance explains the structures and, by state, refers the request to funding partners.
As of October 2026
A de novo has no collections history, so nothing about it can be underwritten the way an acquisition is. The lender is reading a location, a floor plan, a demographic study, and a clinician's capacity to produce. Everything else in the file is a projection, and the projection is only as credible as the assumptions printed beside it.
A startup note pays for 3 things, the build, the equipment, and the ramp, and a first-time owner can make several parts of the file solid before anyone asks. As an independent business financing referral service, Practition Finance sets out what a startup file must contain, then passes a qualified inquiry to funding partners, who present any offer themselves.
Whether this fits you, and when it does not
Commonly a fit
- A licensed clinician opening a first location with a site under letter of intent or lease
- An owner opening a second location as a new build rather than a purchase
- A buyer who has a contractor bid, an equipment quote, and a demographic study rather than an estimate
- An owner who can carry a personal household budget through a ramp of several quarters
- A project where the landlord's improvement allowance and the construction schedule are already documented
Commonly the wrong instrument
- A concept still choosing between two cities, because the demographic work decides the credit and cannot be generic
- A clinician still inside a non-compete radius that covers the intended site
- A project with no equity injection and no post-open liquidity, where the first slow quarter has nowhere to land
- An acquisition dressed as a startup, which is underwritten on the seller's collections instead
- A build where the contractor bid is verbal, since the loan is sized to a written scope
How your money moves
- 01
Prove the site before the building
A demographic study establishes the population, the provider ratio, and the payer participation in the radius. It is inexpensive relative to the note and it is the first thing a startup underwriter reads.
- 02
Price the whole project, not the equipment
Construction, cabinetry, plumbing and electrical, imaging, chairs or treatment units, software, signage, furniture, initial supply stock, marketing before opening, and working capital. A project priced only at the equipment quote is short by a wide margin.
- 03
Settle the lease terms the loan depends on
Improvement allowance, rent abatement, the co-tenancy language, and a term at least as long as the amortization. The allowance reduces the amount borrowed and the abatement changes the ramp.
- 04
Build the projection from capacity, not from ambition
Chairs or rooms, days open, hours, procedures per day, and average fee. A projection assembled from those inputs can be argued. A revenue target chosen first and reverse engineered cannot.
- 05
Structure the ramp into the note
Interest-only or graduated payments cover the months between opening and the point where collections carry debt service and an owner draw. Ask for the step-up schedule in writing and read it against the projection.
- 06
Fund the accounts that open before the doors do
Payroll for a team hired ahead of patients, credentialing where insurance participation is planned, marketing that must run before opening day, and a supply account with no receivables behind it yet.
- 07
Sequence the draws against the construction schedule
Most project notes fund in stages against invoices and inspections. Aligning the draw schedule with the contractor's schedule keeps the build from stopping over a paperwork gap.
Directional terms
Directional terms the market publishes for de novo projects. Ranges, never quotes.
| What it measures | Market range | Confidence | How to read it |
|---|---|---|---|
| Project cost | $400,000 to $950,000 depending on source6 | DirectionalAugust 2026 | Sources vary widely because scope varies widely. Compare against a written contractor bid, not an average. |
| Ramp window | 6 months at US Bank, 12 to 24 months in some startup programs7 | DirectionalAugust 2026 | The window is the whole point of a startup note. Read the step-up schedule before the rate. |
| Practice term and structure | Up to 100% financing, 6-month interest only, 15-year practice, 25-year CRE8 | VerifiedAugust 2026 | One published bank structure, useful as a reference point for the term being offered. |
| Coverage floor | 1.15x minimum on SBA 7(a) credit, measured on the borrower's operating cash flow9 | DirectionalAugust 2026 | Coverage is tested on the projection at stabilization, and again on the household today. |
| Equipment tax treatment | $2,560,000, phase-out from $4,090,00010 | VerifiedAugust 2026 | The structure chosen for the equipment portion decides whether the deduction is available at all. |
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
A startup file is thinner on history and heavier on evidence. Every assumption in the projection should trace to a document elsewhere in the package.
| Document | What it answers |
|---|---|
| Demographic study for the site radius | Establishes that demand exists where the lease is being signed. |
| Signed or draft lease with the allowance stated | Sets occupancy cost, term, and how much of the build the landlord funds. |
| Contractor bid with a written scope | The construction figure the loan is sized to. |
| Equipment quotes with soft costs itemized | Install, training, and software are financeable and are routinely left off the quote. |
| Month-by-month opening projection | Read against capacity, not against a target. |
| Personal financial statement and three years of returns | Global coverage during the ramp is calculated on the household. |
| Proof of liquidity after the injection | The buffer that carries the months the projection gets wrong. |
| License, residency completion, and production history | Establishes clinical capacity behind the projection. |
| Non-compete release or radius confirmation | A restriction covering the site ends the file, and it is checked early. |
How long it takes you
The market range from financing to open runs longer than most first-time owners plan for. Every figure here is attributed to the sources named below and none of it is a commitment.
| Stage | Market range | Note |
|---|---|---|
| Site work and demographic study | 2 to 6 weeks | Runs before any lender conversation is useful. |
| File assembly and lender review | 30 to 90 days | Startup review is longer than acquisition review because there is no history to read. |
| Construction | 60 to 90 days | Draws are staged against invoices and inspections. |
| Ramp to break-even | several quarters, project specific | The ramp is why the note carries an interest-only or graduated window. |
The structure, drawn
The de novo cash curve to break-even
Why a startup note carries an interest-only or graduated window: the schedule fills before the collections do
Source: Startup lender program pages, aggregated · As of October 2026
What a startup underwriter is testing
With no collections to read, the underwriter tests three things. Whether demand exists at the address, whether the clinician can produce at the volume the projection assumes, and whether the household survives the months before the practice pays anyone. The third test is the one first-time owners prepare for least and the one that most often resizes the note.
That is why liquidity after the equity injection carries as much weight as the injection itself. A project that spends the last available dollar at closing has no answer for a construction overrun, a delayed certificate of occupancy, or a slower first quarter, and each of those is common rather than exceptional.
The lease is the other quiet driver. An improvement allowance lowers the amount borrowed, rent abatement changes the shape of the ramp, and a term shorter than the amortization shortens the loan instead. Reading the lease and the term sheet side by side is the single most useful hour in the process.
Three ways a de novo file gets resized
Pricing the project from the equipment quote
Construction, cabinetry, plumbing, software, signage, and pre-opening payroll routinely exceed the equipment line. A project priced short returns as a second request at a worse moment.
Writing a projection backward from a revenue goal
Build it from chairs, days, procedures, and fees. An underwriter can argue with a capacity model. A target with no inputs behind it is simply discounted.
Ignoring the credentialing calendar
Where insurance participation is part of the plan, enrollment takes months and the schedule fills before the remittances arrive. That gap belongs inside the working capital line from the start.
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
Build-out, equipment, leaseholds, and the working capital that carries the ramp
Move this to the range your bank or the market is quoting
Monthly payment
$8,411
120 months at 9.5%, principal and interest
Interest across the term
$359,301
Before any origination, packaging, or guarantee fee the structure carries
Total repaid
$1,009,301
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
01What does a de novo project cost?
Published ranges for a dental project vary widely by source because scope varies widely: operatory count, imaging, cabinetry, and the condition of the shell all move the number. The range published here is directional and carries the sources it came from. The usable number for any specific project is a written contractor bid plus itemized equipment quotes plus a working capital line, and that total is what a lender sizes against.
02Can a first-time owner finance a startup at 100%?
Some programs in the market publish full project financing for clinicians with strong personal files and a completed residency or associate period. Others ask for an equity injection in the range shown above. Programs advertising the lowest injection usually replace it with a post-close liquidity requirement, so the two figures are read together rather than separately.
03Why is there an interest-only period?
Because collections start later than the payment schedule does. A startup opens with full rent, full payroll, and a partly filled schedule. An interest-only or graduated window pushes the full amortized payment out until the practice is closer to carrying it. The step-up schedule matters as much as the length of the window, and it should be read against the projection month by month before the note is signed.
04How long from financing to opening the doors?
The market range runs longer than most first-time owners plan for, and construction is only part of it. Site selection, the demographic study, the lease negotiation, permitting, the build itself, equipment install, and credentialing all sit inside the span. Each figure published here is attributed to a named source and dated. The construction phase alone commonly runs two to three months once permits are in hand.
05Does the landlord's improvement allowance change the loan?
It reduces the amount borrowed, which reduces the payment, which changes the ramp. It also usually comes with conditions: reimbursement after completion rather than in advance, documentation requirements, and sometimes a rent premium that repays the allowance over the lease term. The allowance is negotiated as part of the project budget rather than treated as a discount discovered later.
06Should equipment go inside the project note or on separate paper?
Both structures exist. Bundling puts everything on one payment and one term, which is simpler and often longer. Separating the equipment can match the term to the useful life of the asset and can open tax treatment the bundled structure does not. The decision is driven by the tax outcome and the term, and it is worth taking to an accountant before the note is signed.
Sources
- 1US Bank practice financing
- 2SBA 7(a) program terms
- 3Dental Transitions, valuation and pricing data
- 4IRS Section 179 and depreciation guidance
- 5Section179.org, current-year limits
- 6swissmonkey.io, dentalpracticeloanguide.com
- 7usbank.com, startup lender program pages
- 8usbank.com
- 9U.S. Small Business Administration, SOP 50 10
- 10Section179.org, Ameris Bank, Rev. Proc. 2025-32
This program, field by field
- Startup and de novo financing for general dentistry
How de novo financing is structured for a new general dentistry practice, from build-out cost to the interest-only ramp before collections begin.
- De novo financing for urgent care centers
Building a new urgent care center. How lenders size the ramp period against credentialing lag, payer mix, and projected visits per day at the new site.
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 project budget, the ramp structure, and the document list a startup file needs.