How Much Down Payment for Dental Practice Loans
Down payment requirements vary significantly by loan type. Understanding these requirements helps you plan your purchase strategy and cash reserves.
Down Payment by Loan Type
| Loan Type | Down Payment | Notes |
|---|---|---|
| SBA 7(a) | 10-15% | Most popular option |
| Conventional Bank | 20-30% | Faster approval |
| Seller Financing | 0-20% | Negotiable |
| Equipment Only | 0-10% | Equipment as collateral |
SBA 7(a) Down Payment Details
The SBA 7(a) program requires the lowest down payment, making it attractive for buyers with limited capital.
10% Down Components
- 5% buyer injection
- 5% seller financing (optional but preferred)
15% Down (No Seller Financing)
- 10% buyer injection
- 5% additional cash or collateral
Example Down Payments
| Practice Price | SBA 10% | SBA 15% | Conventional 25% |
|---|---|---|---|
| $500,000 | $50,000 | $75,000 | $125,000 |
| $750,000 | $75,000 | $112,500 | $187,500 |
| $1,000,000 | $100,000 | $150,000 | $250,000 |
Beyond the Down Payment
Additional cash requirements:
- Working capital: $25,000-$75,000
- Closing costs: 3-5% of loan amount
- Professional fees: $15,000-$30,000
- Personal reserves: 3-6 months expenses
Source of Down Payment
Acceptable sources:
- Personal savings
- Gifts from family (with documentation)
- Retirement account rollovers
- Home equity (proceed with caution)
Not acceptable:
- Unsecured loans
- Credit card advances
- Borrowed funds without disclosure
Bottom Line
Plan for 10-15% down payment plus $50,000-$100,000 in additional reserves. SBA loans offer the lowest barrier to entry for most buyers.
Down payment planning help? Contact DentalBridge.