Bob Brooks of Practice Endeavors recently moderated a panel of three of the nation’s largest practice loan acquisition lenders on a webinar hosted by the International Business Brokers Association (IBBA). The panelists addressed how the pandemic has affected dental practice acquisition and dental lending in general.   

Panelists from Wells Fargo, Lendeavor and Live Oak Bank shared how business is mostly back to normal for them with a few exceptions:

• Borrowers now need to complete a Covid specific form.

• Borrowers’ liquidity requirements have increased with some lenders. One presenter said that his company’s liquidity requirement has gone from 3% to 5%, still a low percentage.  

• Before funding loans, lenders prefer to see practices reach production levels at or above pre-Covid levels with corresponding collections numbers a month or two later. If practices are producing over 100% of normal, lenders like to see where production and collections will end up after practices get caught up with patient appointments.

The bottom line is that lending does not appear to be a limiting factor for dental practice acquisitions nor for new start-ups.

More likely, borrower attitude is the most significant factor affecting the transition of practices to new ownership and affecting new start-ups. Use of seller carryback and earnouts in practice transactions has been rare in the past and to date has not appreciably increased as a result of Covid.