For dentists ready to stop paying rent and start building equity, SBA loans offer an exceptional opportunity to purchase dental office real estate. Whether you're buying an existing practice with its building, purchasing a condo unit in a medical complex, or constructing a purpose-built facility, SBA financing can make ownership a reality with surprisingly low down payments.
Why Dentists Should Own Their Real Estate
Dental practices are ideal candidates for owner-occupied commercial real estate. The specialized buildout required for dental offices means landlords often capture the value of your improvements. By owning, you control your environment, build equity, and potentially reduce monthly occupancy costs while creating a valuable retirement asset.
Many successful dentists ultimately sell their practice but retain the real estate, creating ongoing rental income. This "practice in a box" approach maximizes the value of both assets.
SBA Loan Options for Dental Real Estate
SBA 7(a) Loan
The 7(a) program offers maximum flexibility, allowing you to finance practice acquisition, real estate, equipment, and working capital in a single loan. Up to $5 million available with terms extending to 25 years for real estate.
SBA 504 Loan
For primarily real estate-focused transactions, the 504 program offers just 10% down and below-market fixed rates on the CDC portion. This program excels for ground-up construction or major renovation projects.
Typical Dental Office Requirements
Dental offices have specific facility needs that impact costs:
- Space per operatory: 400-500 square feet including support space
- Plumbing: Extensive wet walls and specialized drainage
- Electrical: Higher capacity for equipment and imaging
- HVAC: Additional requirements for sterilization areas
- Lead-lined walls: Required for X-ray equipment
- Compressed air and vacuum: Central systems for operatories
What Lenders Evaluate
Practice Performance
For practice acquisitions, lenders analyze production, collections, and profitability. Key metrics include collections per operatory, overhead percentages, and patient demographics. Practices collecting $500,000+ annually with 60% or lower overhead typically finance easily.
Dentist Credentials
Your dental school, specialty training, and years of experience all matter. New graduates can qualify with strong academic records and reasonable practice projections, though may face slightly higher down payment requirements.
Real Estate Valuation
Purpose-built dental facilities are valued based on replacement cost and income approach. Well-designed, modern facilities in good locations appraise well. Older buildings may require renovation budgets to reach full potential.
Costs to Budget
A typical dental office buildout or renovation costs $150-250 per square foot, meaning a 2,500 square foot four-operatory office might require $375,000-625,000 in buildout costs alone. Add land and shell building costs for ground-up construction.
Equipment for a four-operatory practice typically runs $200,000-400,000 depending on technology level and whether you're buying new or acquiring used equipment with a practice.
Practice Acquisition Plus Real Estate
When buying a practice that includes real estate, you might see a deal structured like this:
- Practice value: $400,000
- Real estate value: $600,000
- Equipment: $150,000
- Working capital: $50,000
- Total project: $1,200,000
- Down payment (10%): $120,000
- SBA loan: $1,080,000
Ready to Own Your Dental Office?
Get pre-qualified for SBA dental practice real estate financing.
Check Your EligibilityTips for Dental Practice SBA Loans
- Start early: SBA loans take 60-90 days; begin the process well before your target closing
- Get proper valuations: Use appraisers experienced in dental practices and medical real estate
- Plan your buildout: Work with dental-specific contractors and architects
- Consider growth: Size your facility for future expansion
- Negotiate seller terms: Seller financing for part of the practice value can reduce your equity requirement
Specialty Considerations
Specialists (orthodontists, oral surgeons, periodontists, etc.) often command higher production per square foot and may justify larger, more specialized facilities. Lenders view specialty practices favorably due to typically higher revenue and profit margins. Multi-specialty group practices are also excellent candidates for larger SBA loans.