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More than eight in 10 U.S. companies use some form of financing when buying a new piece of equipment. Dental offices are no exception.
I've spent more than 15 years arranging financing for small and midsize business (SMB) owners, and purchasing equipment with cash can tie up your money. A dental equipment loan spreads the cost out over the life of the equipment, putting less of a strain on your cash flow.
Practice owners use dental equipment loans to cover a wide variety of purchases. Over my career, I've seen it used for exam chairs, office furniture, milling machines, intraoral scanners or intraoral cameras, digital imaging equipment, and compressors.
Below, I'll get into what dental equipment costs, the differences between loans and leases, what financing runs, and what lenders look at before they approve you.
| Financing type | Typical term | Rate range | Commonly used for |
|---|---|---|---|
| Equipment financing | 12 to 72 months | Starting at 6% APR | Chairs, imaging, sterilizers, and anything you plan to keep |
| Business line of credit | Revolving, 6 to 36 months | Starting at 6% APR | Smaller purchases and ongoing replacements |
| Short-term business loan | 6 to 36 months | Starting at 6% APR | Equipment and other costs in one lump sum |
| SBA 7(a) loan | 10 to 25 years, shorter end for equipment | Starting at 6.75% | Large buildouts that bundle equipment with other costs |
| Home equity line of credit (HELOC) | Up to 30 years, draw period up to 5 years | As low as prime | Practice owners with home equity who want a long payoff |
Dental Equipment Costs
The sticker price on dental equipment fluctuates depending on the vendor. Here are some common ranges to keep in mind.
Dental chair
$6,000 to $15,000
Cone beam CT
(CBCT) imaging system
$80,000 to $200,000
Panoramic X-ray system
$25,000 to $60,000
Vacuum system
$2,000 to $6,000
Sterilizer
$4,000 to $15,000
Refurbished equipment is a common route when cash flow is tight. You can save anywhere from 30% to 50% on refurbished models, depending on the type of equipment and the vendor. Lenders take into consideration the equipment's age, condition, and source of the purchase when deciding financing for refurbished models.
Types of Dental Equipment Financing
Here's some more detail on the specific types of dental equipment financing and what each does.
Equipment financing
The equipment serves as collateral, and it covers the cost of patient chairs, imaging systems, X-ray machines, and more.
Equipment lease
Pay to use equipment for a set term and then return it, renew it, or buy it.
Business line of credit
A revolving credit line that you can draw from, pay down, and then redraw. You only pay interest on what you use.
SBA 7(a) loan
The U.S. Small Business Administration (SBA) partially guarantees these loans. They cover equipment and offer long repayment terms.
Short-term business loan
A short-term loan that isn't tied to a specific asset. Use the lump sum to cover equipment or related costs.
HELOC
Turns the equity in your home into a line of credit that you draw against. Your home secures the line.
Minimum Qualifications
$10,000 in monthly revenue
Your business must earn at least $10K per month in a business bank account.
500+ credit score
You can get approved with any credit score. But the better your credit rating, the better interest rates lenders offer. Your FICO score should be above 500.
Minimum six months in business
Your company should be operational for a minimum of six months. This shows business lenders that your company is sustainable and won't go out of business.
Have a business bank account
Your Clarify advisor will need three or four months of your most recent bank statements to verify income. This is just to see you're actually making $10K+ month in revenue.
Comparing Equipment Leases and Loans
A common question I hear from dental office owners is whether an equipment lease makes more sense than equipment financing. The honest answer is that it depends. Here's how it compares.
| Point of comparison | Equipment loan | Equipment lease |
|---|---|---|
| Ownership | You own the equipment | The lessor owns the equipment |
| Down payment | A down payment lowers total amount financed | Usually first and last payment |
| Ability to upgrade | Sell the equipment to upgrade | Upgrade options often available during lease term |
| Maintenance | Arranged yourself | Typically bundled into the lease |
| End of term | You own the equipment and can borrow against it later | Return the equipment, renew it, or buy it |
Dental offices tend to choose equipment leasing over buying because of cash preservation. Monthly lease payments cover the high cost of equipment for multiple operatories at once, lumping it into one low monthly payment.
Equipment financing, however, may cost less over the long term. Once you pay it off, you own the equipment outright, and you don't have to continue to make payments on it.
What Dental Equipment Financing Costs
The price of the equipment is only part of the full picture. Here's what else factors into the total when applying for dental equipment financing.
Interest rates. Through Clarify Capital's lender network, APRs for equipment financing start at 6%.
Down payment. You can often finance up to 100% of the equipment value through Clarify's network, but outside lenders may ask for a down payment.
Fees. Look for an origination fee and ask for a schedule before you sign.
Term length. Repayment terms through Clarify Capital's network run 12 to 72 months.
There are also a few tax benefits that come with equipment financing. Section 179 of the Internal Revenue Code lets you deduct the total cost of any qualifying equipment or software in the year it goes into service for your business, instead of depreciating it over several years. Your accountant can walk you through the specifics.
Promotional rates from distributors and manufacturers are also worth comparing. Get a quote from your vendor and compare the total cost before you sign.
How Dental Equipment Financing Works
Dental equipment financing through Clarify Capital comes down to four simple steps.
What Lenders Look At
Every lender has different requirements, but they tend to look at the same things.
Operating history
Lenders want to see how long the practice has been operating. A longer track record may give you more options.
Cash flow and annual revenue
Lenders want to see that you can cover the payment and still have room left over. This is sometimes called a debt-service coverage ratio.
Personal credit score
Higher personal credit scores typically unlock better interest rates and repayment terms.
Loan amount and equity
A larger financed amount usually requires a closer review. Some financing may require you to make a down payment.
Collateral requirements
With equipment financing, the equipment serves as collateral.
Personal guarantee
Some financing requires you to personally back the loan, which means you're responsible if the business can't pay.
Equipment Financing for Dental Practices
Deciding what equipment to purchase is difficult. Financing it doesn't have to be.
Clarify Capital works with a network of 75+ vetted, reputable lenders to help you find equipment financing that matches the needs of your practice.
When you're ready to see what you qualify for, apply today. Checking your options won't affect your credit score.
Frequently Asked Questions About Dental Equipment Financing
Here's a collection of the most common questions I hear about dental equipment financing.
What Credit Score Do You Need for Equipment Financing?
It depends on the lender and the type of financing. Clarify Capital's lender network requires a minimum credit score of 550 for equipment financing and short-term business loans. Business lines of credit require a minimum credit score of 600. SBA lenders ask for a minimum credit score of 640
What Are Typical Terms for Equipment Financing?
Repayment terms run 12 to 72 months through Clarify Capital's network of lenders. The term that you receive is matched to the life of the equipment.
Can You Finance Used Dental Equipment?
Yes, you can finance used and refurbished dental equipment. Lenders take into consideration the equipment's age, condition, and the place where it was purchased when determining financing terms.
How Does a Dentist Finance the Necessary Equipment?
Equipment leases or loans are good options for dentists who need to finance the necessary equipment for a practice. Compare quotes from a vendor with traditional banks and online lenders to secure the best terms.
Who Has the Best Dental Equipment Financing?
There's not one right answer. It depends on your credit score, the equipment you need, and how fast you need it. Compare the total cost of financing from multiple sources before making a decision. Traditional lenders, like banks, may have lower rates, but online and specialty lenders usually win on speed.
Is My Information Secure When I Apply?
Yes. Clarify Capital follows SOC 2 security principles, and your information is used to match you with lenders.
Michael Baynes
Co-founder, Clarify
Michael has over 15 years of experience in the business finance industry working directly with entrepreneurs. He co-founded Clarify Capital with the mission to cut through the noise in the finance industry by providing fast funding and clear answers. He holds dual degrees in Accounting and Finance from the Kelley School of Business at Indiana University. More about the Clarify team →
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