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A dental office renovation is a business decision. Updating your operatories and reception area lets you see more patients in a day. A remodel can also bring the building up to current compliance and accessibility standards.
Dental practice renovations can run well into the six figures once you factor in construction, dental chairs, imaging systems, and everything else involved in a remodel.
Most dental practice owners don't have the cash lying around to pay for everything out of pocket. That's where dental practice financing fits in.
In my experience working with dental offices, matching the financing to the project is the toughest part of a remodel. Below, I cover what a dental office renovation costs, the financing options available, and what lenders review.
| Financing option | Typical term | Rate range | Approval speed | Commonly used for |
|---|---|---|---|---|
| SBA 7(a) | 10 to 25 years | Starting at 6.75% | As quickly as two weeks (typically 30 to 90 days) | Renovation, equipment, and working capital |
| SBA 504 | 10, 20, or 25 years | Pegged to an increment above the current market rate | 30 to 90 days | Owner-occupied real estate and large build-outs |
| Equipment financing | 12 to 72 months | Starting at 6% | 1 to 5 days | Dental chairs, imaging systems, and sterilization gear |
| Business line of credit | 6 to 36 months, revolving credit | Starting at 6% | As quickly as same day | Phased work and cost overruns |
| Short-term business loan | 6 to 36 months | Starting at 6% | As quickly as same day | Soft costs and midsize projects |
| HELOC | Up to 30 years, draw period up to five years | As low as prime | As quickly as one week | Faster, lower-rate money for the whole project |
What a Dental Office Renovation Costs
The cost of a dental office renovation depends on the square footage and the project scope.
In my experience, costs typically land anywhere from $150 to $450 per square foot. Expect to invest between $225,000 and $675,000 in construction, while costs for specialty practices can top $1 million. That doesn't include the cost of equipment.
Here's a breakdown of some typical construction costs.
Demolition and framing
$15 to $35 per square foot
Electrical and data cabling
$20 to $50 per square foot
Dental-specific plumbing
$25 to $60 per square foot
HVAC
$20 to $45 per square foot
Cost of Equipment Purchases
Equipment purchases are a separate line item in your remodel budget. Here's a breakdown of what some common equipment costs.
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
Equipment can get expensive quickly. A standard-size dental practice typically needs to purchase at least four dental chairs and delivery units. That brings the cost to $24,000 to $60,000 just for chairs alone.
The Soft Costs of a Dental Office Renovation
Here are a few soft costs to consider when putting together your renovation budget. These are fees, permits, and the cost of having to close your practice during construction. It's good practice to set aside 15% to 30% of your renovation budget to cover these costs.
Design and engineering fees. This is usually the largest line item and will run you anywhere from 8% to 15% of total costs.
Permits and construction plan review. This cost depends on the project and location. Permits and fees for a midsize construction project in Texas may cost $2,000, while the same project in California costs $15,000.
Lost production. Estimate this one based on how much of your practice you'll have to close and for how long. Multiply your average daily production per chair by the number of days offline.
Financing a Dental Practice Renovation
The cost of a dental practice remodel adds up quickly. I often see dental practice owners pair a term loan with equipment financing to cover the cost of construction and equipment.
Here are some of the financing options available to your practice.
SBA 7(a) loans
The U.S. Small Business Administration (SBA) partially guarantees these loans. They cover construction, equipment, and working capital. Repayment terms reach 25 years for real estate.
SBA 504 loans
A common option for owner-occupied real estate and major build-outs. Expect to put 10% down.
Equipment financing
The equipment serves as collateral. Covers the cost of dental chairs, imaging systems, and X-ray machines.
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. Lines of credit are commonly used for phased work and small construction costs.
Short-term business loans
A lump sum repaid on a fixed schedule. A fit for soft costs and midsize remodels.
Some lenders specialize in working with medical practices and understand the unique challenges that come with financing for healthcare.
If you're concerned about the cost of equipment, dental suppliers sometimes finance dental chairs directly, at a promotional rate, so it's worth checking the cost against an equipment loan. Leasing equipment may also be a cheaper option than buying outright.
Using a HELOC To Finance Your Dental Practice Renovation
If you own a home with equity in it, a home equity line of credit (HELOC) is another financing option to consider.
This turns the equity in your home into a line of credit that you draw against, often at a lower rate than many types of business financing.
The trade-off is that your home secures the line. If you can't pay it back, you're putting your home at risk.
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.
What Lenders Review
Lenders want to make sure you can carry a new payment on top of anything you already owe. The approval process depends on the type of financing and lender, but most lenders generally look at the same information.
Time in practice
Most lenders want to see a consistent operating history. SBA lenders ask for at least two years.
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 amount usually requires a closer review. Some financing may require you to make a down payment.
Collateral requirements
The SBA sometimes requires collateral on 7(a) loans. If you're applying for equipment financing, the equipment serves as collateral.
Personal guarantee
Revenue-based financing may still require you to sign a personal guarantee. You'll sign one for an SBA loan if you own 20% or more of the practice.
Match Financing to Your Project Needs
The right option aligns with your remodel needs and timeline. A cosmetic refresh or a complete build-out calls for different types of dental practice financing.
When you're ready to see what your project qualifies for, apply today and a lending advisor will compare offers with you. Checking your options won't affect your credit score.
Frequently Asked Questions on Dental Practice Renovations
Here are the most common questions I get asked about dental practice renovation financing.
How Much Does a Dental Office Renovation Cost?
There isn't one specific number. Total costs for a dental office renovation typically land anywhere from $150 to $450 per square foot. Expect to invest between $225,000 and $675,000 in construction, while costs for specialty practices can top $1 million.
What Can Change the Cost of a Dental Practice Renovation?
Operatory count is a big driver of cost, since each one needs dedicated plumbing, vacuum, compressed air, and electrical. Remodeling an older building can also come with a steep cost.
Can You Finance a Dental Office Build-Out?
Yes, many owners choose to finance their build-out. SBA 7(a) loans cover construction, equipment, and working capital. SBA 504 loans fit big build-outs. Equipment financing covers the cost of dental equipment. A business line of credit or a term loan can help fill in the gaps.
What Credit Score Do You Need for a Dental Practice Loan?
It depends on the lender and the financing type. Lenders look for a minimum credit score of 640 for SBA 7(a) loans through Clarify Capital's network. Equipment financing is more flexible, with a minimum personal credit score of 550.
Do You Need Collateral for Dental Practice Financing?
Sometimes. Equipment financing is secured by the dental equipment. Your house serves as collateral for a HELOC. SBA 7(a) loans sometimes require collateral. If you own 20% or more of the business, you'll have to sign a personal guarantee.
How Long Does Approval Take?
Online lenders typically approve the fastest. Sometimes within a day, or as fast as same day. SBA loans take more time. Approval can land as quickly as two weeks, but usually takes 30 to 90 days.
Is My Information Secure When I Apply?
Yes. Clarify follows SOC 2 security principles, and your application data is protected throughout the process.
Bryan Gerson
Co-founder, Clarify
Bryan has personally arranged over $900 million in funding for businesses across trucking, restaurants, retail, construction, and healthcare. Since graduating from the University of Arizona in 2011, Bryan has spent his entire career in alternative finance, helping business owners secure capital when traditional banks turn them away. He specializes in bad credit funding, no doc lending, invoice factoring, and working capital solutions. More about the Clarify team →
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