Fund chairs, scanners and other clinical equipment with hire purchase or leasing, fit-outs with a business loan plus asset finance for the kit, and premises with a commercial mortgage. Buying a practice is usually funded with an acquisition loan secured on the business, alongside your own money. Many lenders see established practices as relatively low risk, but they'll still look closely at your income, your registration and, for a purchase, the practice you're buying.
A dentist needs a second chair and an intraoral scanner. A physiotherapy clinic wants to add two treatment rooms. An associate has the chance to buy the practice they work in. A GP partnership is thinking about buying its surgery building.
These are different problems, and they suit different kinds of finance. This guide takes each in turn, for dental, medical and other healthcare practices, and explains what lenders look at.
How lenders see healthcare practices
In general, lenders are comfortable lending to healthcare. Patients need treatment in good times and bad, the people running the practice hold professional qualifications, and an established practice usually has a long, steady trading record. Some lenders have teams that only lend to healthcare and know the sector's details well.
That doesn't mean every application is easy. A lender will still want to see that the practice is profitable, that it's properly registered and that its income is likely to continue. Newer practices, or those relying on a single clinician, get closer questions.
Equipment: chairs, scanners and clinical kit
For equipment, start with asset finance. The lender pays the supplier and you repay over the time you use the kit, usually a few years. The equipment helps secure the deal, so it's often easier to arrange than an unsecured loan of the same size.
Much of what practices buy is fundable this way: dental chairs and delivery units, X-ray and scanning equipment, intraoral scanners and milling units, sterilisation and decontamination equipment, ultrasound and diagnostic kit, lasers, eye-examination equipment and practice management systems. Branded equipment with a second-hand market is the easiest to fund.
The two main forms are:
- Hire purchase (HP). You pay a deposit and fixed instalments, and own the equipment at the end. It suits kit you'll keep for most of its life, like a chair.
- Leasing. You rent the equipment and never own it. It suits kit that dates quickly, like scanners and software, where you'll want to upgrade.
VAT works differently for many practices. Medical and dental care provided by registered health professionals is generally exempt from VAT. That means many practices aren't VAT-registered, or can reclaim only part of the VAT they pay, so VAT on equipment is a real cost rather than a timing issue. On HP, the VAT on the full price is normally due at the start, though some lenders will include it in the amount financed. On a lease, VAT is added to each rental and spread over the term. Cosmetic treatments that aren't for health reasons are treated differently, so ask your accountant how this applies to you. Our guide to hire purchase vs leasing covers the wider differences.
Equipment suppliers often offer their own finance, sometimes with low or no interest. That can be good value, but compare the cash price too: a supplier offering cheap finance may be less willing to discount.
Fit-outs and new treatment rooms
Fitting out a surgery or treatment room is part equipment and part everything else: plumbing, electrics, ventilation, flooring, cabinetry and fees. The everything else is what lenders call soft costs. It has little resale value, so asset finance providers may not fund it, or will charge more to.
The usual answer is to split the bill. Put the equipment on asset finance, and fund the building work with a business loan, typically over a few years. Clinical rooms must meet the standards that apply to your type of practice, so build the cost of compliance into your budget from the start, not after the regulator has looked.
Buying a practice, or buying in
Buying an existing practice is one of the biggest financial steps in a clinician's career. Most of the price is usually goodwill: the value of the patient list, the reputation and the income they bring, rather than the equipment or the building.
Lenders who know the sector are used to lending against goodwill, and some will fund a large share of the price for an experienced buyer with a sound plan. Expect them to look hard at:
- A valuation of the practice, usually from a valuer who specialises in healthcare.
- The practice's income, its mix of NHS and private work, and whether it depends on the seller staying on.
- The team. Associates, hygienists and other clinicians, and whether they're likely to stay. If you buy the business rather than the company that owns it, employed staff usually transfer to you on their existing terms.
- Registration and contracts. In England, many healthcare providers, including dental practices and GP surgeries, must register with the Care Quality Commission, and the other UK nations have their own regulators. If you buy the practice's assets rather than the company, you'll usually need your own registration in place before you take over, so allow time. Any NHS contract has its own rules about how it can pass to a new owner, so check with the seller's advisers and the commissioner early.
Buying into a partnership works differently. You buy a share of the goodwill and sometimes the premises, usually with a loan to you personally, repaid from your share of the profits. Our guide to business acquisition finance explains how purchase deals are structured, including deposits, deferred payments and due diligence.
An illustration, not a quote. An associate dentist agrees to buy the leasehold practice she works in for £600,000, most of it goodwill. She puts in £90,000 of her own money, and an acquisition loan over ten years covers the rest, secured on the business with a personal guarantee. A year later, she adds a second chair and an intraoral scanner on a lease, so the VAT is spread over the rentals rather than paid at the start. These figures are illustrations: your terms depend on you and the practice.
Premises
Buying your premises, or a practice that comes with its freehold, is usually funded with a commercial mortgage. Expect to put down a deposit, commonly a quarter or more of the price, and for the lender to look at the practice's trading as well as the building. See commercial mortgages explained.
If you lease your premises, the remaining lease term matters for any borrowing. A lender is unlikely to lend over a longer period than your right to trade from the site. GP practices have their own NHS arrangements for premises costs, so take specialist advice before buying or building a surgery.
Starting a practice from scratch
Opening a new practice, sometimes called a squat in dentistry, is harder to fund than buying an established one, because there's no patient list or trading record to lend against. Lenders lean more on your experience, your business plan, the local demand and your own money in the deal. Equipment is still fundable on asset finance. Our guide to start-up business loans explains what lenders look for.
NHS and private income
Most practices earn from NHS work, private patients or both, and lenders look at the mix rather than preferring one.
- NHS income is usually paid regularly under a contract, which makes it predictable. It's tied to delivering the activity the contract sets, and in NHS dentistry in England, money can be clawed back if a practice falls short. The contract terms also limit how fast that income can grow.
- Private income depends on local demand and what patients can afford, but you set your own prices. Patient plans paid monthly give a steady, recurring base that lenders like to see.
What lenders want is evidence that your income is stable and likely to continue: a track record, a spread of patients and clinicians, and a plan if one part changes. If you offer patients finance for treatment, that's a separate matter. It's consumer credit, with its own FCA rules.
Cash flow
Practices still have uneven months: a big lab bill, a VAT bill on taxable treatments, or a gap while a new clinician builds their book. An overdraft or revolving credit facility suits short gaps, because you pay interest only on what you use. A short-term loan suits a single, known cost. Avoid funding day-to-day costs with long loans.
Comparing the options
| Need | Often funded with | Watch out for |
|---|---|---|
| Chairs, scanners and clinical kit | Hire purchase or leasing | VAT you can't reclaim |
| Fit-out or new rooms | Business loan, plus asset finance for kit | Soft costs and overruns |
| Buying a practice | Acquisition loan and your own money | Goodwill value and staff staying |
| Premises | Commercial mortgage | Deposit size and valuation |
| Cash flow | Overdraft or revolving credit | A facility that never clears |
What lenders look at
Expect questions about:
- Accounts and bank statements. Usually two or three years of accounts and recent statements, plus management figures if your year end was a while ago.
- Your professional registration and the practice's registration with the relevant regulator, along with any recent inspection reports.
- Your income mix, including any NHS contract and how much of the income depends on you personally.
- Your experience. For a purchase or a new practice, your clinical and management track record.
- Existing commitments, including equipment finance already in place.
Many practices are run by sole traders or partnerships. Lending of £25,000 or less to sole traders and small partnerships is regulated by the FCA, so fewer business lenders offer it. Lending to limited companies and LLPs is generally unregulated.
Common mistakes
- Paying VAT up front without planning for it. If you can't reclaim it, VAT on a large HP deal is a real cash cost.
- Funding a fit-out entirely on asset finance. Soft costs are often cheaper on a loan.
- Underestimating the time a purchase takes. Registration and contract changes can take longer than the finance.
- Borrowing longer than your lease. You could end up repaying for premises you no longer trade from.
- Choosing supplier finance on the monthly figure alone. Compare the total cost, and the cash price.
Questions people ask
Can I get finance for dental equipment?
Yes. Dental chairs, scanners, X-ray equipment and other clinical kit are commonly funded with hire purchase or leasing. Branded equipment with a second-hand market is the easiest to fund, and many lenders know the sector well.
How do I finance buying a dental practice?
Most buyers use an acquisition loan alongside their own money, often secured on the business with a personal guarantee. Lenders look closely at the valuation, the practice's income and team, and how registration and any NHS contract will pass to you.
Can healthcare practices reclaim VAT on equipment?
Often not in full. Medical and dental care by registered professionals is generally exempt from VAT, so many practices can't reclaim the VAT they pay, or can reclaim only part. Ask your accountant how it applies to you, because it affects whether hire purchase or leasing suits you better.
Do lenders prefer NHS or private income?
Neither, as a rule. NHS income is usually regular and contract-based, while private income depends on local demand but isn't capped by a contract. Lenders want to see that your income is stable, spread across patients and clinicians, and likely to continue.
Can I get finance to open a new practice?
Yes, though it's harder than buying an established practice, because there's no trading record. Expect lenders to focus on your experience, business plan and own contribution. Equipment can still be funded with asset finance.
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This guide is general information, not financial advice. Rates, rules and lender criteria change, so check the details with your broker or lender before you sign anything. Lending Lenny is not a lender.