Starting a Dental Practice: De Novo vs. Acquisition SBA Financing

The biggest decision a dentist faces when entering practice ownership isn't how to finance it — it's whether to buy an existing practice or build from scratch. Both are financeable with SBA loans. But the risk profile, cash flow ramp-up, and lender requirements are very different.

The Honest Comparison

FactorAcquisitionDe Novo

Immediate revenueDay oneMonth 3–12 (ramp-up)
Active patient baseBuilt-inZero — must build
EquipmentIncluded (may need upgrade)All new, high cost
StaffExisting team (retention risk)Hire from scratch
Insurance credentialingTransition requiredBrand new
Loan size$400K–$2M$350K–$800K
Time to profitability3–6 months typical12–24 months
RiskModerate (known practice)Higher (patient ramp)

Lender perspective: Acquisitions are easier to finance because there's a track record. De novos are financeable but require a stronger personal profile and business plan.

SBA Financing for Practice Acquisitions

An acquisition is the more common path for dentists with 2–5 years of associate experience and a moderate savings base.

SBA 7(a) acquisition structure:

Purchase price: $600K (example)

SBA loan: $510K (85%)

Buyer cash: $60K (10%)

Seller carry: $30K (5%) — deferred 24 months

Term: 10 years

Monthly payment: ~$6,400

The practice generates revenue from day one. If the practice was collecting $550K/year pre-purchase, you start with a base that covers debt service from the first month (assuming a good transition).

What you need personally for an acquisition:

680+ personal credit (700+ preferred)

$60–100K in liquid cash

2–5 years associate experience

Clean professional record

SBA Financing for De Novo Practices

De novo makes sense when: there's no good acquisition target in your market, you want to build a practice with your specific systems from day one, or you're a specialist who needs a purpose-built facility.

Typical de novo budget breakdown:

ItemCost Range

Leasehold improvements (4–6 operatories)$120,000–$280,000
Dental equipment (chairs, X-ray, sterilization)$120,000–$250,000
CBCT / advanced imaging$80,000–$150,000 (optional)
CAD/CAM$100,000–$175,000 (optional)
Furniture and fixtures$20,000–$50,000
Technology (practice mgmt, phones, IT)$15,000–$30,000
Working capital (12 months operating reserve)$60,000–$120,000
Total$515,000–$1,055,000

SBA 7(a) de novo structure:

Total project cost: $650K (example)

SBA loan: $585K (90%)

Buyer cash: $65K (10%)

Term: 10 years for equipment/improvements

The critical difference from acquisitions: You're borrowing against projected, not proven, revenue. The business plan must be credible, and you must have personal reserves to cover living expenses and debt service during the ramp-up period.

Revenue Ramp for De Novo Practices

Realistic patient acquisition trajectory for a general practice de novo:

Month 1–3: 20–40 new patients/month (heavy marketing phase)

Month 4–9: 35–60 new patients/month (word-of-mouth beginning)

Month 10–18: Practice stabilizes; hygiene recall starts building

Month 18–24: Full profitability typically reached

Key insight: new patient volume is driven by location (high-traffic, good signage, parking), PPO participation (start applications 90 days before opening), and marketing (Google ads, social, direct mail in the first 6 months).

Personal Requirements for De Novo Financing

Lenders hold de novo applicants to a higher standard:

Personal credit: 700+ preferred (680 minimum)

Cash reserves: 6+ months of projected operating expenses post-closing (above the 10% down)

Associate experience: 2+ years preferred; less than 1 year = very difficult regardless of financials

Location analysis: Demographic data, competition analysis, insurance plan participation plan — all in the business plan

Personal financial statement: Lenders want to see assets beyond the down payment

Which Path Is Right for You?

Choose acquisition if:

You want revenue from day one

You're buying in a market with available established practices

You have less than $100K in cash reserves

You want to minimize personal financial risk during ramp-up

Choose de novo if:

No good acquisition targets exist in your target market

You have a strong vision for a specific type of practice

You have $100K+ in cash reserves and 18+ months of financial runway

You're a specialist who needs a custom-built facility

Get pre-approved for your dental practice SBA loan at 3A Lending →