The analysis of accounts, filed by 318 dental practices, shows a 76% increase in the amount of money loaned by directors of dental practices to their own businesses, with £23.8 million loaned in the last year, up from £13.5 million a year earlier*.
The study indicates that many dentists make these loans in order to invest in equipment to meet demand from their private patients for the latest treatments such as dental implants and cosmetic dentistry.
Peter Alderson, managing director of LDF, says: ‘Dentists are eager to win over private patients in particular.
‘Being able to deliver advanced treatments and a convenient, efficient service in pleasant modern surroundings is essential, and that often means investment is necessary.
‘Consumers are now prepared to spend more on procedures that are less painful and deliver better cosmetic results.
‘Lasers capable of detecting tooth decay and equipment for tooth whitening are in high demand.
‘Online appointment booking services and email reminders are now virtually compulsory.’
However, LDF cautions dentists paying for new equipment or refurbishments out of their own pockets.
Peter Alderson continues: ‘Dentists are still facing challenges in accessing funding through traditional methods, so more of them are ploughing their own income and savings into their practices.
‘However, dental practices are very often partnerships, and if a problem arises with another partner it’s risky to have personal savings on the line – not to mention the fact that the money will not be available for personal use in the meantime.’
Although capital holding requirements put in place by regulators are still making it difficult for banks to expand their lending to SMEs (small and medium-sized enterprises), other types of finance are available to dentists.
Alternative lending options such as asset finance can help dentists who are looking to invest in office refurbishments and equipment, or spread the cost of their tax bills.
Peter Alderson says: ‘Asset finance is a great option for dentists that are not able to secure traditional lending at rates that work for their businesses, but are eager to invest in the growth of their practice.
‘More and more dentists are taking advantage of that.
‘Asset finance allows practices to make the investments they need, but distributes the cost of repayment over a period of time, helping business keep tight control of their finances.’
*Source: Companies House data