Dental practices have a tremendous amount of costs associated with starting or expanding their businesses – from payroll to x-ray machines, you’ll need some capital to get started.
But how do you know if you should turn to a traditional bank to fund your dream dental office, or opt for a business loan online? You might find some answers if you keep reading.
Online business loans have a number of benefits, especially for dental offices looking for quick access to funds. When compared to conventional bank loans, their automated underwriting and simplified application procedures can potentially lead to noticeably quicker approval times. The standards for online lenders are usually less strict as well, meaning that they may accept lower credit scores and require less documentation (but this depends on the lender and the type of business loan). Some even have industry-specific loans for certain fields.
That being said, online loans aren’t perfect. Online loans can often come with higher interest rates and less personalized service compared to traditional bank loans.
Because of traditional banks' well-established capital and risk assessment procedures, traditional bank loans present the possibility of cheaper interest rates when compared to online lenders. In addition to being affordable, they help the bank, and the company build enduring, lasting connections that can be very beneficial for continued financial support, tailored guidance and access to additional banking services. Think of it this way – with an online lender, you can’t go into a local branch and see the same people every time.
For companies looking for long-term financial partnerships or community outreach, this relationship-driven strategy can offer a calming kind of consistency, particularly for complex or long-term financial demands.
Interest rates for loans from traditional banks are often lower than those from online banks because of the established capital and risk assessment. That being said, online lenders may provide more flexibility in terms of payback dates and quantities. Bank loans typically have more rigid repayment terms with set schedules.
Just as well, online lenders may impose application costs or higher interest rates that are passed off as fees, whereas traditional banks may impose origination fees or prepayment penalties.
Because of their strict risk evaluation, traditional bank loans usually need a lot of paperwork – you may have to bring years' worth of tax returns, thorough financial statements, company plans, or legal documents.
Online lenders, on the other hand, frequently simplify the procedure and demand less documentation – they may only need recent bank statements and basic company data. This makes online business loans more accessible to companies with little financial history or those that want quick approvals.
Ultimately, to fund your dental practice, you’re looking at a trade-off between speed and cost, as well as personalized service versus accessibility. Online lenders will give you cash quickly, but it may come with higher penalties – if you’re looking to get your business off the ground as soon as possible, but you have limited credit history, it could be a good option for you.
If you’re willing to wait, however, and you already have a dental practice with a place in the community, look to a traditional bank. The process is slower, but you may find yourself with a loyalty discount or a few new dental customers from your local bank branch.
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