Understanding Canadian Lenders and How to Secure the Right Deal
Financing is at the core of every Canadian dental acquisition.
Canadian banks generally view dental practices as low risk, offering up to 100% financing for qualified buyers, often including working capital. Here’s how to make financing work in your favour.
1. Know the Major Dental Lenders
Canada has several institutions with dedicated dental lending teams:
- RBC Healthcare
- Scotiabank Healthcare+
- TD Healthcare
- BMO Healthcare Professionals
- Select regional credit unions
Work with lenders who understand practice cash flow and can evaluate goodwill, not just equipment assets.
2. Strengthen Your Borrower Profile
Before applying:
- Maintain strong personal credit (typically 680+).
- Pay down consumer or revolving debt where possible.
- Provide two years of associate T4A income history.
- Prepare an updated resume highlighting production experience and leadership roles.
Ask:
- Is cash flow sufficient for debt servicing and personal income?
- Are there seasonality patterns driven by school schedules or insurance plan limits?
3. Understand Loan Structures
Common Canadian loan formats:
- Term Loans: 10–15 years amortization, fixed or variable interest.
- Line of Credit: Often included for operating capital or renovations.
- Leasehold and Equipment Loans: May accompany the purchase to support upgrades.
Most banks will bundle these into a single practice financing package.
4. Collect the Required Documentation
Typical application checklist:
- Personal financial statement
- Two most recent Notice of Assessments
- Practice financials (3 years) and production summaries
- Draft or executed Letter of Intent (LOI)
- Business plan or ownership summary
Tip: Provide digital, organized files to speed underwriting.
5. Optimize Loan Terms
Compare:
- Fixed vs. variable rate offers
- Amortization length (longer term = lower monthly payments but more interest)
- Collateral requirements—most banks lend unsecured if cash flow supports repayment
- Early repayment flexibility
6. Navigate the Approval Process
Expect conditional approval within 1–3 weeks once financials are complete. Your lender will order an independent valuation or appraisal. Keep accountants and lawyers aligned for a coordinated close.
7. Plan for Closing and Cash Flow
Upon final approval, funds flow through your lawyer’s trust account.
Post‑closing, track performance closely in the first six months—maintain liquidity, monitor revenue trends, and ensure you meet debt service comfortably.
Strong pre‑approval and clear communication with your lender can reduce deal stress and ensure smooth closing.
Success Tip: Align with experienced Canadian advisors who know provincial regulations and financing practices. Schedule a confidential consultation with BuySide M&A Advisors Canada.