Business funding for dental practices

Buying a dental practice means borrowing mostly against goodwill: the patients, the NHS contract income and the private plan income that keep coming after you take over. A lender judges the loan on the practice’s profit, the security of its NHS contract and its private income, and on the buyer’s clinical and management record.

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What you pay for when you buy a dental practice

A dental practice price is made up of goodwill, equipment and fittings, and sometimes the freehold. Goodwill is the largest part: the value of the patients who will keep coming, the NHS contract where there is one, private fees and dental plan income. Equipment is worth what a second-hand buyer would pay. The premises are either bought or held on a lease the buyer takes over.

A lender funding goodwill is lending against future profit, so it starts from the profit the practice makes after paying associates, nurses, hygienists, laboratory bills and rent. That profit has to cover the loan repayments, the new owner’s income and the tax.

A goodwill-led dental purchase

Illustrative example

A dentist buys a mixed NHS and private practice through a new company for £1,200,000: an assumed £1,000,000 of goodwill, £150,000 of equipment and fittings and £50,000 of other assets, with the premises on a lease. The buyer puts in £200,000 and borrows £1,000,000 over ten years at an assumed 8% a year. The practice’s profit before finance costs and the owner’s pay is an assumed £260,000 a year.

Purchase price
£1,200,000
Buyer’s own money (assumed)
£200,000
Loan over ten years at the assumed 8%
£1,000,000
Monthly repayment
£12,132.76
Annual repayments
£145,593
Profit left after repayments, before the owner’s pay and tax (£260,000 − £145,593)
£114,407

The profit covers the repayments 1.79 times. Only the interest is a deductible cost, so the company pays corporation tax on more than the £114,407 left. A lender tests the same sums with lower profit, for example if an associate leaves or NHS activity falls short, and the debt service cover calculator runs them for your figures.

How the NHS contract changes hands

NHS England’s policy book for primary dental services states that the NHS contract cannot be sold with the practice. If the seller holds the contract personally or in a partnership, it moves to the buyer only through a novation agreement signed by the commissioner, the seller and the buyer. The policy book treats a novation as awarding a new contract, so the commissioner has to consider procurement law, and there is no right to one. The commissioner is NHS England or the integrated care board it has delegated to.

Where a company already holds the contract, the buyer can buy the company’s shares. Incorporated contracts carry a change of control clause: the company cannot change its shareholders without the commissioner’s prior consent, which should not be unreasonably withheld or delayed. A dental corporation must also keep a majority of directors who are dentists or dental care professionals. Make the purchase conditional on the consent, and the lender will make its loan conditional on it too.

Contract delivery and the 96% line

An NHS contract pays an annual contract value for a set number of units of dental activity. The NHS Business Services Authority reconciles delivery at the year end for the commissioner. A practice delivering less than 96% of its contracted units faces recovery of the overpayment and may receive a breach notice, while a shortfall within the 4% tolerance can be carried into the next year. Where delivery has been below 96% for three years running, the commissioner should seek to reduce the contract value and activity permanently.

That history is the risk in the goodwill. Ask for three years of year-end delivery figures, any breach notices or rebasing letters, and the associate list behind the activity; the lender will ask for the same. A contract delivered by associates who are staying supports a larger loan than one delivered mainly by the principal who is selling.

96%
The share of contracted units of dental activity a practice has to deliver in the year to avoid recovery and a possible breach notice. Source: NHS England, Policy book for primary dental services, checked 3 November 2026.

Approvals a dental purchase needs

  1. 1

    Agree terms and funding

    Heads of terms set the price and its split between goodwill, equipment and stock. The lender’s offer follows its review of the accounts, the NHS contract and the associate agreements.

  2. 2

    Get NHS consent

    Apply to the commissioner for consent to the change of control, or for a novation of the contract, and make completion conditional on it.

  3. 3

    Register with the Care Quality Commission

    The buyer applies to register as the incoming provider for the existing location. The registered manager can continue under the new owner, and the practice’s rating carries over.

  4. 4

    Complete and draw the loan

    The lender releases funds at completion once consent, registration, the lease assignment and its security are in place.

Shops along a cobbled street in Norwich

What a lender wants to see on a practice

The lender reads three years of accounts and recent management accounts, adjusted to show what the practice earns under a new owner, with the seller’s drawings replaced by the cost of a dentist doing that work. It looks at the split between NHS and private income, the patients on dental plans and the plan provider, the associate contracts, and the remaining term of the lease.

It also reads the buyer: management experience, a business plan for the first two years and any planned change to the NHS and private mix. A lender may ask for a debenture over the company, a personal guarantee from the dentist, and life and critical illness cover assigned to it.

Finance for a practice

Practice purchase loan

Acquisition finance secured on the business and repaid from its profit, sometimes with a capital repayment holiday at the start.

Premises

A commercial mortgage buys the freehold, or a small self-administered pension scheme buys it and leases it to the practice.

Equipment and fit-out

Equipment leasing or hire purchase funds chairs, imaging, scanners and decontamination rooms, with the kit as security.

Working capital

An overdraft or revolving credit facility covers laboratory bills and wages around the timing of NHS and private income.

The owner’s pension and tax

A dentist who does NHS work can be in the NHS Pension Scheme and also save through a company. Can a dentist pay into a pension through a limited company covers how the two fit together, and pensions for professionals covers the wider planning. When you come to sell, selling a dental practice to a corporate sets out the tax.

The funding search through Swoop is for limited companies and LLPs, and for sole traders and partnerships borrowing more than £25,000, which covers a practice purchase.

Business loan affordability calculator

Your profit against all your loan repayments, new and existing, as the cover ratio a lender works out.

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Questions people ask

How much can I borrow to buy a dental practice?

A lender sizes the loan from the profit the practice will make under you, after associates, staff, laboratory bills and rent, and how many times that profit covers the repayments. It then looks at your own money in the deal, the security of the NHS contract and private income, and your experience. There is no fixed multiple: work out the repayments on the loan you want and test them against the practice’s adjusted profit.

Can an NHS dental contract be transferred to a buyer?

Not by sale. NHS England’s policy book says the contract cannot be sold with the practice. A contract held by an individual or partnership can move to a buyer only by a novation that the commissioner agrees to. Where a company holds the contract, a buyer can buy the shares, but the change of control needs the commissioner’s prior consent, which should not be unreasonably withheld.

What happens if a dental practice under-delivers its UDAs?

If a practice delivers less than 96% of its contracted units of dental activity in a year, the commissioner recovers the overpayment and may issue a breach notice. Shortfalls within the 4% tolerance can be carried into the next year. Three consecutive years below 96% should lead the commissioner to seek a permanent reduction in the contract value and activity.

Do I need my own money to buy a dental practice?

A lender will want to see some of the buyer’s own money in the purchase, and the amount depends on the lender, the practice and the buyer. The more you put in, the lower the repayments and the more room the profit has to absorb a bad year. Your own money can come from savings or, for a company purchase, a loan from you to the company.

Finance is subject to status and to the lender’s terms. A personal guarantee makes you liable for the company’s debt if it does not repay, and it can be enforced against your own assets, including your home. Nothing here is a personal recommendation.

Funding by sector

Acquisition finance

Senior debt, asset-backed lending, vendor finance and equity stacked to fund the purchase of a business.

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Commercial mortgages

A commercial mortgage is a long-term loan secured on premises the business uses or a building let to tenants.

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Equipment leasing

A lease lets the business use equipment for a monthly rental while the funder keeps ownership.

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Business loans

Term loans, secured and unsecured lending, government-backed schemes and how to compare offers.

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Funding searches run on Swoop’s platform. Swoop Finance Limited is a credit broker and not a lender, and is authorised and regulated by the Financial Conduct Authority (FRN 936513). Buzz Accounting Ltd introduces businesses to Swoop and may receive a fee from Swoop when funding is arranged. Business funding is separate from the financial advice Equity & General Financial Services Limited gives through this website. Finance is subject to status, and a lender may ask a director for a personal guarantee.

Cover for a personal guarantee

If a lender asks you to guarantee the company’s borrowing, our advisers can advise on life cover for that debt.

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