The Good, the Bad and the Ugly: Knowing if Merchant Cash Advance (MCA) is Right for Your Practice

The dental industry is growing and changing at a rapid pace, and patients are demanding more of a personalized and comfortable spa atmosphere in the dental offices they choose. Everything is changing for dentists, from the way they look, the materials and tools they use, to the way they operate and market their business.

According to the National Health Expenditure Report released in 2012, consumer dental spending is expected to grow at an average annual rate of 5% through 2021. In addition, a Dental Economics Survey released in November 2012 indicates that patient volumes are finally reaching their pre-recession level. Numbers. In order to capture this market share, stay ahead of customer demand, and stay competitive in their neighborhood, dental practices need to invest in certain upgrades, inventory, new equipment, digital technologies, or marketing campaigns. .

REMEMBER TO READ: 10 of the best financial tips from dental experts,
Speak for yourself to grow your dental business

This is easier said than done, as a practice may not have the cash for upgrades and must seek outside financing options. Many dentists first try to get traditional bank loans, but about seven out of 10 loan applications are turned down. Finding a traditional bank loan is even more difficult for dental practices because a medium loan, say $40,000, is often considered a microloan and too expensive for a bank to take out.

One of the best alternative financing options for dental practices comes in the form of an unsecured loan or a merchant cash advance (MCA). This type of financing offers businesses a lump sum payment in exchange for a share of future credit card sales. An MCA is a fast and flexible financing option that can provide strong businesses with the capital they need in days, not months like traditional lenders. Also, while banks need about five years in business, most MCAs will provide financing to businesses that are in business for only one year.

American Finance Solutions, one of the fastest growing merchant cash advance companies for small businesses, has hundreds of dental practices nationwide as customers. Most of these dentists use the capital advance for equipment (ie more chairs or facility upgrades), product inventory, new hires and marketing.

Here are some tips on what to look for and watch out for when choosing an MCA:

An ethical and holistic approach Banks reject the majority of small business loan applications because they rely on the credit quality of the owner and the value of collateral to support the credit decision. Banks can overlook good companies because they don’t look at the overall health of the company based on its sales. One of the main benefits of working with an MCA involves focusing on the overall health and future prospects of the business, not the owner’s personal FICO score. Also, an ethical MCA must be prepared to tell a business how much money it can really afford.
Qfast turnaround time A quality MCA can fund your dental practice in less than seven days. This is important when you need to quickly buy more inventory or supplies, repair equipment, or do renovations in order to stay open for business.
Fflexible and realistic repayment schedule There are two main components to repaying financing with an MCA. The first is the rate at which the business is charged for financing. The average fee for a cash advance is less than 25% of the financed amount. This means that if a company receives a $20,000 advance, it will likely repay a total of around $25,000. This varies by company and largely depends on the needs of the company and length of tenure. The second is the percentage of each credit card transaction used to repay the financing. Since many dental practices need cash flow in August for back to school, the advantage of an MCA reimbursement method is that owners do not have to repay a large fixed amount per month during their low season. Instead, they pay by having a small percentage deducted from each credit card transaction, so the payment is tied to the firm’s cash flow. Dentists must ensure that the percentage is affordable and will not place them in financial hardship.

Do your research and you’ll find the right financing partner to help your business not only survive, but also grow and gain market share. When you work with a savvy MCA that allows you to access funding quickly and repay it in a time frame that best suits your practice, your business is able to meet its needs and thrive.

Scott Griest is the founder and CEO of American Financial Solutions (AFS), one of the nation’s fastest growing merchant cash advances for small businesses. For more information, visit

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