Oral Surgery Practice Refinancing: When It Pays Off
Oral surgery practice refinancing can help surgeons restructure debt that has built up through acquisitions, build-outs and years of equipment purchases. Because oral surgery offices rely on costly imaging, anesthesia and surgical equipment, many practices carry several loans and leases at once, each with its own terms and payment dates.
This article explains when refinancing may make sense, what to evaluate and what lenders typically review. Every situation is different, and nothing here is legal, tax or accounting advice or a commitment to lend. An accountant can help evaluate the full financial effect of any refinance.
Why Oral Surgery Practices Accumulate Debt
Debt often builds in layers over the life of a practice:
- An acquisition or start-up loan from the early years of ownership
- Build-out or leasehold improvement financing
- Separate loans or leases for imaging, anesthesia and surgical equipment
- A line of credit used for working capital
- Partner buyout financing
- Short-term financing taken on during a cash flow squeeze
Each obligation may have made sense when it was taken on. Together, they can create a complicated payment schedule that strains monthly cash flow.
When Oral Surgery Practice Refinancing May Make Sense
Refinancing is not always the right move, but it may be worth evaluating when:
- Several equipment loans and leases could be combined into one payment
- Existing debt carries short terms that create high monthly payments
- The practice’s financial position has improved since the original loans were made
- Short-term or high-cost obligations are straining cash flow
- A partner transition or expansion requires restructuring existing debt
- Market conditions have changed since the original financing
Changes in the broader rate environment can affect whether refinancing is attractive. Our article on how interest rate decisions affect maxillofacial surgery practice financing explains that relationship.
Debt Consolidation for Equipment-Heavy Practices
Equipment debt is often the most fragmented part of an oral surgery practice’s balance sheet. Different lenders, terms and end dates can make it hard to see the true monthly cost. Consolidating equipment obligations may simplify administration and, depending on the new terms, could improve monthly cash flow.
Before consolidating, review prepayment penalties, lease buyout terms and whether any equipment is near the end of its useful life. Our guide to oral surgery equipment financing covers how new equipment purchases may fit into the plan.
Existing Obligations and Merchant Cash Advances
Some practices have taken on short-term obligations, including merchant cash advances, to manage cash flow gaps. Refinancing may be one way to address these obligations, but each must be evaluated on its own terms. There is no guarantee that every obligation, including every merchant cash advance, can be consolidated or refinanced, and whether a particular obligation can be included depends on its terms, the business’s cash flow, program rules and lender review.
Refinancing Options
SBA 7(a) Loans
SBA 7(a) loans may be used to refinance certain existing business debt when program requirements are met. Eligibility and terms depend on the business, the borrower, the debt being refinanced, use of proceeds, program rules and lender review. Not all debt is eligible.
Conventional Practice Loans
Conventional practice loans may be an option for established practices with solid cash flow and credit. Conventional lenders set their own standards for what debt they will refinance and on what terms.
Working Capital Lines
Refinancing term debt can sometimes be paired with a working capital line to help the practice manage future cash flow gaps without returning to short-term financing. Our article on the oral surgery line of credit explains how lines are often used.
What Lenders Review
Lenders evaluating a refinance generally consider:
- A complete schedule of existing debt, including balances, payments, terms and collateral
- Practice cash flow and recent financial statements
- Tax returns for the practice and owners
- Credit history and personal financial statements
- The reason for refinancing and how it improves the practice’s position
- Payoff letters and any prepayment terms
Every loan is subject to approval.
Evaluating the Trade-Offs
Refinancing can lower monthly payments by extending terms, but a longer term may increase total interest paid over time. Fees, closing costs and prepayment penalties also affect the outcome. Comparing total cost, monthly payment and flexibility side by side can help you decide whether a refinance truly pays off.
You can compare potential payment scenarios with our conventional loan calculator. Estimates are for planning purposes only and do not represent an offer or approval.
Refinancing Before a Sale or Transition
Surgeons planning to sell, bring in a partner or retire may want to review their debt structure in advance. A cleaner balance sheet can simplify due diligence and help buyers and lenders understand the practice’s true cash flow. Debt is typically paid off at closing in an asset sale, but structure and timing should be reviewed with counsel and accountants.
Our maxillofacial surgery practice refinancing and debt consolidation page explains how we approach these reviews.
Final Thoughts
Oral surgery practice refinancing can help simplify an equipment-heavy debt stack and improve cash flow, but it is not right for every practice. Understanding your existing obligations, the costs of refinancing and the long-term trade-offs can help you decide whether restructuring will pay off.
US Medical Funding helps oral and maxillofacial surgeons review existing debt and explore refinancing and consolidation options. Not every existing obligation will qualify to be refinanced, but we can help you understand which options may fit.
