Refinancing a dental practice means looking again at each loan the practice carries: the goodwill loan from buying in or buying out a principal, the loans on the chairs and imaging, the surgery fit-out and the overdraft. This guide sets those loans out together, with the effect a lower rate, a longer or shorter term or other security has on each month's outgoings and on the total repaid.
Is the repayment on the goodwill loan from the buy-out taking a bigger share of the fees than you planned for? Are you repaying chairs, an OPG and a fit-out to three different lenders on three different dates? Is a CBCT on the wish list while the scanner you already have is still being paid off? Have the loans sat as they are because a fully booked day in the surgery leaves no time to sort them out?
Total spending on dental services in Australia was $13.2B in 2023-24, and AIHW figures show $8B of it was paid by individuals and $2.6B by health funds. Those two shares arrive as fees, paid at the front desk or claimed from the fund at the chair, and fees are what a practice repays its loans from. Refinancing the debts a dental practice carries is a specialist area we can assist with, for principals, new owners and partners in a group.
Ardent Capital Group can assist you to refinance the practice's loans, from the goodwill to the chairs and the surgeries, and we are happy to work through each of them alongside you.
The loans a dental practice carries after a buy-in
A practice that has changed hands usually carries several debts, each taken out for a different reason. A refinance treats each one differently, so it helps to see them side by side.
The first is the goodwill loan. Buying the practice from a retiring principal, or buying into a partner's share, is funded with a goodwill loan. That is a business loan for the value of the patient base, the name and the recall list, rather than for equipment or premises. It is repaid from the practice's fees. It is commonly written over a shorter term than a property loan, and at a higher rate.
Beside it sit the loans for what the practice runs on. Chairs and delivery units, an intraoral scanner, a CAD/CAM mill and the sterilisation room are usually financed against the equipment itself. So is imaging: an OPG takes a panoramic x-ray of the whole mouth, and a CBCT takes a 3D scan.
The surgeries were fitted out with plumbing for suction and compressed air, cabinetry, lighting and the shielding the x-ray room needs. That was funded by a fit-out loan or the purchase price. Then there is the overdraft, which carries lab bills and wages between fund claims.
A list of every debt gives the full picture. It shows each loan's purpose, balance, rate, months left, security and repayment. Any ATO payment plan, home mortgage, car finance and card limits belong on it too, since lenders deduct those repayments as well.
Example: a practice's three loans after buying out the principal
A worked example makes those loans easier to picture. These figures are illustrative. They describe a three-surgery practice in leased rooms, bought from a retiring principal three years ago. Each loan is listed with its monthly repayment, and the total is what leaves the practice account each month.
| Loan | Balance | Rate | Months to run | Monthly repayment |
|---|---|---|---|---|
| Goodwill loan from buying out the principal | $480k | 9% (assumed) | 84 months | $7,723 |
| Equipment loan on two chairs and an OPG | $95k | 10% (assumed) | 36 months | $3,065 |
| Fit-out loan on the surgeries | $140k | 11% (assumed) | 48 months | $3,618 |
| Total | $715k | $14,406 |
Figures are illustrative and rounded, and the rates are assumptions made for the arithmetic and are neither market rates nor quotes. The overdraft is not shown, as what it costs each month depends on how much is drawn.
The goodwill loan is the largest debt and runs the longest, at $7,723 a month. Together the three take $14,406 a month until the equipment loan ends in month 36.
How a refinance changes rate, term and security
Refinancing pays out one or more of these loans with a new one on different terms. Three levers change, each shifting the practice's monthly outgoings and overall cost differently.
- Rate. Cutting the rate while keeping the months unchanged reduces each repayment and the interest bill. The lender sets it after looking at what backs the loan, the practice's collections and each owner's credit record.
- Term. Stretching the loan over extra months shrinks each repayment. It also lifts the interest bill, since the debt is outstanding for longer. A practice can still choose it while a new associate's appointment book fills.
- Security. Security is what the lender holds against the loan, such as equipment or property. Property-secured lending generally comes at a lower rate than an unsecured or equipment loan. The property then secures what the practice owes.
All three loans in the example are amortising, meaning each runs down to nil by the end of the term, unless it ends in a balloon, a lump sum left to the final repayment. Each repayment splits two ways: interest, worked out on what is owed, and principal, which cuts the debt. As the balance shrinks, so does the interest, so interest takes its biggest share early on.
Worked example: the first year on the goodwill loan
The goodwill loan shows that split clearly. On the $480k balance at an assumed 9%, interest in the first month is $3,600. The other $4,123 of the $7,723 repayment reduces the balance. Across the first 12 repayments, about $51.6k comes off the balance and about $41.1k goes in interest.
Refinancing each loan in the practice
Each loan was set up around something different, so each is looked at on its own terms first.
The goodwill loan from the buy-in or buy-out
The goodwill loan was set up when the practice changed hands. It is usually secured by a general security agreement. That is a lender's charge over the practice's business assets. A guarantee from each owner sits beside it, and sometimes property too.
Since the principal sold, the practice has built up a trading record of its own. Three years of fees under your name show what it earns now, and how the patient base held through the change of owner.
Refinancing can move it to another lender, reset its rate and term, or combine it with the other loans. If you own the rooms, the goodwill balance can also move onto the property loan.
Two details matter when moving it. One is the break cost, a fee for ending a fixed rate early. The more rates have fallen since the rate was fixed, the bigger it is. The other is how far the old lender's security reaches. If it covers more than one loan, paying out the goodwill may not release its claim over the chairs or the home.
Chairs, imaging and sterilisation equipment
Dental equipment wears out at different paces, which matters when choosing a repayment term. Effective life is the number of years an asset can be used to produce income, taken from the ATO's determination or worked out by the business. It is a tax figure, not a promise of how long the equipment will run. The ATO's effective life tables give a dental chair 10 years and a digital x-ray system using intra-oral plates or sensors 7. A CAD/CAM milling unit gets 5, and so does a benchtop steriliser. On a 5-year equipment loan, a chair is still working years after its loan is paid off. A scanner, a mill or a sensor may be replaced sooner, because the software and the next model move on.
Refinancing can reset the rate, the term and any balloon on an equipment loan. Folding a 36-month equipment loan into a 10-year loan means repaying the OPG for years after it may have been replaced.
A CBCT purchase and the equipment refinance can be one decision: the old loan paid out and the new unit funded together on the supplier's quote. The new term can then match the effective life the accountant uses for the CBCT.
The surgery fit-out and the lease
In leased rooms, the fit-out loan is tied to the lease. Most of a surgery's fit-out cannot move with the practice: the plumbing to each chair, the cabinetry, the sterilisation bench and the x-ray room's shielding. So before setting its term, a lender reads the lease end date and any option to renew.
A refinance can set the fit-out loan to finish inside the lease. If the lease ends in four years with no option, a 7-year fit-out loan leaves three years of repayments on surgeries the practice may have to hand back.
A make-good clause is the lease term requiring the tenant to return the rooms to their original state. That can mean removing cabinetry, plumbing and shielding in the same year the lease ends.
The overdraft, payment plans and the ATO
Short-term debt is easy to overlook. An overdraft is drawn when lab bills, rent and wages land before fund claims and patient fees catch up. It is paid back as they arrive. Rolled into a term loan, its balance is cleared but the buffer is gone.
An ATO payment plan spreads tax or super owed into instalments. GST, the goods and services tax, owed on the practice's taxable sales can sit in a plan. So can PAYG withholding, the tax the practice has deducted from the wages it pays hygienists, assistants and front-desk staff. The ATO adds its general interest charge, its interest on overdue amounts. A business loan can pay it out, depending on how the lender views the plan and whether instalments are up to date.
Business-loan interest may be claimable as a deduction. General interest charge incurred from 1 July 2025 is not, and the accountant decides how each applies to the practice.
Putting the practice's loans together
With each loan understood, the question becomes whether the practice needs room in its monthly cashflow now or the lowest total cost over the years.
Example: the $715k under four refinance options
Here the same practice's loans are run through four refinances. Each is measured against changing nothing: the monthly change while all three loans are still running, and the difference in everything repaid.
| Option | Monthly repayments | Change on today's $14,406 | Repaid over the life | Difference in what is repaid |
|---|---|---|---|---|
| Leave the three loans where they are Today | $14,406 | Starting point | $933k | Starting point |
| Refinance the goodwill loan only | $14,045 | $361 less | $902k | $31k less |
| Goodwill and fit-out in one 84-month loan, equipment kept | $12,575 | $1,831 less | $909k | $24k less |
| All three in one 10-year loan | $8,487 | $5,919 less | $1,018k | $85k more |
| Secure all three on the home for 25 years | $4,828 | $9,578 less | $1,448k | $515k more |
Figures are illustrative and rounded, and the rates are assumptions made for the arithmetic and are neither market rates nor quotes. Payout and break costs, establishment and valuation fees, and any later rate change are not included.
Refinancing only the goodwill loan saves $361 a month and $31k overall, and leaves the loans on the chairs and fit-out on their own terms.
Combining the goodwill and fit-out costs $24k less than today, but repays the fit-out over 84 months, which fits a lease with at least that long to run. The 10-year loan takes $5,919 off each month and costs $85k more. The home-secured option has the smallest repayment. It also costs $515k more, with the OPG and the fit-out repaid for 25 years.
The options that cut the monthly repayment most do it by adding months, and those extra months add to what is repaid. The choice depends on the practice's fees, the lease, the equipment plan and how much the household draws from the practice.
No figure here is a quote or an approval. We would gather each payout figure, meaning the sum needed to clear that loan on its settlement date. After that we would weigh the options on both measures, and lodge the option you pick with lenders that write dental practices.
Security for the refinanced practice loans
A dental practice's loans can be secured by the equipment, a general security agreement, the owners' guarantees or the home.
- The equipment. Once the current lender is paid out, its claim on the chairs and imaging is released. The incoming lender then takes security over them.
- A general security agreement. This charge over the practice's assets is registered on the PPSR, the national register of security interests in personal property. It does not cover land, buildings or fixtures to land. At payout, it helps to ask for each old registration to be released.
- Guarantees. Each owner of the practice entity is commonly asked for a personal guarantee. That is a promise to repay the loan personally if the practice cannot.
- The home. Borrowing against the house generally opens up cheaper rates and more years. It also makes the family home answerable for the practice's debts. You make that call. Where the house already backs the goodwill loan, a refinance can work toward removing it once collections alone support the repayments. Our home loans for dentists cover the home loan side.
- Rooms you own. If the practice owns its rooms, the property can carry a longer, lower-rate loan. Our dental practice property refinance page covers that loan.
Partners, associates and more than one entity
A group practice may have the practice in one entity, the rooms in a trust and a second practice in another company. A lender then asks for financials from each one and assesses every guarantor. A partner leaving can be funded through a refinance of the goodwill. The agreement between the owners is set by your accountant and solicitor.
Before you apply to refinance the practice
Much of what a lender needs is paperwork the practice already holds; the rest can be requested.
What to line up first
Timing shapes when a refinance suits a dental practice.
- Payout figures in writing. It helps to have every current lender put its payout figure in writing. Where a fixed-rate payout costs more than the refinance saves, it can be revisited nearer the fixed period's end.
- A recent change at the practice. A principal leaving, an associate starting or a surgery closed for a refit shows in the statements. A few more months of steady fees give a lender trading to read after the change.
- Lodgements. It helps to lodge any outstanding BAS and tax returns first, because lenders assess lodged figures. Each BAS (business activity statement) is the dental practice's regular ATO return covering GST and PAYG withholding.
Patient fees, fund rebates and what the practice pays out
A dental practice is paid by patients, health funds and, for some, Medicare.
- Patient fees and fund rebates. Fees arrive by card at the front desk. Where a patient claims at the chair, the health fund pays its share to the practice and the patient pays the gap. Statements and the practice software show the daily takings and the split between the two.
- Government schemes. The Child Dental Benefits Schedule caps benefits at $1,158 per eligible child over two consecutive calendar years. Where the practice bulk bills those services, the Medicare payments arrive separately from patient fees.
- Associates and hygienists. Where associates are paid a share of the fees they bill, those payments show as a cost line beside the fees. Employed hygienists and oral health therapists show as wages.
- Dental assistants. Dental assistants are covered by the Health Professionals and Support Services Award. Under it, pay increases for dental assistants started from 1 April 2026, with a further increase for some from 1 January 2027.
- Lab fees and consumables. Crowns, bridges, dentures and aligners come back from the lab as a bill. It shows in the accounts as a cost of that work.
Documents to gather
The documents a lender asks for follow the loans and the income set out above.
- Payout letters showing each balance, rate, break cost and any balloon
- Bank statements for each practice account, plus the most recent BAS
- Two years of financials and tax returns for each entity, with year-to-date figures
- Production and collection reports from the practice software, by month and by dentist
- The lease for the rooms
- Invoices for the chairs and imaging, and any supplier quote
- The sale contract from the buy-in or buy-out, and any partnership or shareholder agreement
- Statements for each owner's personal loans and cards
Questions dentists ask about refinancing practice loans
I bought out my principal three years ago. Can the goodwill loan be refinanced now?
It can be, subject to the lender. The three years of fees since you took over are the practice's own trading record, and they go into the application.
Can the goodwill go onto the loan over the building we own?
It can, where the property's value and the practice's income support the larger loan. The goodwill is then repaid at the property loan's rate and over its term. That lowers the repayment, and can raise the total interest if the term is longer.
My OPG is paid off in eight months. Should it go into the refinance?
Not necessarily. Most of the interest on it has already been paid, so including it adds little saving and can add years of repayments.
We want to buy a CBCT. Should that wait until after the refinance?
The two can be planned together. Either way, the new unit's repayment sits beside the refinanced loans in the practice's monthly outgoings. One application lets the term on the CBCT be set against its own working life.
An associate left and my collections dipped. Will that hurt the application?
It can be explained. The statements and the practice reports show the dip. Monthly collections by dentist show its cause, and the recovery as the book fills again with a new associate.
Does my lender need to know about the patient finance plans we offer?
Where they are a meaningful share of the practice's income, it helps to include them. A report of plans sold, paid and still owing shows how much has come in and how much is still to come.
My partner and I each guaranteed the goodwill loan. What happens to the guarantees if we refinance?
The old guarantees end once every debt they secure is paid out and the old lender releases them, and the new lender asks for its own. If one partner is leaving, the new loan can be set up with only the continuing owners as guarantors, subject to the lender's assessment.
Will the rent on our leased rooms affect how much I can refinance?
Yes. Rent is a fixed cost, and lenders deduct it from the fees before working out what the practice can repay. The lease's end date is also read when setting the term on a fit-out loan.
Will a lender count the money I draw from the practice for the household?
It can be, subject to the lender. What you take out of the practice comes from the same fees as the loan repayments, and so do the repayments on your home loan, car loan and card limits.
Does a refinance enquiry show up on the practice's credit file?
Requesting payout letters and discussing options with us leaves no mark. Lodging an application records an enquiry for the practice entity and each guarantor, which is why we lodge with lenders that write dental practices.
Going through your practice's loans with you
A dental practice's debts were taken out for different reasons: the patient base you bought, the chairs and imaging, the surgeries you fitted out. Refinancing them means matching each loan to what it paid for, the lease the rooms sit under and the fees that repay it. Refinancing goodwill, equipment and fit-out loans, consolidating them, and arranging the dental practice business loans and working capital that sit beside them are all things Ardent Capital Group can assist with. Our team brings a financial planning background to setting out how the new loans fit with the practice and household debts, with the practice's accountant signing off the tax side. If you would like a second view on the practice's loans, we would be pleased to hear from you.
