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Washington State Dental Association

Preferred lending program · Taking the guesswork out of choosing a bank

 These days, a lot of banks seem to want your business, but very few really understand the vagaries of the dental industry. And while some bankers might talk a good game, we’ve heard from a number of dentists who felt more like walking ATMs than business partners. The WSDA knows that making a decision about which bank to work with can be outside your realm of experience, especially if you’re a new dentist. “We’re fortunate,” says Kainoa Trotter, Vice President of Communications, “because of our relationship with the Washington Dentists’ Insurance Agency and some of the best practice brokers in the state, we know which banks have a history of lending to dentists and which of those are ready to advocate on behalf of our members.” 

Vetting banks for you
    Armed with that knowledge, WSDA has been carefully curating a list of the banks in the state who are interested in cultivating relationships with dentists, distilling down the list, and fully vetting them — so that you don’t have to. Trotter says, “It’s another benefit that we think will have real value to our members — we’re trying to help take the guesswork out of one of the most important professional relationships of your career.” Matt French, Director of Insurance Services for the Washington Dentists’ Insurance Agency, knows how important finding the right bank can be for first time buyers and those refinancing their practices, saying, “No matter who you choose, you want to find a lender who understands the dental business well, treats you like family, and takes the time to figure out what’s important to you.”

A family business — First Citizens Bank
    You might not think of a top-ranked bank as being family owned, but that’s just exactly what First Citizens bank is. In fact, according to Luz Cooper, VP & Business Banker for First Citizens Bank, it’s what really sets it apart from the competition, “At 117 years old, we are the oldest family-controlled bank in the United States, and one of the top 30 banks in size, with $30 billion in assets. The way that we do banking is a lot different than any other bank – we’re here to serve the needs of our clients, not our stockholders.” Cooper has been in banking for ten years, cutting her teeth in the dental industry while with two other local banks. She explains, “It’s a niche that I picked because I like the people. I specialize in the medical/dental profession – I understand the industry and how it works, and I’ve come to know the dentists and how to listen to them.” 

Connecting in the community — Banner Bank
    For Craig Sievertsen, Senior VP and Manager of Small Business Lending with Banner Bank, working with dentists dovetails nicely with the bank’s core values. Headquartered in Walla Walla,
Wash., Banner has 103 branches with $5.2 billion in assets. “We enjoy working with dental professionals because we believe they are a key component in the communities we serve. We’re committed to our communities and dentists are a meaningful part of that,” he says. “We’ve found that dentists subscribe to some of the same values that we do,” always doing the right thing and supporting the communities where we live and work.” Seivertsen continues, saying, “We’re connected to dentistry through our association with the WSDA, but also because we have bankers in our markets who are dedicated to supporting the dental industry with their business development efforts and their time. We’re knowledgeable, and we hire staff who have taken the time to educate themselves through their personal networks. From a knowledge perspective, it’s equally important for our bankers to have ongoing relationships with brokers, consultants, and CPAs who dentists routinely use.”

At home with HomeStreet Bank
    Marc Mohagen, Vice President of HomeStreet Bank, has been working in the dental community for 22 years. The other lenders working in his division have close to 70 years of combined service in the dental marketplace, so you know they’re knowledgeable. “HomeStreet is really committed to the industry, and it’s a niche that really works for me, personally,” says Mohagen. “The dental marketplace is my specialty, so I know the dental language well, and I can help in determining which practices are good to buy and which ones might have shortcomings that make them less appealing.” HomeStreet – a Seattle-based bank with $4 billion in assets –has been in business for more than 90 years. The bank offers more than 20 branches in the Puget Sound area and additional branches in Oregon, Idaho, and California. 

Common pitfalls of new dentists
    All three bankers we spoke with know that the challenges new dentists face — such as enormous debt and a dearth of equity — can hinder the loan process for a typical business, but they have more leeway with dentists, mostly because dentists are a good investment. “Statistically speaking,” says Cooper, “we know dentists will be successful in their careers. We recently financed 100% of a 26-year-old’s practice buy. If we’re talking about new dentists, we need financial projections, a business plan, and production reports that show what they’ve been producing where they are currently practicing. With an experienced dentist who is refinancing or doing a buyout, we’ll need the usual information, tax returns and other information from their CPA. Regardless, it’s nice when they’re referred to us by their CPA because we know everything will be organized.” 

     Mohagen says that one of the biggest problems dentists face is approaching a bank that is not familiar with the dental industry. “Dental lending falls outside the box for many banks and because of that, it can become a very time-consuming process that ends unsuccessfully. Inexperienced lenders at other banks don’t understand the intricacies of the dental marketplace as well, and by the time they collect all the information and the dentist’s loan request is rejected, they’ve already spent a lot of time in the process,” he says. Working with a lender who is experienced in the marketplace can often yield better results in less time. “Because we’re local and we’re all in the same office, I can just walk around the corner to talk with the person in charge of signing off on the loan, so I can generally get answers very quickly,” Mohagen says.

Getting started
   Plan, plan, plan! Our three dental lending experts couldn’t agree more on this point. Planning ahead for when you will buy a practice helps tremendously. “Be diligent, look for the right practice, and find one that really fits you, including the culture, the staff, the style of the practice,and the ability for growth,” says Cooper. “All of those elements are going to work in concert to create success.” Having the prior owner stay on to help in the transition can be key, he adds. Sievertsen says, “It’s highly important for dentists to understand the business requirements that come along with starting and running a practice. They get great training for dentistry, but they don’t get enough training in business administration, running and managing a staff and a business. Those moving parts that come along with the administration of a business is what they need to start talking about early on, even if they’re just considering a practice partnership.”

Mohagen reminds us that the devil is in the details. “A lot of young dentists buying practices don’t realize that they have to have life insurance in place in order to close a sale, which can take as long as six weeks. We always recommend that dentists who are considering buying a practice get a jump on it by gathering a team together — an attorney, a CPA, and an insurance broker — to make sure that the small details are all attended to,” he says. 

    The good news is that if you choose any one of these three banks, they’ll know all the details already, and have professionals who are primed to serve as your advocates in the lending process.

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