The main ways to finance a dental practice partnership are an SBA 7(a) loan, a conventional bank practice-acquisition loan, a seller-financed note from the selling dentist, and — for working capital or a fast bridge — revenue-based funding underwritten on the practice's bank deposits rather than the buyer's credit. Which one fits depends on how much of the practice you are buying, whether the deal is a stock or asset transaction, and whether you can wait 45-90 days for a bank close or need cash inside a week. Most partnership buy-ins are financed with SBA or conventional debt because the loan is tied to the practice's cash flow, while revenue-based funding is used alongside those loans to cover payroll, equipment, or the gap between signing and funding — not usually to buy the equity itself.
Key takeaways
- Partnership deals come in three forms — associate buy-in, partner buyout, and new co-ownership — and each is underwritten differently.
- SBA 7(a) and conventional bank loans are the workhorses for buying the equity stake; they close in roughly 30-90 days.
- Revenue-based / MCA marketplace funding is the fast working-capital layer: approval on bank deposits and revenue over credit, from about $10,000, FICO 500+, funding in 24-48 hours.
- Seller notes (often 10-30% of price) bridge valuation and down-payment gaps and keep the seller invested in the transition.
- Asset purchases are generally easier to finance than stock purchases because the buyer doesn't inherit the entity's liabilities.
- Sequence the capital stack: lock structure and valuation, arrange the acquisition loan and seller note, then layer working capital last.
- No legitimate funder guarantees approval before reviewing your numbers — treat "guaranteed" as a red flag.
What a "partnership" deal actually is (and why it changes the financing)
"Partnership financing" covers three very different transactions, and lenders price each one differently:
- Associate buy-in: a dentist who already works at the practice purchases a minority or 50% stake from the owner. The practice has a track record the buyer knows, which underwriters like.
- Partner buyout: one existing partner buys out another (retirement, relocation, or a split). The buyer usually knows the numbers cold, but the remaining owner's cash flow now has to service new debt.
- New co-ownership / de novo partnership: two or more dentists open or acquire a practice together. Less operating history means lenders lean harder on personal credit, projections, and the group's combined experience.
Two structures also matter. A stock (equity) purchase means you buy shares of the entity and inherit its history and liabilities; an asset purchase means the practice's assets move into a new or existing entity. Asset deals are cleaner for lenders and more common; stock deals need more diligence. Nail down which one you are doing before you shop financing, because it drives loan eligibility, tax treatment, and how much any lender will advance.
The four financing paths, compared
Here is the practical menu. Most closed buy-ins blend two or three of these.
| Path | Best for | Typical speed | Underwrites on | Typical size |
|---|---|---|---|---|
| SBA 7(a) loan | Full or partial buy-in, buyer with limited cash down | 45-90 days | Practice cash flow + buyer credit, projections, resume | Up to $5M |
| Conventional bank practice loan | Strong-credit buyer, established practice | 30-60 days | Practice EBITDA, buyer credit and net worth | Varies by bank |
| Seller financing (seller note) | Filling a gap, aligning seller incentives | Deal-dependent | Seller's own comfort + your relationship | 10-30% of price (common) |
| Revenue-based / MCA marketplace funding | Working capital, bridge cash, equipment, payroll during transition | 24-48 hours | Business bank deposits and revenue over credit; FICO 500+ | From ~$10,000 |
SBA and conventional loans are the workhorses for buying the equity itself because they offer long amortization and the lowest cost of capital. Seller notes bridge the down-payment or valuation gap and keep the seller invested in a smooth handoff. Revenue-based funding is the fast-cash layer: it is approved primarily on the practice's deposit history and revenue rather than the buyer's credit file, funds in about 24-48 hours, starts around $10,000, and works with FICO scores of 500 and up. It is repaid from a share of ongoing receipts, so the cost is a factor on the amount advanced, not an interest rate — treat it as a cash-flow tool, never a substitute for the acquisition loan.
Decision framework: which path fits your deal
SBA 7(a) works best when you have limited cash for a down payment, the practice has clean collections, and you can tolerate a 45-90 day close. It is the default for most first-time buy-ins. Avoid it when you need money this week or the seller won't wait through SBA diligence.
Conventional bank financing works best when you have strong personal credit, meaningful net worth, and a practice with steady EBITDA — you may close faster and with fewer conditions. Avoid it when your credit or down payment is thin; the bank will simply decline where SBA would flex.
Seller financing works best when there is a valuation gap, the seller wants to stay involved during transition, or you need to reduce the senior loan amount. Avoid it when the seller needs full cash at close or the note would over-leverage the practice's cash flow.
Revenue-based funding works best when the acquisition loan is set but you need working capital for payroll, supplies, an operatory upgrade, or a short bridge while the bank finishes — and when your credit alone wouldn't clear a bank fast. Avoid it when you are trying to finance the equity purchase itself, or when the practice's deposits are too thin to comfortably absorb a share-of-revenue repayment. It is a supplement, not the buy-in loan.
Example: how a blended buy-in gets funded
The figures below are illustrative only — for example, to show how the layers stack, not a quote.
| Layer | Role in the deal | Example figure | Repaid from |
|---|---|---|---|
| SBA 7(a) acquisition loan | Buys the equity stake | for example, ~75% of purchase price | Practice cash flow, long amortization |
| Seller note | Bridges valuation / down-payment gap | for example, ~15% of price | Scheduled payments to seller, often subordinated |
| Buyer equity injection | Cash the buyer puts in | for example, ~10% of price | N/A (buyer's own funds) |
| Revenue-based funding | Working capital + transition bridge | for example, ~$40,000 | A share of daily/weekly deposits, 24-48h to fund |
Notice the acquisition loan and seller note buy the ownership, while the revenue-based layer keeps the lights on and payroll met during the handoff. We deliberately do not multiply out a total payback here — with revenue-based funding the right question is whether the practice's cash flow comfortably covers the repayment share, not a single lump-sum figure.
What underwriters look at (each source is different)
SBA and bank lenders want the practice's tax returns and profit-and-loss (typically three years), a production and collections report, the buyer's personal credit and financial statement, a resume showing clinical and any management experience, a business plan or projections for the combined entity, and a clean valuation. Stock deals add entity-level diligence.
Seller notes are underwritten by one person: the seller. Your track record at the practice, your relationship, and the deal's overall structure carry the weight.
Revenue-based / marketplace funders look primarily at the last several months of business bank statements — average daily balances, deposit consistency, and number of deposits — because approval rests on revenue and deposits over credit. A FICO of 500+ typically clears the door, decisions come in about 24-48 hours, and advances start around $10,000. No source can promise funding in advance; anyone who says "guaranteed" is a red flag.
Sequencing the money the right way
Order matters. Lock the deal structure (asset vs. stock, price, buy-in percentage) and the valuation first, because they determine SBA eligibility and loan size. Get the acquisition loan and any seller note pre-arranged next — the senior lender needs to approve the seller note's terms and subordination anyway. Only then layer in revenue-based working capital, sized to what the practice's deposits can comfortably support, so the transition has cash without straining the same cash flow that services the acquisition debt.
The most common mistake is reaching for fast working-capital funding to patch a down-payment shortfall. That inverts the stack: expensive short-term cash ends up carrying long-term equity. Use each tool for its job — long, cheap debt buys ownership; fast, revenue-based cash covers operations.
For the broader picture on cash-flow-based approval, see our pillar on revenue-based business funding and our overview of dental practice financing options.
Common pitfalls in partnership financing
- Over-leveraging the practice. Stacking an SBA loan, a seller note, and working-capital funding without stress-testing combined outflows against real collections. Model the practice's cash flow after every layer, not just at close.
- Ignoring the partnership agreement. Buy-sell terms, decision rights, and a valuation formula for the next transition should be papered before money moves — lenders and future you will both need them.
- Using the wrong tool for the equity. Fast revenue-based cash is a working-capital and bridge tool, not a way to buy the stake.
- Chasing "guaranteed" approvals. No legitimate funder guarantees an approval before reviewing your numbers. Walk from anyone who does.
- Skipping clean books. Commingled personal and business deposits slow every underwriter — bank and revenue-based alike. Separate accounts well before you apply.
Frequently asked questions
Can I finance an entire dental practice buy-in with revenue-based funding?
Generally no. Revenue-based (MCA marketplace) funding is built for working capital, equipment, payroll, and short bridges — it funds fast, from about $10,000, on the practice's deposits and revenue. Buying the equity stake itself is better served by an SBA or conventional practice loan with long amortization, with revenue-based cash layered on for the transition.
What credit score do I need to fund a dental partnership?
It depends on the source. SBA and conventional acquisition lenders want strong personal credit and financials. Revenue-based funding is different: approval rests on business bank deposits and revenue over credit, so FICO scores of 500 and up typically qualify, with decisions in about 24-48 hours. No funder can promise approval before reviewing your numbers.
How fast can I get funding for a partnership deal?
SBA closes typically run 45-90 days and conventional bank loans 30-60 days. Revenue-based funding is the fast layer — often 24-48 hours from complete application to funding — which is why buyers use it to bridge the gap between signing and a bank close, or to cover payroll and supplies during the handoff.
What is a seller note and should I use one?
A seller note is financing the selling dentist provides directly, often 10-30% of the price, usually subordinated to the senior loan. It bridges a valuation or down-payment gap and keeps the seller invested in a clean transition. It is useful when the seller doesn't need all cash at close, but the senior lender must approve its terms.
Is an asset purchase or a stock purchase easier to finance?
Asset purchases are generally easier and more common, because the buyer doesn't inherit the entity's history and liabilities, so lenders do less diligence. Stock (equity) purchases can carry tax and continuity advantages but require deeper underwriting. Settle the structure before shopping financing — it drives eligibility and loan size.
How much cash do I need to put into a dental buy-in?
It varies by lender and deal, but SBA-backed acquisitions are designed for buyers with limited cash down, and a seller note can further reduce the buyer's equity injection. Conventional lenders usually expect more down payment and stronger net worth. The exact figure depends on the practice's cash flow and your credit profile.
Can I get partnership financing if the practice has thin or inconsistent deposits?
It's harder across the board. Bank and SBA lenders lean on cash flow and collections, and revenue-based funders look at deposit consistency and average balances. If deposits are thin, separate and clean up the accounts, strengthen collections, and consider a smaller working-capital amount the practice can comfortably support rather than over-borrowing.
Does applying for revenue-based funding hurt my chances of getting an SBA loan?
Sequencing matters more than the application itself. Arrange the SBA or bank acquisition loan and any seller note first, because the senior lender needs to see and approve the full capital stack, including any working-capital funding and its repayment share. Layer revenue-based funding in afterward, sized to what the practice's cash flow can absorb.
