Dental Office Feasibility Study in Tennessee

Tennessee dental loans are large, and one lender leads

Tennessee dentists borrow well above the class norm. The median approval is $793,600, 1.57x the dental median nationwide, and our screen finds that median apart from both Tennessee's all-class lending and dentistry nationally, by its margin and beyond sampling noise. Half of loans fall between $353,750 and $2.1 million. The 106 approvals from FY2017 to FY2026 carried $142.1 million, Tennessee ranks 23 of 54 among states, dentistry sits 7 of 39 among Tennessee classes, and at 1.21x the location quotient shows Tennessee leaning on dental credit more than the nation does.

Live Oak Banking Company dominates: its 34 loans carry $78.4 million of the cell's $142.1 million. The Huntington National Bank holds 8 loans for $9.0 million and Fifth Third Bank 6 for $9.2 million. SBA 7(a) carries 100 loans and SBA 504 only 6, so Tennessee dentists are financing practices, and often buildings too, through the 7(a) program rather than the 504 route. No franchise appears, at 0.00%. Shelby County leads with 21 loans, Davidson follows with 19, Williamson with 13, Hamilton with 11 and Rutherford with 9.

Cancellation and loss on large practice loans

At least 14.3% of FY2017 to FY2024 Tennessee dental approvals were cancelled, and 15.5% when undisbursed loans count as cancelled. Tennessee lenders funded 48 practice loans in FY2017 to FY2021; 8.3% of that group is already lost to charge-off, and 4.2% failed inside five years, which tells a lender that losses on these large practice loans keep appearing after year five. Both rates are floors. Dollars jump from year to year: FY2021 carried 13 loans for $25.0 million, FY2022 only 5 for $3.2 million, and FY2026 13 for $26.5 million.

Testing a large Tennessee practice loan

A loan near $793,600 is usually a practice acquisition, a start-up with full equipment, or a building, and the study has to justify that scale. Demand should be tested by population per dentist, growth and payer mix in the draw area, across Shelby, Davidson, Williamson and the counties around them. For an acquisition, the study must test collections, patient retention and the seller's transition. Cost covers equipment, technology and any build-out or purchase. Debt service coverage has to hold on collections after associate and hygiene pay and the owner's draw, and the appraisal must separate real estate value from practice goodwill, since practice goodwill gives a lender little to recover if a Tennessee practice fails after year five.