Dental Office Feasibility Study in Utah

Utah: a top dental state with a strong 504 channel

Dental offices are one of Utah's largest SBA classes. The class ranks 3 of 39 among Utah asset classes, Utah is 7 of 54 nationally in dental lending, and a location quotient of 1.57x shows dental work taking a much larger slice of the Utah SBA book than it does nationally. Over FY2017 to FY2026 there were 256 approvals worth $195.9 million. The median loan was $480,900, or 0.95x the national dental median, and the interquartile range ran from $178,925 to $1.0 million. Neither that median nor the Utah floors clear our margin against both the Utah all-asset book and dental lending nationally, which leaves the Utah cell defined by its weight and its program mix, not by unusual outcomes.

The Utah mix leans on 504. SBA 504 carries 90 Utah approvals against 166 under 7(a), which means many Utah dentists are buying or building the office itself. Mountain West Small Business Finance holds 71 of those 504 loans, worth $45.0 million, and Intermountain Business Lending, Inc. holds 18. Live Oak Banking Company leads the 7(a) holders with 31 loans worth $57.3 million, Zions Bancorporation, National Association 20, Central Bank 12, Glacier Bank 10 and Mountain America FCU 9. Utah's franchise share in dentistry is 0.00%.

The Utah floors

Utah dental loans have closed and repaid well. Of Utah's FY2017 to FY2024 dental approvals, at least 6.6% were cancelled, against a ceiling of 7.0%. Of 139 loans disbursed in FY2017 through FY2021, 0.72% are charged off to date, and the same 0.72% failed within five years. Both Utah rates are floors on loans that are still repaying. For a lender, that record supports dental credit in Utah; for a borrower, it means a lender will judge the deal on its own merits rather than on class risk.

What a Utah dental feasibility study must test

Because the class is crowded in Utah, demand is the first question. Salt Lake County holds 108 approvals and Utah County 58, followed by Davis at 20, Weber at 17 and Cache at 15, so a new practice in those counties competes with many recently financed offices. The study should test patient population per dentist in the trade area, the payer mix and a realistic ramp of active patients. For a 504 building project, cost must be bid at current construction pricing and the Utah appraisal has to value the real estate as a medical office, not just as this practice. The coverage ratio should hold at the full loan, which for owner-occupied projects can approach $1.0 million at the upper quartile.