With 10,000 dental practices operating in the UK, patients are no longer falling through the doors because of lack of choice, and as result more and more practices are choosing to focus on adding value to ward-off the competition. Inevitably, dental professionals are turning to refurbishment to secure and retain patients, both as a draw and to meet their increasingly demanding needs. With fewer banks willing to lend to practices for refurbishment and expansion, Darren Shaw of independent finance house County Finance Group, explains some of the government incentives available and how practices may be able to access finance.
“Undertaking refurbishment and expansion can actually prove a rather cost-effective option for many practices, not only in an investment sense but through the extensive tax relief options available. The current Government incentives in place mean there has never been a better time to invest in revamping a practice, and many of these also provide attractive tax-reduction benefits that mean revenue can be spent elsewhere.
The Government’s Capital Allowance’s scheme is one initiative that has been put in place to help organisations improve their facilities whilst alleviating some of the financial burdens associated with undertaking such a project. Many professionals don’t fully realise the benefits of the scheme, which could typically save practice owners up to 30% of the cost of a new surgery or building. And with continual advances in technology, the ever-growing need to update business assets such as equipment and machinery can also put very real pressure on the sector, however this scheme can enable practitioners to purchase the business assets without exhausting their budget.
The aim of the scheme is to give tax relief on improving or converting premises, such as patient waiting areas and treatment room enhancements. The qualifying assets can be written off against the practice’s taxable income and the current threshold stands at assets up to the value of £250,000, these can be claimed back against Corporation Tax, meaning revenue can be reinvested into staff training and team expansion.
In the past, banks have often been the lender of choice, but increasingly are now only offering secured loans and often require collateral such as property and even pension policies – both complicating the process, and delaying the project with page-upon-page of paperwork. As a result, many practices are turning to independent financial houses as a more viable solution. So what are the options on offer to ensure a practice has a fighting chance against its competition?
An unsecured loan could open a number of doors for a practice looking to stand-out in a highly competitive market. While the use of an ‘arm’s length’ practice loan could ensure the cost of the investment is spread over a period of time, which sees the income generated, meet or exceed the outlay.
The purchase of new state-of-the-art equipment could keep a practice in tune with its competitors, but can often prove expensive, without an immediate return. However many financial lending houses offer hire purchase and finance lease which can ensure income generated from the equipment or asset can match the initial outlay – ensuring no additional strain on cash demands.
Above all, independent finance houses offer a hassle-free alternative, with a cash injection paid directly into a practice’s account. Many do not require ongoing accounting information and decisions are made rapidly, saving all the paperwork often required by banks. The convenience of external funding could mean dentistry practice owners are able to undertake essential refurbishment and expansion, which will set them firmly on the route to creating their perfect practice, and ultimately standing-out in a market in a market more competitive than ever.