| Detail | Amount |
|---|---|
| Down payment | $0 |
| Monthly payment during interest-only period | None |
| Annual debt service (12 full payments) | $0 |
| First-year debt service | $0 |
| Total of all payments | $0 |
| Debt service coverage ratio | Enter cash flow |
| Year | Payments | Interest | Principal | Ending balance |
|---|---|---|---|---|
| Enter a loan amount, rate, and term. | ||||
Estimates only. Fixed rate assumed. This is not financial, tax, or legal advice.
The purchase price gets the attention in a practice deal, but the monthly payment is what you live with for the next decade. This calculator turns a price, down payment, rate, and term into the numbers that matter after closing: the monthly payment, what the loan costs you in interest, how fast the balance falls, and how much of the practice's collections go to the lender each year.
Enter the purchase price and your down payment percentage. If the lender is also financing working capital, equipment, or closing costs in the same note, add that amount in Other amounts financed. Then enter the rate and term from the lender's term sheet, any interest-only months, and the practice's annual collections. The results and the year-by-year table update as you type.
If you have a figure for the practice's cash flow before loan payments, enter it to see a debt service coverage ratio. Leave it blank if you do not; the rest of the calculator works without it.
Loan amount is the purchase price minus your down payment, plus any other amounts financed. The monthly rate is the annual rate divided by 12. During any interest-only months, the payment is simply the balance times the monthly rate. After that, the calculator uses the standard fixed-payment amortization formula: the one level payment that, applied every month for the remaining months, pays the balance to zero. Each payment covers that month's interest first, and the rest reduces the balance, which is why early years are mostly interest and later years are mostly principal.
Annual debt service is 12 regular payments. Debt service as a percentage of collections is that annual figure divided by collections. The coverage ratio divides your cash flow figure by annual debt service: 1.00x means the cash flow exactly covers the payments with nothing left over.
Why debt service as a share of collections matters. Loan payments come out of the same collections that pay staff, rent, supplies, lab, and you. Comparing the payment with collections shows how much room is left for everything else. Read it next to the practice's overhead, using our guide to dental practice overhead benchmarks, rather than against a single rule of thumb. Lenders will run their own coverage test with their own definitions, so ask how they calculate it.
Using the default numbers, which are made up for illustration: a practice with $1,000,000 in annual collections sells for $900,000. The buyer puts 10% down ($90,000) and borrows $810,000 at 7.5% for 10 years with no interest-only period.
| Hypothetical example | No interest-only | 6 interest-only months |
|---|---|---|
| Payment during interest-only months | None | $5,062.50 |
| Regular monthly payment | $9,614.84 | $9,955.85 |
| Annual debt service (12 regular payments) | $115,378 | $119,470 |
| Debt service as % of collections | 11.5% | 11.9% |
| Total interest over 10 years | $343,781 | $355,342 |
The interest-only period cuts the payment roughly in half for the first six months, which can help during a transition, but it costs about $11,600 more in interest in this example and raises every payment after it. If the buyer entered $250,000 of cash flow before loan payments, the coverage ratio on the no-interest-only version would be about 2.17x.
Do not model the loan on the seller's best year. Collections often dip after a sale while patients get to know the new dentist. Run the calculator again with collections 10% or 15% lower and make sure the payment still works. Our practice acquisition guide covers due diligence on the numbers.
For current limits and program basics, see the SBA's own 7(a) loan page, which lists a maximum 7(a) loan amount of $5 million.
Use the calculator to compare term sheets side by side: same price, different rates, terms, and interest-only periods. If you are still deciding how to get into ownership, read startup vs. acquisition and financing a practice startup. Once you own the practice, financial management for practice owners covers how to keep debt service in proportion as the business changes.
All results are estimates only and are not financial, tax, or legal advice. Confirm loan terms with your lender, and review any purchase with a dental-specific attorney and CPA.
Estimates only. This calculator is not financial, tax, or legal advice. Confirm numbers with your CPA, lender, or advisor before making decisions.