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There are real differences in the approach lenders take in developing their credit decisions. The two key differences are between collateral-based lending and cash-flow lending.

• Collateral-based lenders typically make credit decisions based on the value of your personal assets and use personal items such as your home, money market accounts, and Certificates of Deposit as collateral. Your local bank is most likely a collateral-based lender.

• Cash flow lenders use the historical performance of a practice — or, in the case of start-ups, projected revenue and cash flow — to make credit decisions and use the practice as collateral, not your personal assets. Cash flow lenders are usually specialty lenders that specialize in a particular business or industry.

If you are concerned about using your personal assets as collateral for your business, look for a cash-flow lender. This will protect your personal assets while providing a realistic basis for obtaining funding.

Once you have determined the type of lender you prefer, consider asking the following questions of potential lenders to gain an understanding of the type and quality of service they can provide for your project.

• Which specific markets do you serve? Does the lender understand the unique financing needs of dental practices?

• May I speak with your current dental customers? Speaking to references will help you determine whether this lender can support your specific needs. If a lender does not have or will not offer the names of dental customers, move on.

• How does the approval and funding process work? A streamlined process, usually for smaller loan amounts that require only an application, should provide approvals within one to two days. Approvals for larger or complex loan requests involve a more in-depth analysis and should take approximately five to seven days once the required information is received. In all cases, the documentation and funding process varies depending on how quickly required documents are received (e.g., invoices, contractor budgets, copies of lease agreements, etc.) and the overall progress of your project. Funding can occur anywhere from a couple of weeks to several months post-approval.

• What is your prepayment policy?

° Ensure there are no prepayment penalties, and avoid balloon payments if possible.

• Who will fund and service my loan?

° You want to work with a reliable financing team throughout your project that is available to answer questions, provide useful resources, and help you solve any funding issues. Make sure your loan is not packaged and sold to a third party.

• Who do I call if I have questions or need help?

° Make sure your lender can provide a name, not just a department.

• How can you help if I experience problems in my practice?

° You want to know your lender is part of your team and available to help you overcome challenges.