May 4, 2025 • 12 mins
You can download your FREE report on how you can avoid financial mistakes as a dentist using the link just here >>> dentistswhoinvest.com/podcastreport
———————————————————————
Could your dental practice loan repayments be eating into your growth potential? Finance specialist Dan Fearon explains how blended loans and strategic refinancing could drastically improve your monthly cash flow.
Discover how one practice reduced repayments from £20,000 to £7,000 without increasing revenue. We cover the pros and cons of extended terms, new lending options in 2025, and how debt restructuring could give your business room to breathe and grow.
Plus, UK dentists can now earn free verifiable CPD—listen in, complete a quick form via the episode link, and get your certificate straight to your inbox.cial insights that can transform your dental business.
———————————————————————
Disclaimer: All content on this channel is for education purposes only and does not constitute an investment recommendation or individual financial advice. For that, you should speak to a regulated, independent professional. The value of investments and the income from them can go down as well as up, so you may get back less than you invest. The views expressed on this channel may no longer be current. The information provided is not a personal recommendation for any particular investment. Tax treatment depends on individual circumstances and all tax rules may change in the future. If you are unsure about the suitability of an investment, you should speak to a regulated, independent professional. Investment figures quoted refer to simulated past performance and that past performance is not a reliable indicator of future results/performance.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Dr James (00:00):
Today we have Mr Dan Fearon joining us on the
Dentists Who Invest podcast.
Today we're going to be talkingabout practice finance what any
prospective practice owner orcurrent dental practice owner
can do to minimize theirrepayments.
We're going to be talking aboutsomething specifically called
blended loans, which not thatmany people know about, but they
(00:21):
can offer us a huge opportunityto unlock a great deal of cash
flow in our dental practices viarestructuring our debts.
Looking forward to this one, asever, I'm also super excited
today to announce a brand newfeature for the Dentists Who
invest platform, and that isfree verifiable CPD to all UK
dentists who have enjoyed thispodcast episode.
(00:41):
Whenever you finish the episode,all you have to do is click the
link in the podcast description.
It'll take you right throughthe Dentistry Invest website.
You'll be able to complete ashort questionnaire and, once
passed, you fill in yourreflections and we'll go ahead
and email over to you yourverifiable CPD certificate,
which is entirely free.
What that means is this podcastepisode will be able to
(01:02):
contribute towards yourverifiable CPD hours during this
learning cycle.
Let's talk about blended loans,because this is something that
I had never heard of until youenlightened me.
Very curious to learn more Iknow.
Dan (01:19):
Thanks for having me on, James.
Um, yeah, we was sort ofchatting about blended loans and
it's interesting because Ithink banks now are trying to
find different ways to engagewith clients.
There's a lot of competition inthe healthcare market and
they're trying to find differentniches to attract customers and
be different from theircompetitors.
(01:39):
Really, so, yeah, there arelenders out that, basically,
really so, yeah, well, there arelenders out that, basically, if
you're looking to buy thegoodwill and the freehold of the
practice, instead of doing twoseparate loans so you know, the
goodwill loan over 15 years andthe freehold over 20 years what
they can offer you in effect islike a blended loan and put that
(02:01):
into one, which would allowthem to maybe term the whole
facility over sort of 20 to 25years.
So that could make a bigdifference to a client in terms
of their monthly repayments,because the facility is over a
longer period of time.
Dr James (02:16):
And can I ask a question?
What is the traditional logicthat the lenders use that
justify the fact that they don't, just, as standard, offer you
one loan?
Why do they split it into agoodwill loan and a freehold
loan, for example?
What's the reason?
Dan (02:33):
oh, sometimes for clients they may want to do it that way.
They may have a separatelimited company for the practice
and a separate limited companyfor the freehold.
And you know, once you get tothe, you know they get to the
end of wanting to be a dentist,they may want to sell the
goodwill of the practice andretain the freehold because
(02:53):
they're separate entities.
Then, um, it's nice and cleanto do that.
In terms of this way, you wouldprobably everything would need
to be in the the same limitedcompany name, so that that could
be the only drawback, becauseeverything would need to be in
the the same limited companyname, so that that could be the
only drawback, becauseeverything would need to be lent
to the one entity.
But you know, traditionallythey are blended up, they're
separate because when they'relooking to exit it could be
(03:15):
easier for them.
Dr James (03:18):
Ah, understood, and that was a lot more common a
setup back in the day, wasn't it, where you had the nhs, perhaps
goodwill, sitting in a personalname?
Dan (03:26):
yeah, exactly yeah understood in in terms of, in
terms of um, the lenders thatwe're talking about, yeah, they
don't mind that the nhscontracts may not be in their
limited company name.
They're okay with that.
It doesn't all need to belinked in in that situation
understood.
Dr James (03:47):
And then the other thing that you shared with me
just off camera before we weretalking, is that this also can
apply to, uh, more short-termloans, like two to five years,
you know they can be all.
You can basically roll up allyour debt into one repayment and
spread it out longer,potentially with these blended
loans.
Dan (04:06):
Yeah.
So if you've got an existingpractice already, you know you
may have your business debt thatyou used to purchase the
goodwill and your debt for thefreehold.
But if you know in the meantimeyou've taken some short-term
debt, what you could do you know, obviously it's a case-by-case
basis is roll that all into oneand turn that out over a longer
(04:28):
period of time, which you knowif you've got quite a bit of
short term debt, it may beimpacting your business cash
flow.
So if you're turning it outover a longer period of time,
obviously the monthly repaymentswould go down.
Dr James (04:41):
So that would free up a bit of cash flow for the
business Understood and, apartfrom what you've just said, what
would you say the other majoradvantages would be of
restructuring your debt in thisway?
Dan (04:53):
The advantage of structuring it over a longer
period.
The main advantage is thereducing the monthly repayments,
really, because, yeah, like I'msaying is, if you've got a lot
of short-term debt, um, it canimpact the growth of the
business because if you're, ifyou're looking to maybe expand
in the future or, um, maybe evenpurchase a second practice that
(05:15):
could be holding you backbecause you haven't got the cash
to do that where, if you'redetermining the facility over a
longer period of time, thenobviously there's more cash
available in the business tohelp you grow and expand what
about if you've got debt betweenyou know that's owed to lots of
different companies, likeyou've got your equipment debt
with one person and you've gotyour practice finance with
(05:38):
someone else?
Dr James (05:38):
is that possible to roll it all up with one entity
still?
Dan (05:42):
yeah, you can.
You can still roll it into tothe one facility.
Yeah, that that wouldn't be aproblem.
They would look at.
Obviously you did have to lookat.
Um, yeah, if there are anyrepayment penalties or the
interest penalties on on thefacility.
But yeah, it doesn't matterthat you've got one facility
with that person, another onewith that person, obviously the
bank would come in.
(06:03):
In effect, take on the one loan, refinance everything.
Can you just have the onefacility going forward?
Dr James (06:10):
I see, and then, as you were saying just a second
ago, the one major advantage isit can really help when things
are in a pinch uh, with regardsto monthly cash flow.
Obviously, just to state thevery obvious, what might seem
very obvious, but we just wantto say it out loud you're going
to be paying more back overall,correct, because you're
spreading it out over a longerperiod, but your repayments, the
(06:32):
interest rate yeah.
Yes, but your repayments permonth are going to go down, or
at least that's the idea.
Have I got that right?
Dan (06:43):
Yeah, your monthly repayments will be lower, so
obviously that will free up somecash within the business to
allow you to do other thingsthat you might want to do, and I
suppose also you.
You know you could still havethe advantage if you have got
extra cash and you want to putlike a lump sum onto the
facility, then you could stilldo that.
So you take the advantage ofthe lower repayments, but if you
do have some extra cash youcould chip away at the loan that
(07:06):
way and, you know, stillhopefully finish it on a
reasonable time frame I see, sothere is some flexibility there
yeah, yeah, exactly this.
Dr James (07:16):
It's not set in stone, you know if, if you do want to
put some extra payments on, thencertainly can do that and the
reason, one of the reasons thatwe did this podcast today was
because, again, we were talkingoff camera and you told me that
these blended loans are becominga little bit more fashionable
or commonplace these days yeah,I think they're sort of being
(07:36):
put forward a little bit more interms of different options for
for clients.
Dan (07:41):
Because you know you've got some banks that can offer like
partial amortizing loans wheresome of the facility will be
sort of interest only and somewill be capital and interest,
and the benefit of that type offacility is the rates can be
quite low because they're onlycommitting to the facility for
maybe like five years orsomething like that, so the
(08:03):
rates can sometimes start with aone, and so that's quite nice
for for people to look at.
And there's also other banks outthere that if you're just
buying a leasehold premise theymight be able to term the
facility over a longer period.
So if you have a 15-year leasethey may be able to do the loan
(08:23):
over 16 or 17 years, which againhelps with the low repayments.
So banks I think they're tryingto think of new ways to sort of
make themselves different fromthe competitors, and we're
always having new banks come in.
We've recently just had a newlender come into the market who
is really keen to grow theirdental book and you know they're
(08:47):
looking to do 90% loan to valueand offering really good rates.
So in the dental market.
It's quite strong and they'revery keen to lend.
Dr James (08:58):
You know what Interesting thing that you said
just then?
Because we'd been operating onthe pretense that this was just
for freeholds up until thispoint, but you've just pointed
out that it is also possible forleasehold as well, but so there
(09:18):
are other lenders that couldprobably push.
Dan (09:21):
if you're looking to buy a leasehold premises, maybe had to
do the term of that slightlylonger than your lease.
Dr James (09:29):
Ah right, okay, so there won't be like on a blended
rate.
Dan (09:35):
That would be a blended loan.
Rather Sorry, that would be adifferent bank, different
facility, but still pushing theboundaries a little bit, so they
could possibly give you lowerrepayments because they can turn
it over slightly longer.
Dr James (09:48):
Good to clear that one up.
Seems kind of intuitive thatthe repayments the the the
length of the loan is going tobe longer than the lease yeah,
it's on that.
Dan (09:59):
There's there are sort of certain checks and measures in
there to do that, and the bankwould need to be comfortable
with what the level of that isat the end of that lease term to
make sure they can do that.
But it's, it's certainlypossible, as I sorry, if you had
a million pounds remaining atthe end of the lease, the bank's
probably not looking to do that, but it's it's certainly
possible, as I sorry, if you hada million pounds remaining at
the end of the lease, the bank'sprobably not looking to do that
(10:20):
.
But if it's a lower amount andthey're comfortable with that,
then they would certainly lookhere interesting.
Dr James (10:27):
Let's revert back to the the loans thing we were
talking about a second ago,because I know that you do this
stuff day to day, day and day.
Have you got you got any casestudies or examples of an
individual who perhaps had twoseparate loans or maybe a whole
load of equipment, finance orsomething along those lines, and
they were able to draw that allin to?
(10:48):
They were able to restructureeverything and draw it into one,
you know, debt and repaymentand what they were able to save.
Dan (10:57):
Yeah.
So we had a client recentlythat we was looking at their
facility and they had, yeah, anumber of different loans, you
know, some short-term financeand stuff all sort of spread out
, and they were paying roughlyabout 20 000 per month in terms
of loan repayments.
And then we looked at thefacility you know, see what was
(11:20):
possible in the market and wemanaged to sort of reduce their
monthly repayments down to about7,000 a month.
So it's a huge savings forsomeone, and obviously that's
you are terming the facility out, so you're doing it over a
longer period of time and, likeyou said earlier, there is
interest linked to that.
But if you're paying out 20k amonth and you can reduce that to
(11:45):
7 000 a month, that's a hugesaving that a practice can make
when they're looking at theircash flow big number isn't it?
yeah, oh, and you know, ifpeople were, you know,
interested in sort of having achat about, you know, looking at
(12:06):
their deals and how they canget in contact with us about
that, then you know they cangive me a call, my mobile, which
is 07 815 087 488, or just dropme an email which is dan@saroma
.
co.
uk
Today we have Mr Dan Fearon joining us on the
Dentists Who Invest podcast.
Today we're going to be talkingabout practice finance what any
prospective practice owner orcurrent dental practice owner
can do to minimize theirrepayments.
We're going to be talking aboutsomething specifically called
blended loans, which not thatmany people know about, but they
(00:21):
can offer us a huge opportunityto unlock a great deal of cash
flow in our dental practices viarestructuring our debts.
Looking forward to this one, asever, I'm also super excited
today to announce a brand newfeature for the Dentists Who
invest platform, and that isfree verifiable CPD to all UK
dentists who have enjoyed thispodcast episode.
(00:41):
Whenever you finish the episode,all you have to do is click the
link in the podcast description.
It'll take you right throughthe Dentistry Invest website.
You'll be able to complete ashort questionnaire and, once
passed, you fill in yourreflections and we'll go ahead
and email over to you yourverifiable CPD certificate,
which is entirely free.
What that means is this podcastepisode will be able to
(01:02):
contribute towards yourverifiable CPD hours during this
learning cycle.
Let's talk about blended loans,because this is something that
I had never heard of until youenlightened me.
Very curious to learn more Iknow.
Dan (01:19):
Thanks for having me on, James.
Um, yeah, we was sort ofchatting about blended loans and
it's interesting because Ithink banks now are trying to
find different ways to engagewith clients.
There's a lot of competition inthe healthcare market and
they're trying to find differentniches to attract customers and
be different from theircompetitors.
(01:39):
Really, so, yeah, there arelenders out that, basically,
really so, yeah, well, there arelenders out that, basically, if
you're looking to buy thegoodwill and the freehold of the
practice, instead of doing twoseparate loans so you know, the
goodwill loan over 15 years andthe freehold over 20 years what
they can offer you in effect islike a blended loan and put that
(02:01):
into one, which would allowthem to maybe term the whole
facility over sort of 20 to 25years.
So that could make a bigdifference to a client in terms
of their monthly repayments,because the facility is over a
longer period of time.
Dr James (02:16):
And can I ask a question?
What is the traditional logicthat the lenders use that
justify the fact that they don't, just, as standard, offer you
one loan?
Why do they split it into agoodwill loan and a freehold
loan, for example?
What's the reason?
Dan (02:33):
oh, sometimes for clients they may want to do it that way.
They may have a separatelimited company for the practice
and a separate limited companyfor the freehold.
And you know, once you get tothe, you know they get to the
end of wanting to be a dentist,they may want to sell the
goodwill of the practice andretain the freehold because
(02:53):
they're separate entities.
Then, um, it's nice and cleanto do that.
In terms of this way, you wouldprobably everything would need
to be in the the same limitedcompany name, so that that could
be the only drawback, becauseeverything would need to be in
the the same limited companyname, so that that could be the
only drawback, becauseeverything would need to be lent
to the one entity.
But you know, traditionallythey are blended up, they're
separate because when they'relooking to exit it could be
(03:15):
easier for them.
Dr James (03:18):
Ah, understood, and that was a lot more common a
setup back in the day, wasn't it, where you had the nhs, perhaps
goodwill, sitting in a personalname?
Dan (03:26):
yeah, exactly yeah understood in in terms of, in
terms of um, the lenders thatwe're talking about, yeah, they
don't mind that the nhscontracts may not be in their
limited company name.
They're okay with that.
It doesn't all need to belinked in in that situation
understood.
Dr James (03:47):
And then the other thing that you shared with me
just off camera before we weretalking, is that this also can
apply to, uh, more short-termloans, like two to five years,
you know they can be all.
You can basically roll up allyour debt into one repayment and
spread it out longer,potentially with these blended
loans.
Dan (04:06):
Yeah.
So if you've got an existingpractice already, you know you
may have your business debt thatyou used to purchase the
goodwill and your debt for thefreehold.
But if you know in the meantimeyou've taken some short-term
debt, what you could do you know, obviously it's a case-by-case
basis is roll that all into oneand turn that out over a longer
(04:28):
period of time, which you knowif you've got quite a bit of
short term debt, it may beimpacting your business cash
flow.
So if you're turning it outover a longer period of time,
obviously the monthly repaymentswould go down.
Dr James (04:41):
So that would free up a bit of cash flow for the
business Understood and, apartfrom what you've just said, what
would you say the other majoradvantages would be of
restructuring your debt in thisway?
Dan (04:53):
The advantage of structuring it over a longer
period.
The main advantage is thereducing the monthly repayments,
really, because, yeah, like I'msaying is, if you've got a lot
of short-term debt, um, it canimpact the growth of the
business because if you're, ifyou're looking to maybe expand
in the future or, um, maybe evenpurchase a second practice that
(05:15):
could be holding you backbecause you haven't got the cash
to do that where, if you'redetermining the facility over a
longer period of time, thenobviously there's more cash
available in the business tohelp you grow and expand what
about if you've got debt betweenyou know that's owed to lots of
different companies, likeyou've got your equipment debt
with one person and you've gotyour practice finance with
(05:38):
someone else?
Dr James (05:38):
is that possible to roll it all up with one entity
still?
Dan (05:42):
yeah, you can.
You can still roll it into tothe one facility.
Yeah, that that wouldn't be aproblem.
They would look at.
Obviously you did have to lookat.
Um, yeah, if there are anyrepayment penalties or the
interest penalties on on thefacility.
But yeah, it doesn't matterthat you've got one facility
with that person, another onewith that person, obviously the
bank would come in.
(06:03):
In effect, take on the one loan, refinance everything.
Can you just have the onefacility going forward?
Dr James (06:10):
I see, and then, as you were saying just a second
ago, the one major advantage isit can really help when things
are in a pinch uh, with regardsto monthly cash flow.
Obviously, just to state thevery obvious, what might seem
very obvious, but we just wantto say it out loud you're going
to be paying more back overall,correct, because you're
spreading it out over a longerperiod, but your repayments, the
(06:32):
interest rate yeah.
Yes, but your repayments permonth are going to go down, or
at least that's the idea.
Have I got that right?
Dan (06:43):
Yeah, your monthly repayments will be lower, so
obviously that will free up somecash within the business to
allow you to do other thingsthat you might want to do, and I
suppose also you.
You know you could still havethe advantage if you have got
extra cash and you want to putlike a lump sum onto the
facility, then you could stilldo that.
So you take the advantage ofthe lower repayments, but if you
do have some extra cash youcould chip away at the loan that
(07:06):
way and, you know, stillhopefully finish it on a
reasonable time frame I see, sothere is some flexibility there
yeah, yeah, exactly this.
Dr James (07:16):
It's not set in stone, you know if, if you do want to
put some extra payments on, thencertainly can do that and the
reason, one of the reasons thatwe did this podcast today was
because, again, we were talkingoff camera and you told me that
these blended loans are becominga little bit more fashionable
or commonplace these days yeah,I think they're sort of being
(07:36):
put forward a little bit more interms of different options for
for clients.
Dan (07:41):
Because you know you've got some banks that can offer like
partial amortizing loans wheresome of the facility will be
sort of interest only and somewill be capital and interest,
and the benefit of that type offacility is the rates can be
quite low because they're onlycommitting to the facility for
maybe like five years orsomething like that, so the
(08:03):
rates can sometimes start with aone, and so that's quite nice
for for people to look at.
And there's also other banks outthere that if you're just
buying a leasehold premise theymight be able to term the
facility over a longer period.
So if you have a 15-year leasethey may be able to do the loan
(08:23):
over 16 or 17 years, which againhelps with the low repayments.
So banks I think they're tryingto think of new ways to sort of
make themselves different fromthe competitors, and we're
always having new banks come in.
We've recently just had a newlender come into the market who
is really keen to grow theirdental book and you know they're
(08:47):
looking to do 90% loan to valueand offering really good rates.
So in the dental market.
It's quite strong and they'revery keen to lend.
Dr James (08:58):
You know what Interesting thing that you said
just then?
Because we'd been operating onthe pretense that this was just
for freeholds up until thispoint, but you've just pointed
out that it is also possible forleasehold as well, but so there
(09:18):
are other lenders that couldprobably push.
Dan (09:21):
if you're looking to buy a leasehold premises, maybe had to
do the term of that slightlylonger than your lease.
Dr James (09:29):
Ah right, okay, so there won't be like on a blended
rate.
Dan (09:35):
That would be a blended loan.
Rather Sorry, that would be adifferent bank, different
facility, but still pushing theboundaries a little bit, so they
could possibly give you lowerrepayments because they can turn
it over slightly longer.
Dr James (09:48):
Good to clear that one up.
Seems kind of intuitive thatthe repayments the the the
length of the loan is going tobe longer than the lease yeah,
it's on that.
Dan (09:59):
There's there are sort of certain checks and measures in
there to do that, and the bankwould need to be comfortable
with what the level of that isat the end of that lease term to
make sure they can do that.
But it's, it's certainlypossible, as I sorry, if you had
a million pounds remaining atthe end of the lease, the bank's
probably not looking to do that, but it's it's certainly
possible, as I sorry, if you hada million pounds remaining at
the end of the lease, the bank'sprobably not looking to do that
(10:20):
.
But if it's a lower amount andthey're comfortable with that,
then they would certainly lookhere interesting.
Dr James (10:27):
Let's revert back to the the loans thing we were
talking about a second ago,because I know that you do this
stuff day to day, day and day.
Have you got you got any casestudies or examples of an
individual who perhaps had twoseparate loans or maybe a whole
load of equipment, finance orsomething along those lines, and
they were able to draw that allin to?
(10:48):
They were able to restructureeverything and draw it into one,
you know, debt and repaymentand what they were able to save.
Dan (10:57):
Yeah.
So we had a client recentlythat we was looking at their
facility and they had, yeah, anumber of different loans, you
know, some short-term financeand stuff all sort of spread out
, and they were paying roughlyabout 20 000 per month in terms
of loan repayments.
And then we looked at thefacility you know, see what was
(11:20):
possible in the market and wemanaged to sort of reduce their
monthly repayments down to about7,000 a month.
So it's a huge savings forsomeone, and obviously that's
you are terming the facility out, so you're doing it over a
longer period of time and, likeyou said earlier, there is
interest linked to that.
But if you're paying out 20k amonth and you can reduce that to
(11:45):
7 000 a month, that's a hugesaving that a practice can make
when they're looking at theircash flow big number isn't it?
yeah, oh, and you know, ifpeople were, you know,
interested in sort of having achat about, you know, looking at
(12:06):
their deals and how they canget in contact with us about
that, then you know they cangive me a call, my mobile, which
is 07 815 087 488, or just dropme an email which is dan@saroma
.
co.
uk
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