The Truth About Dental Lending In 2025 With Craig Leone

Jonathan Moffat sits down with Craig Leone of Huntington Bank to unpack what’s really happening in dental lending right now. They break down what banks are actually looking for in 2025, how lending criteria have evolved, and what dentists need to know before applying for a startup, acquisition, or expansion loan. From liquidity requirements and profit margins to growth strategies and red flags, this is a must-listen for any doctor thinking about financing in today’s market.

Special thanks to Huntington Bank for sponsoring this year’s Dental Wealth Mastermind.

If you’re planning to attend, don’t miss the chance to connect with their team live in Newport Beach.
Register now at dentalwealthmastermind.com.

Find Jonathan at jonathanmoffat.com
Learn more about Aligned Advisors at alignedadvisors.com
Connect with Craig Leone at huntington.com/practicefinance

Find Jonathan on LinkedIn: linkedin.com/in/jonathanmoffat1
Find Craig on LinkedIn: linkedin.com/in/craig-leone-01861346/

Join us weekly as we explore what it really takes to grow your wealth while designing the life you want. Visit dentalwealthmultiplier.com for more!

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The Truth About Dental Lending In 2025 With Craig Leone

Welcome to another episode of Dental Wealth Multiplier. I’ve got a great guest, Craig Leone from Huntington Bank. This is not the first time he has been on the show. Craig, it’s great to see you again. It’s great to have you on here again.

Thanks for having me, Jonathan. I appreciate it.

I’m excited to have you guys back with us in September for our event. Maybe give us a brief little background history of yourself as far as your experience both in banking and in the dental side, and then let’s jump into a couple of topics that are relevant for a lot of the people tuning in.

Craig Leon On Dental Lending

I got my start in the military. I served for eleven years. I was an infantry soldier, then an officer. I gained a lot of accountancy experience there, which allowed me to take off once I hit the ground floor in banking. I do have a private banking background as well. I did my first five years in the private bank, and then went to Huntington. I’ve been in practice finance for a few years now. I served on the underwriting side. I was an underwriting manager before coming into my role now. What all that means is I might have a little bit more attention to detail, I’m a little more analytical, and I’m able to partner with doctors throughout their growth journey.

I had forgotten that you’d served in the military. Thank you for your service. I appreciate you bringing that up. What’s changed throughout your career, as you’ve seen when you first started? I remember when I first got started working with dentists. If you were a dental student, you graduate from dental school, and you essentially have a blank check from a bank to write to go start your practice. It was like you needed a dental degree, and that was it. They would fund you right out of dental school with no experience. It was just, “How much do you want us to write the check? Where do you want us to send it?” type of a thing. It probably changed a little bit over the years.

I think it has. There are specialized arms of banks that practice finance day in and day out. Huntington has that as well. On the credit side, every 4 or 5 years, they take a good, hard look at loan losses and how the portfolio is doing. At that time, you might see a little bit of contraction or expansion. We have seen some expansion in the way we look at dentists. To touch on the point coming directly out of school, we do fund doctors directly out of school if you went through a specialty residency. For a GP, we usually like to see 1 to 2 years of associate experience to gauge clinical production ability and earnings, to make sure everything is on track there.

What are you looking for? It is interesting to know. If you’re doing a residency, I’ll be speaking to some endodontist residents here, so I might have to get some talking points from you on there for them. From a GP standpoint, what are you looking for specifically? Are you looking at like, “Send over your CV. It looks like you graduated from dental school in 2012. It’s 2015. You’ve got about two and a half years or three years under your belt. That’s all we are looking for.” What else are you looking for those young doctors doing those startups?

We have a lot of data. We have a lot of industry averages. For a GP, what we like to see is that you’ve obtained $150,000 in earnings and right around $500,000 to $550,000 of production ability. That could vary upon the different practices you’re in, if it’s a cash-based business or if it’s Medicare and Medicaid. That’s why it’s important not only to take a look at your historical tax returns, W-2s, and 1099s, but also your production reports if you’re able to obtain those. For specialists, those numbers vary depending on the specialty. Endodontics is a very excellent specialty that we do here as well. We provide funding right out of residency.

Just to put it in layman’s terms, this is maybe more for me than our audience. When you say earnings, you’re saying, “We want to see that you got a paycheck of at least $150,000 in that prior year, and you produced around $550,000.” Is that right?

That’s right.

Take home $150,000 and produce $550,000. Anything else you guys are looking at for that first-time practice? Are those metrics the same for an acquisition or a de novo startup? Are you looking at the same metrics there?

I’ll touch on the startup piece first. There’s another variable in there. That’s how much you’re requesting. With a general GP startup, you’re looking at about $700,000 to $800,000. Sometimes, we have clients who come in that are looking to do a larger project. Normally, we see a first office be between 3 and 5 chairs. Sometimes, we have GPs or doctors who are above the industry average. They anticipate needing more than 3 or 4 chairs within the first 3 to 5 years of business. They’re looking for a space that could accommodate maybe eight chairs.

As you know, you have a higher leasehold expense. You have more equipment than you need and maybe even more specialized equipment. In those scenarios, we do look to see that they are above industry average earners. They’re above industry average production. That’s how we gauge the dollar amount there. For an acquisition, we like to see that it’s the right size. Sometimes, it doesn’t occur that way. I’ll give you an example. You might be an associate at a single doctor-owned practice. There are two practitioners in the practice. You are essentially acquiring that business.

What that means is we have one doctor owner who needs to cover down on clinical production ability for the entire practice. We call that a gap. There’s a gap in production there because one owner is leaving. Usually, that’s not a problem. We look to see that they could at least handle 50% of that clinical production in the practice and see how they’re going to operate past that point. Are they going to hire an associate? Is the owner staying on for a period of time? It is pretty typical there, too.

Is that your preference? Do you prefer that the owner sticks around for a period of time, or does that not make that big of a difference for you when you’re making that decision?

It is a positive. It’s a good transfer of goodwill in the practice. It leads to a little bit less transition risk that credit sees in those scenarios. Sometimes, it doesn’t happen. We’ll weigh that based on the entire view of the transaction.

This is important not only for those who are maybe wanting to buy that first practice or do their first startup, but also for those who are thinking about selling or transitioning. You should start planning for that. It’s interesting to know. I would imagine that the larger the practice, the larger the loan, the more important that probably is that that doctor stick around and transition out. At least make sure if it’s a two-doctor-run practice, there’s going to be a solution in there for how to keep it a two-doctor-run practice. I imagine those are some of the things you guys are looking at.

If there’s an associate in the practice already who’s purchasing the practice, credit loves that. It reduces the transition risk that they see. In the majority of our transactions that we see, that doesn’t occur. It’s usually a single doctor who’s associating elsewhere, coming in, and acquiring a practice. That’s fine. We do like to see that they’re able to cover a good portion of that clinical production that’s in the practice currently.

I’ve got a bunch of questions, a bunch of ground I want to cover here, because it’s so important. We all need access. If you want to start a business or grow and scale, the name of the show is Dental Wealth Multiplier. How do we multiply our wealth? One of the ways that you do that is by leveraging. Sometimes, that’s leveraging the bank’s money. Sometimes, that’s leveraging skills. We talk a lot about leveraging the team, the people, and the resources we already have.

What Is It Like To Start Another Practice

The reality is there’s a good chance you’re going to need to borrow money, whether it’s buying real estate or additional practices. How do those metrics change from a bank’s perspective when you go from, “I’ve proven that I can either do a startup or an acquisition that I can grow a practice. I’ve proven that. I want to go to practice number two.” I was at dinner with a GP. His wife is an orthodontist. She had her first practice done very well. He was like, “We want to get to five practices.” They’re looking at practice number two.

What’s the bank looking at when you get one of your clients and your doctors coming in and go, “I did a great job with practice number one that you guys gave me the money on. I’m ready for practice number two.”? What are you guys looking for to make that an easy yes, or for both underwriting and credit to say, “Yes, let’s do this.”

Number one, the biggest hurdle is to look at that existing practice that the doctor is running. Is it stable? At least in the industry average EBITDA, does it look like he or she is ready to move on to a second practice location?

What does the bank look at or consider to be an industry average EBITDA?

It depends on the specialty. If we’re talking a GP, it is right about 35%. We do know that that number goes down if you have an associate in the practice.

That’s an owner-operator. You own the practice. You’re doing all of the dentistry. That is 35%.

That will fluctuate. That might be location-dependent. If you are accepting Medicare or Medicaid, is it fee-for-service? There are a lot of variables there, but that’s the benchmark that we use.

If there’s an associate in there, what if the production is split and they do 50/50 between two associates? If it’s all associate-run, what’s that EBITDA that the bank is looking at?

That could vary. If an office is fully run by associates who earn an industry average associate income, it is usually about 30% of production. We see those in the low to mid teens quite often. If it’s split 50/50, that’ll probably be a low to mid 20% range.

Percentages And Ratios To Consider

We’ve been fortunate to do a lot of our clients’ work with you. What you’re looking at is, “Can the owner pay the bills of the practice, service alone, pay for their own, and support their lifestyle?” Are there percentages that you want to see in terms of how much the doctor is taking home? If you have a doctor who is like, “I take home 10%,” are there general percentages that you’re looking at in terms of the debt service?

Hopefully, our audience finds this to be interesting. I’ll let you answer that question first before we get into the weeds on ratios. I do think that’s an interesting conversation that I’d love to have with you. I don’t think enough people talk about the importance of those ratios. Are there percentages where it’s like, “This is how much we think you should allocate towards your living expense or personal lifestyle expenses. This is what we think you should have allocated towards debt service.”

Every situation is unique and different. Some folks like to run their business to the bottom line, meaning they kick out everything above a one-to-one. They pay their debts, and then they take distributions for everything else. That’s fine. What we do at Huntington is we look at the individual. First of all, we look globally. We not only look at the business, but we do look personal. When we look at personal, it’s a high-level calculation here.

We’ll see their debt service from a household perspective and multiply by two. We call that a break-even. We replace that number with the officer compensation at the business level. We allow all additional funds that they might’ve taken out of the practice to be added back to global debt service. It is the funds that you have available to service any debt that you’re requesting. A lot of advice I give to newer doctors is that you might love that million-dollar property down the street. That’s a great goal, but establish your practice first.

We preach the same thing. You can delay that Porsche, that $2 million or $3 million house, the vacation home, especially if you’re young. I can’t shut this off. It’s always going. I was swimming laps or something the other day. I stopped into the Voice Memo. I’m going to do this. I was like, “I want to run the numbers on this.”

If you delayed the extra mortgage payment of the bigger home versus what you would suffice, or the bigger car payment, and you invested that into your practice, what would that ROI end up being over 5, 10, 15, and 20 years?” I’m a dork. I can’t shut it off. I’m always thinking about this stuff. It’s such a good point. Put the money back into your practice. We’re going to get to liquidity. I’ve got a list of things we’re going to talk about here. Put it back into practice and delay that vacation home until it’s the right time.

It’s hot on my mind now that we’re talking about it. Another important point I like to make with newer doctors who are looking to own a practice is that I know that student loan debt. I know that car payment. I know that the mortgage. I know that’s on your personal balance sheet. You might be great at attacking that, but a lot of banks, not Huntington, would rather see a higher amount of liquid assets on your balance sheet when you go in to take out that first business loan.

Is there a number or a percentage? I bring this up, and I’m glad you’re talking about it, because we’re seeing that becoming a bigger issue. We talked about this a few years ago. I talked about it. You and I did a show. We talked about it. I spoke at several different groups about this very thing. Liquidity is becoming a bigger issue than maybe it was many years ago.

A lot of folks are focusing on that number. To give you a high-level number, it’s 10%.

Is it 10% of what you’re requesting?

Yes. If you want to take out $1 million, they’re looking for right around $100,000 in liquid assets. That’s checking, savings, and brokerage. Unfortunately, that’s not crypto. A lot of people have crypto. The premise behind that is you might have been associated for 2, 3, or 4 years and earning great earnings. You might be at about $200,000 a year, or maybe more, but you’re only showing $15,000 or $20,000 on your personal balance sheet. That usually brings up more questions than answers for the underwriting staff. We like to try to avoid that. If you’re fully focused on your business, hold off the expenses, build your liquidity, and ensure that your business takes off. To have that backup liquidity is very important as well.

It is checking, savings, brokerage, and anything else that falls in that category from the bank’s perspective of what you’d consider liquid. It is probably not 401(k) IRA assets because that’s not liquid. If you’re tuning in to this and you’re on the front end, build that habit now of saving. Unfortunately, I’ve seen far too many, and Craig, I’m sure you have too, doctors who were practicing for 20 to 30 years who are in their late 50s or 60s. You’re like, “What do you have for your emergency fund?” They’re like, “Nothing.” How do you have nothing? Dentistry is an amazing profession, and you have the opportunity to make a lot of money.

Unfortunately, what we see a lot of times is that as you make more money, the lifestyle increases. It was what we were talking about before. If you can have that discipline and that delayed gratification, it’s going to free you up with the ability to grow your assets that appreciate in value and are going to generate income, and even passive income to talk about, as opposed to some of those other assets or liabilities that don’t do that. The liquidity piece is a good point. It is 10% of what you’re requesting. Make sure you’ve got it liquid. Make sure you can show, “Here it is on the balance sheet,” and it is not crypto. Any other thoughts on that before we shift gears?

More Tips On Practice Expansion

We were talking about what’s important when you’re looking to expand. We touched on startups. I did want to touch on this point. If you do own a practice, what we do look for, number one, is that that practice is stable and doing well. There are two different options at that point when you’re expanding, either de novo or you’re acquiring a second practice. When acquiring a second practice, banks are able to look at those two combined. They’re looking at a global analysis.

They want to make sure that that first practice, that flagship practice, is self-stabilizing and self-sufficient. They look at and consider the revenues and the cashflow of that practice that you’re looking to purchase. De novo is a little bit more unique. Your flagship practice has to be able to not only support its current operations and debt service, but also that of your second location. Keep in mind that all of that debt service is now serviced only by your flagship location. It could potentially get a little tighter, but we have folks who do it all the time.

Is there a ratio or a percentage of the purchase price of the second practice or third location in terms of a percentage of revenue? Often, we hear, “It’s 80% of revenue.” What are you looking at as far as, “We think you’re overpaying for this practice. Therefore, it’s not cash flowing,” or “It looks like this is a smart buy. You’re getting it at a good price for the profitability and for the cashflow.”

You hit the nail on the head, saying profitability and cashflow. That’s a major component here. Also, location is a major component. Rural Kansas is different than Richmond, Virginia. That could be a very big differentiator. We do see right around 75% or 80% is a pretty good average for sale price. What we see a lot of times, too, is that the profitability of the practice decreases in some instances. It could be aging owners who no longer do specialty procedures and refer them out. At that point, you’re going to see a much higher hygiene or maybe even cosmetic percentage of procedures. Sometimes, those practices don’t hit 75% or 80%. They might be around 50% or 60%. There are so many factors that pertain to that. It’s unique. It’s situation-dependent.

Along that line too, on the acquisition side, if you have a practice, you’ve been the sole practitioner there, you’ve grown it, and you want to go buy a practice number two, I’m imagining from the bank perspective, you’re going to want to see, “What’s your plan now that you have two practices? Who’s going to be working in that? What if the associate or the doctor in practice number two doesn’t show up?” You want to see a little bit of thought process on how they’re going to be able to maintain both locations.

We hear it more and more, which is that money has gotten smarter. Years ago, if you were like, “I’m going to get a practice number two or three,” banks would be like, “Here’s the check. It looks great.” Now, what they’re realizing is, “It’s hard to run two practices.” Three practices are the hardest. Two practices are pretty manageable. Three is where we start to see, “This is getting tough,” and even the point where it’s like, “I don’t know that I can manage this.”

When someone is coming to you and saying, “I’m ready to buy a practice number two and number three,” you’re looking from a personal perspective, “Are you liquid? Do you have that liquidity, 10% of what you’re requesting of this new purchase price, maybe even a little more, because you’ve got one or two practices?” From a practice standpoint, “Is a practice profitable?” Does it even matter having a write-up or an explanation of, “Here’s how I plan to run practice number two. I know I can’t be in two places at once. I’ve got my brother. I’ve hired an associate.” How important is that when you’re considering funding a second, third, or additional future growth locations?

A transition plan is very important. It not only communicates your plan to the bank, but also lets us know that you put some thought and some detail into that. Everybody is going to put some thought into how they’re going to operate two or three practices. I’m working with a client of yours. They have two doctors. They’re going to split time between the practices. Having any additional information like that is good to communicate to our underwriting staff. In the background, in the basement where these folks work, they’re writing up usually a 15 to 20-page document about your transaction. That is a major piece of it. How are you going to operate successfully, not only the new practice, but also your current one? A lot of times, we assume associate, but it’s great to hear that from the owner.

Creating A Covenant With The Bank

That is helpful. I don’t want to go too far in the weeds. I want to circle back around because it’s important to understand what covenants you’re making with the bank. I remember when we owned our practices. If you make your loan payments on time every month, you’re good. You get the call. You’re like, “We need to have a conversation because there’s a problem. You aren’t within covenants.” We’re seeing this happening more and more.

I can draw my conclusions as to why that’s the case. I’m not saying every bank’s like this. I do think, and we have a few clients, where we’re like, “These banks are trying to get these low-interest rate loans off their books.” I’m speculating here, but the point is you want to be aware of what you’re agreeing to, other than just making timely payments. A lot of people may not be aware that you’re agreeing to meet certain covenants that are debt-to-EBITDA ratios or debt-to-income ratios.

Craig could talk a little bit about the Huntington’s approach to those ratios. I’m going to hit you with three questions here. What are we seeing as standard ratios? What red flag should go up for you as a borrower? It is like “I may be getting set up for failure here.” We see that if the ratio is above this or below, maybe go get a second opinion on there. How important is that when borrowing from a single location? Is that something you need to be more conservative when you’re at locations 4, 5, 6, and above, when you reach a certain debt limit with the exposure to the bank? Over $4 million is going to be a big issue. I apologize. I don’t want to hit you with five different questions.

What I love telling doctors is to ask questions. Ask clarifying questions and dig into those because it’s important. I’ll talk from Huntington’s perspective. Every bank is different. We have dollar thresholds, so we don’t have financial reporting covenants. We don’t have debt service coverage covenants until you get $1 million in exposure. If you’re under that, we do have a team that’ll work with you. It’s a very big benefit to new practice owners. It’s called Practice Pulse. We have a staff here that’ll work with you on a monthly basis and could answer any of your questions.

It’s almost like a coaching staff that has worked in practices. They’ll compare you to industry averages. Some people might think that’s Big Brother looking over their shoulder. If I were a practice owner, I would love to see how I’m comparing to the industry. Do I need to make any changes? Do I need to get credentials with some other insurance companies? These folks are good at what they do and help support new practice owners.

Getting back to the point, once you jump over that million-dollar mark, at Huntington and most other banks, what you’re going to start seeing is financial reporting covenants and debt service coverage. Generally, it’s annual. They’re going to ask you for annual tax returns, profit and loss statements, and personal financial statements. They’re going to run a calculation in the back end. There’s going to be a staff member at the bank who does a quick calculation to see if you’re hitting that mark of debt service coverage. Generally, it’s 1.1 times. That is a trigger to maybe ask some additional questions and work with the doctor to make sure everything is okay. That’s what we do here.

You said 1.1 times. Can we put some numbers to that to get for our audience? That’s saying if you borrow $1 million, you’re going to want to see $1.1 million in gross income. Is that what you’re saying?

That’ll be from a debt service perspective. Let’s say your loan payments add up to $100,000 a year. We’re going to want to see your ending cashflow on a global basis be about $110,000. It is a rough number.

That’s super helpful. As far as financial reporting, there are reviewed financials and audited financials. Maybe walk us through what those different sets of financial requirements are. “At $1 million, we want this. At $3.5 million exposure, we’re going to want this. At $7 million in exposure, that’s when you’re going to step up to this bigger audited financials or reviewed financials.” Talk a little bit about that.

I haven’t seen it since I’ve been here that we require CPA-audited statements. If you have ever seen CPA-audited as a requirement, throw up a red flag and have a discussion because that costs you money.

It’s very expensive to the tune of $10,000 or $15,000 plus, depending on reviewed and audited. Audited is even more, like $20,000 or $25,000.

That could be significant. We require a company prepared. We require up to $5 million. Over $5 million, we still might require that. Sometimes, we ask for a compile. It depends on the ratio of lending and how the relationship looks at the time. It’s not a bait and switch. Whatever is in your commitment letter and your loan documents, that’s what we go with. Any bank that tries to flip that is wrong. It should always put up a red flag.

Make sure you’re working with an accountant or a bookkeeper who understands these. I was having this conversation with a client with a different bank. We’ve introduced them to you. Hopefully, they end up coming over, and you are able to work something out with them. That bank does not have a huge exposure, maybe $2 million. Their bank is requiring all this crazy financial reporting. I said, “Your bookkeeper, your accountant, should be able to put that together for you.” What will be even more helpful is that within your financials, you get to have a page, too, that says, “You’re within your cut. These are your covenants. Green, you’re good. Yellow, you’re there, but you’re out of line. Red, you’re out.”

It is something where you’re like, “Are we doing that?” Correct me if I’m wrong. I’m curious what your perspective is. It’s very bank-specific. This is where it’s so important to make sure you understand who your bank is. How long have they been doing this? Is this a significant portion of what they’re doing? Do they have a team? You have this team of support to support your clients. It’s amazing. When you’re looking at those ratios, have that conversation with your account. See if they can put those in your financials so that you’re looking at those leads on a quarterly basis. A lot of banks, even you said, Craig, are going to want this. “Send us your annual company-prepared financials.”

I was looking at it this way. If you were lending this money, what would you want to see to make to feel good and nice and sleep well at night knowing your money was safe? Aside from getting regular payments, you probably want to see some financial reporting every once in a while. That’s not an unrealistic expectation. The other thing that’s interesting, as we touch a little bit on money and getting smarter, unfortunately, we are seeing higher default rates. We are seeing higher percentages of foreclosures and closures.

When I started in the industry, probably when you did, too, it was like, “Dentists never default on their loans.” I’m sure it happened, but it wasn’t a thing. We’re seeing that it is becoming a thing. We were talking about this. In terms of businesses, it’s still one of the safest businesses that a bank could lend to. The default rate is still very low, but it’s changing. Because of that, unfortunately, the banks need to tighten some of these restrictions. We saw with banking a couple of years ago, where deposits all of a sudden became a big thing for banks because of Silicon Valley Bank. Now, liquidity is becoming a big thing.

As you guys are learning, you’re in the space, which is both good. I’m not going to say it’s bad. It’s good but also makes you more aware of, “This is what a good practice should look like. These are what the numbers should be. This is what profitability should be. This is what a successful practice or venture would look like.” Now that we know that and we’ve seen enough of these to know that, we also know what a not-so-great practice looks like. It protects the bank.

To that point, we are very skilled. For all of our underwriters and underwriting managers, this is what they do day in and day out. They don’t do automotive shops or strip malls. They do practice finance. They do dentistry. We are skilled at being able to see those red flags initially. We dig into it. We just don’t say, “There’s a red flag. Stop.” To use an example, I had a startup doctor come to me with low liquidity, but he was able to prove where it went. He paid off about $400,000 in student loan debt in a two-year period.

We had a conversation about that. He wants to be debt-free. It is excellent. In certain situations, I’m able to take a red flag with underwriting and say, “This was a discretionary use of funds.” You can see exactly where they put the money. Where we run into issues is if we can’t see where they put the money, or it looks like a lifestyle adjustment. If there’s usually one red flag, you can try to work around it with different strengths of the deal. Once you start putting up additional red flags, that’s where banks start getting a little nervous.

If you’re tuning in to this, disclose everything. You’re not going to hide anything from the bank. They are going to pull your credit. They’re going to do a lien search. You’re going to read the leases. You’re going to read this asset purchase agreement. You’re going to do your diligence again. Money is getting smarter. You know now what to look for. We have a pretty comprehensive, robust view of our client’s financial situation, but it doesn’t mean that there aren’t things that maybe they haven’t even disclosed to us, like, “I’ve got divorced.” We see this a lot of the time with divorce, where you’re like, “I got divorced. My wife got the home, but my name is still on the home.”

Disclose Everything To The Bank

That’s going to show up as a lien against you. Sometimes, things like that never get cleaned up. If that’s the case and you disclose that upfront, you might say, “We’re going to need to get that cleaned up.” You might say, “As long as we know,” or “You can show us your divorce decree,” or whatever. You’ve given time. 1) You’ve disclosed it. 2) You’ve given time. As underwriting works through the file, you can fix those things as opposed to, “We’re supposed to close on Friday. It’s Tuesday. We’re trying to loan docs. We’re going to do one more credit pool. What’s this new million-dollar loan you’ve got on this condo in South Carolina?” That’s going to be a problem.

One of the reasons we love working with you is that we do work with a lot of our clients and get a lot more approved and through than not. One of the things that is almost a guaranteed deal killer is this. With one red flag, we can work. Let’s work through that as long as the explanation makes sense. I’m thinking of a client we have in common who had some credit card expenses. We were able to prove they’re all business-related, not personal.

It’s like, “Those are all the P&L. We’re good. We can check that box. It is not a big deal.” Disclosing that is when we work through that. If one turns into two, then turns into three red flags, and then we get through those, you’re like, “We’re ready to close. Wait, what’s this house that popped up on your credit report?” I’ve seen it all. I’m sure you’ve seen even more. Make sure you disclose upfront. You’re not going to hide anything from the bank. That’s important to remember as well.

Banks do look at character. We look at their shoes. We will look into the licenses of doctors, too. If there are license actions, we look into them. If you didn’t report a bankruptcy and we found it, the underwriters can ask why. Why wasn’t this stated upfront? Upfront is the way to go. Jonathan, I’ve worked with many of your clients. You know that I do my analysis upfront. Tell Craig everything. I’ll tell you what it looks like from a debt service and what hurdles you might have. I’ll give you options. Do you want to move forward with these items that I see? Upfront is great. Having that information on hand and being able to communicate with the underwriting and credit teams is paramount.

The Rise Of Creative Acquisition Structures

This is the last question that I have for you, Craig. I don’t know if there’s anything you want to give as far as any parting words, any promos, or anything you are running. That will put you on the spot. If you’re not, it’s okay. When we’re structuring these deals, what we’re seeing a lot more of, which is a lot more common with these acquisitions, especially at the second, third, fourth, fifth, sixth, or tenth practice, is a combination of debt.

“It’s a million-dollar practice to get a million-dollar acquisition purchase price. Let’s give you $600,000 in cash, and then $400,000 in equity in the DSO.” We’re seeing a lot of these kinds of combinations. How does the bank look at that? Does the bank like those? Do you look at that as a way for the sellers to participate in some of the risk with them? How do they look at that equity? That’s got to be on the balance sheet as something that’s got to be paid out at some point in time in the future. Do you guys like those deals? Don’t you like them? Is it an automatic yes? Is it an automatic no? Is it leaning towards no? I got to get out of curiosity, because we’re seeing more and more of these types of creative structures with these acquisitions.

It’s a double-edged sword. I’ll start with some of the good. Some of the good is that you now have additional owner practitioners running these practices. Why that’s good is because you have continuity of operations. If somebody goes down, if something happens, you have more than one owner to help step in for that. In addition to that, you retain some talent. Sometimes, that’s why you’re allowing somebody to buy into your practices. You want to retain that talent. We see that.

On the other side of the sword, what could happen here is I’ll start with one fact. Sometimes, you do that too many times. You have this very convoluted ownership structure where you might have 8 to 10 practices with different ownership percentages of different doctors. What banks are going to want to see is if a doctor owns 20% or more, they’re going to want them as personal guarantors. If you’re going out to purchase your ninth practice and you have eight different doctor practitioners owners, we’re going to need a personal guarantee from everybody.

That increases the risk that somebody has an issue. Somebody has delinquencies or very high lifestyle expenses. A double-edged sword doesn’t happen too often. A lot of times, we do see common ownership in multi-practice dental offices. We will see it either way. We will take a look at it and analyze it either way. I can’t say one is better than the other. They both have their strengths. They both have their weaknesses.

Navigating The Ever-Changing Interest Rates

I’m curious. We’re seeing more and more of that structure. Craig, I appreciate you coming on here. It’s always a pleasure when we get to spend time together and tap into your wealth of knowledge around this ever-changing space. I will put you on the spot. Any thoughts around interest rates? Everyone thinks they’re coming down. People think they’re going up. What are you being told internally? Should people plan on them staying where they are? What do you think?

The cost of funds is what the banks utilize. The best way to look at where banks are is to take a look at the ten-year treasury. Go online, take a look at it, and see where it’s at. We did see a spike, probably looking at about a twenty-basis point increase. We’re still mid-fives. Sometimes, it depends on the day. This economy is so wild. We are offering a promotion. It’s called Relationship Pricing. If you’re willing to do a checking account, merchant services, which includes some credit card terminals and a business credit card, we’re offering a half-point discount on the entire loan.

Anything else you want to say as we sign off here?

I would like to thank you again for having me. I love working with your team. You are always so punctual. You have the information on hand. It’s a multiplier for how quickly we can get to our service level for our clients. The quality of information that comes out is amazing. Thank you for using it.

Thank you. I’m big on relationships. We enjoy working with you guys and your team. It’s been fun to work with Phil and you. Getting to spend time with you at the event is always a good time. Huntington is our go-to number one choice. There’s a reason for that. It is not only your customer service, but also a very well-oiled machine of a team, great rates, and all-around good service. We appreciate that. I appreciate you being one of our partners. I look forward to having you out here. Craig, thanks again for your time, for sharing your expertise and insight into the banking lending world. It’s an interesting conversation to be revisiting on a regular basis. As you said, it’s ever changing. I appreciate you being on here.

Thanks for having me.

You got it. Bye, everyone.

Important Links

• Huntington Bank
• Craig Leone on LinkedIn
• Healthcare Practice Loans | Huntington Bank
• Dental Wealth Mastermind
• Aligned Advisors
• Jonathan Moffat
• Jonathan Moffat on LinkedIn

About Craig Leone

Craig Leone is a trusted business development professional with a strong commitment to supporting dental professionals throughout their practice ownership journey. As Huntington Bank’s National Business Development Officer and a former Practice Finance Underwriting Manager, Craig brings a unique blend of accounting expertise, sector-specific insight, and leadership experience to every client relationship.

Over the course of his career, Craig has partnered with hundreds of dentists to help them start, grow, and transition their practices. He takes pride in understanding not only the business vision but also the personal aspirations behind each practice. His hallmark qualities—attention to detail, clear communication, and creative problem-solving—enable him to deliver world-class financial solutions tailored to each client’s goals.

Craig graduated summa cum laude from Franklin University with a degree in Business Management. He also served honorably as an Infantry Soldier and Officer in the U.S. military before transitioning into banking, where he gained valuable experience in both Private Banking and Business Banking.