When dentists need access to financing, a line of credit can be an excellent solution. But should you opt for an unsecured or secured line? Here’s an overview of the key differences dentists should understand when weighing these options:

Unsecured Lines of Credit

An unsecured line of credit is not backed by any business or personal assets as collateral. This makes qualification easier since lenders are taking on more risk.

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Benefits of unsecured lines include:

• Easier to qualify - No need to pledge collateral assets.
• Access larger amounts - Lines up to $250K are possible depending on revenues and credit score.
• Flexible spending - Funds can be used for any business purpose.
• Potentially lower rates - Unsecured rates can be competitive, often Prime + 0-3%.

The main downside is that unsecured lines generally have lower maximum limits before additional collateral is required.

Secured Lines of Credit

With a secured line, the line is backed or “secured” by business or personal collateral like real estate or investments. This lowers the lender’s risk.

Benefits of secured lines:

• Qualify for larger limits - Access higher credit lines by pledging assets.
• Possible lower rates - Secured lines can feature the lowest interest rates.
• Build business credit - Making payments responsibly helps establish business credit history.

The trade-off is that putting up collateral takes extra time and paperwork. If the line goes unpaid, the assets could be seized.Which is Better?For dentists just starting out or those needing under $250K, an unsecured line is likely the simpler, faster option. For larger credit needs above $250K, or the lowest rates possible, a secured line backed by strong collateral is recommended.As with any financing decision, be sure to compare multiple lenders and offers to find the best line of credit for your practice.