Financial survival after COVID-19

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By Adrian O'Dowd

2020 has been one of the hardest in recent years for many businesses which have struggled to keep afloat after the COVID-19 pandemic forced some workplaces to close completely.

Dental practices have been at the centre of the storm being forced to close to routine work for months although some semblance of normality is now starting to return.

Several months of closure have taken their toll on dental practices and their finances with many practitioners increasingly turning to their accountants for life-saving support.

COVID impact

In an article published in the Postgraduate Medical Journal* in April, authors Imran Farooq and Saqib Ali said that the COVID pandemic and ensuing restrictions on dentistry had “resulted in serious monetary implications for dental practices worldwide”.

General dental practices had suffered “huge financial losses” as they could only provide emergency dental care.

The BDA has indicated the scale of losses, saying that it expected UK dental practices to face “crippling losses due to suspension of routine dental care”.

In October 2020, the union said that official data on activity indicated treatments delivered by NHS dental services in England were at a quarter of pre-COVID levels, and had only begun to inch above typical demand for urgent care, which was currently receiving priority.


The lifelines being offered by government have included the Coronavirus Business Interruption Loan Scheme (CIBLS), Bounce Back Loan Scheme (BBLS), the furlough scheme and the government promise to keep funding NHS dental practices.

Many practices have taken up these offers of support as shown by a survey of dental practices carried out in August 2020 by the National Association of Specialist Dental Accountants and Lawyers (NASDAL).

NASDAL’s quarterly goodwill survey of 121 UK practices found that more than half (52%) of these practices had relied on either a CIBLS or BBLS loan from the government, collectively borrowing around £3.8m.

The survey found that 11% of practices had taken out CBILS loans (mainly private practices) and the average CBILS loan was £105,000, while 41% of practices had taken out BBLS loans, covering all types of practices, with the average BBLS loan being £49,000.

Alan Suggett, Specialist Dental Accountant and Partner in chartered accountancy firm UNW LLP who compiles the survey, says: ‘The CBILS application process was particularly arduous and difficult and this meant that in my experience, those practices that applied for CBILS loans really did need the funds. BBLS however, required just a couple of ticks and the money was in the account 48 hours later.

‘I suspect that a large number of applicants did so on a ‘just in case’ basis and will be happy to pay the money back in full next year.’

Importance of financial advice

Dental practices rely on good financial advice at any time but especially now, according to Muhammed Shabbir, Director of Armstrongs Accountancy Ltd, who says: ‘Like any industry and other trading sector involved in the economy, financial advice is important.

‘With the COVID-19 pandemic, for some of the practices we have seen their private income go to zero. Some have adapted with certain measures and opened for emergencies. Some have started practising again but obviously support and advice is needed on how to manage the funds and keep it going.

‘Many practices have got common contracts with the NHS and the government is supporting that, but the private income which provides them with some lucrative opportunities – that has dried up due to lockdown.’

NASDAL’s Chairman Nick Ledingham believes accountants’ advice is essential, saying: ‘If practices are dealing with an accountant that acts for many dental practices, then the accountant will know what the effect on the dental profession is in a widespread way across the country, whereas the individual dentist may only see what is happening to their own practice.

‘An accountant who is a member of NASDAL that acts for 200 or 300 dental practices will know in general terms what the danger signals might be for practices and what they need to do to deal with particular issues.’

Uncertain future

The long-term future of some dental practices is in doubt, especially for purely private practices, say experts.

Mick Armstrong, BDA Board Member and previous Chair of the union’s Principal Executive Committee, believes some practices may struggle to survive.

‘They are at risk of closure but probably not immediately because some have subsidised from savings or have heavily borrowed,’ he says. ‘They will have a finite period to pay that back so, potentially, they could borrow more or extend the loan period to keep going.

‘But at some point, they are going to exhaust those savings or struggle to meet those loans and currently with your expenses being the same if your income is reduced, then you are going to get more and more into debt.’

Recent announcements such as the government’s Job Support Scheme might help, but the end of the national furlough scheme will be a watershed moment, he believes, adding: ‘Fully private practice will have been hit hardest because they’ve had no support from government.

‘They can possibly offset that to a certain extent by increasing prices, but that will become unsustainable if we enter a deeper economic recession. Also, the corporates’ profits may be significantly affected and the effect on their viability is unknown but is potentially dramatic.’

Shabbir says he has not yet seen any practices close permanently as a result of the pandemic, but is aware that some are under extreme pressure to survive.

‘The practices that are private might go out of business until they have got sufficient reserves built up on their balance sheets,’ he says. “The furlough scheme did help and measures like the bounce back loans to support them during these tough times but some of them, if they haven’t got reserves, might go out of business if they don’t recover soon.’

There has also been an impact on acquisitions, he adds, saying: ‘With the deals which we have experienced, the price was agreed but due to the pandemic, they have had to renegotiate the value of the practice. There has been a downfall.’

The level of government support thus far in the form of small business grants, self-employed grant, furlough money and government-backed loans has helped many practices, argues Ledingham, but he warns: ‘By early spring next year, it seems likely that government support will have disappeared completely and they will be having to repay loans at that stage, but maybe they’ll be completely back in business.’

Impact of economic recession

Given the significant increase in job losses across the UK this year due to businesses of various sorts closing or cutting back after the COVID lockdown, money will be tight, meaning that people may not want to spend as much on non-NHS dental work.

Armstrong says: ‘In the last recession in 2008, private practice incomes dropped by 40% because people didn’t have the money to spend on what was largely discretionary treatments.’

Ledingham adds: ‘For people who work in the private sector, with the combination of redundancy or falling income for the self-employed, this may well have an impact on what they spend on private dentistry.’

In addition, practices face new costs as current restrictions such as how many people can be treated in a day dictated by enforced time periods between treatments while surgery and other areas are disinfected, and dentists having to maintain time windows between patients after an Aerosol Generating Procedure (AGP) to minimise risks of viral transmission.

These will take their toll on business, as Ledingham explains: ‘There are physical constraints as well as financial constraints. Private practices are still unable to get through the volume of work that they used to and are not able to see as many patients each day.’

Resilience of mixed practices

A recent project involving many stakeholders from the world of dentistry has sought to set out what mixed NHS and private practices will need in the future.

The Short Life Working Group (SLWG) was led by Deputy Chief Dental Officer for England Jason Wong and various organisations contributed including the BDA, NASDAL, and the Faculty of General Dental Practice.

The group reported** in August 2020 after investigating the claim that ‘there will be a dearth of dental practices on the high street in 18 months’ time’.

For the working group, NASDAL provided an independent assessment of the current fiscal position of the dental sector.

NASDAL estimated that although there was unlikely to be ‘significant insolvency of dental practices’ over the next 12 to 18 months, it anticipated that any cash flow impacts and potential practice insolvencies would emerge in late 2021.

The working group recommendations included:

  • an extension of the Coronavirus Job Retention Scheme for the dental sector
  • an extension of the maximum repayment term (currently six years) for both the CBILS and the BBLS schemes
  • ensuring all dental practices were eligible for business rate relief
  • government commitment to target additional funding toward expanded NHS dental provision.

Suggett, who is also Media Officer of NASDAL says: ‘We are not for one moment suggesting that the UK is now full of poor dentists or that the UK government should support zombie businesses.

‘However, it is clear that most dental practices are fundamentally sound businesses and to see a good number in potential difficulty purely because of capital loan repayments, is a real concern.’

Ledingham adds: ‘The issue, is if the private practices disappear completely, how would people get their teeth fixed and what would the impact be on what is left? Would the NHS be able to cope if the private practices weren’t around?’

Best advice

The best advice to dental practices currently is to seek as much help and support as they can secure, say the experts.

‘Keep your costs as low as you can, make sure you take advantage of any support schemes – such as the furlough scheme or the job support scheme – review your outgoings and your loans and see if you can get any extension to those. Crucially, seek the advice of financial experts,’ says Armstrong.

Shabbir agrees, saying: ‘Ensure you have available funds like the common funding schemes such as the bounce back loans and grants that local authorities are giving. If practices can secure some funding, that will give them a lifeline to last longer.

‘We are also looking at reducing their costs. Some of them are renegotiating with their landlords so if they can get some sort of rental breaks or some reduction in their rent to support their business, that would help. They can also renegotiate with their local authority on local business rates.

‘They should monitor their own outgoings, reduce them and review their expenses in a way that can help support them for the next 12 months.’

Ledingham’s advice to practices is simple, as he says: ‘Keep in close touch with your accountant if you feel you need any specific advice. Listen to what your accountant says and try to make sure that they are experienced in advising dental practices.’


* Farooq I, Ali S. COVID-19 outbreak and its monetary implications for dental practices, hospitals and healthcare workers. Postgraduate Medical Journal. DOI:10.1136/postgradmedj-2020-137781. (3 April 2020)

** Short Life Working Group. Investigation into the resilience of mixed NHS/Private dental practices following the first wave of the COVID-19 Pandemic. (27 August 2020)



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