Pharmacy Finance

Financing a Pharmacy  

by Brad MacLiver, Authorship & Profile at Google   

Whether you are looking to purchase a pharmacy, finance an existing location, or need to finance the buy-out of a partner is here to assist you obtain the financing you need. We are direct correspondents to major financial institutions, fund managers, and investors.    

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Pharmacy Business Loans   Business loans (debt financing) requires a clear and concise business loan package. Terms and interest rates are determined by the lender and are established after the review of the business loan package and credit checks.  

Currently the pharmacy industry is experiencing a decline in financial margins, and this affects the ability of a borrower to service debt. Pharmacies typically don’t offer much security as far as hard assets are concerned. Inventory can quickly disappear.  

Displays and shelving, which may still be a good condition, are usually old and don’t have much resale value for a lender. The business is usually operated out of a leased location. Due to these factors the borrower may need to offer a strong personal financial position, personal guarantees, and possibly personal assets for collateral.  

The funding package needs to include the “current” corporate and personal financial information, and additional supporting documentation. Having ba lender move forward with funding the pharmacy will be dependent on the detail of the funding package and the type of funding requested.    

Six Points to Consider About Pharmacy Business Loans  

1. Local banks usually do not have experience in financing pharmacies. They usually will not value the customer files as an asset. A typical retail pharmacy with a current market value of $1 million may only have $10-20,000 of hard assets that have not been fully depreciated and can be used as collateral for the pharmacy business loan.   Would a bank loan $1M on home that only had $20,000 of collateral? Of course not, and the same is true for a business. Therefore, in order to obtain the best funding, it takes a lender who understands the dynamics of a pharmacy business. With their pharmacy knowledge, pharmacy lenders can provide longer terms and larger amounts of financing than a local bank can offer.  

2. When the pharmacy owner chooses to use the services of to package the loan and arrange the loan from a pharmacy lender (who we have relationships with) then you have the advantage of our pharmacy expertise representing you, along with our relationship with multiple pharmacy lenders allowing you the best opportunity to receive the funding you require.  

3. needs a complete package to submit to the lender. Lenders will not have their staff working on a loan package that is not complete. They are not going to make assumptions, or guess at what the numbers are if you omit some of the required data. For increasing the success rate of funding, team up with  

4. The business loan proposal will be based on the pharmacy’s cash flow. Your data will need to show the lender that you can service the debt, on a monthly basis, based on your typical business operations.  

5. It is to the borrowers benefit to be up front about any skeletons in the closet. Let us know from the start about any issues so we can deal them. If issues arise later, the lender may make assumptions about the integrity of the pharmacy management.  

6. For pharmacy Business Loans Interest rates and terms are based on the credit of the borrower and the cash flow of the business. With lenders who understand pharmacy, we typically see terms and interest rates that are more competitive than a local bank who does not understand pharmacy.  

For more information regarding pharmacy business loans, drug store valuations, selling a pharmacy, or other forms of financing pharmacies please contact us today.



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