Business Loans for Pharmacies
Find the Best Pharmacy Business Loans. Compare, Choose, and Save.
Best Business Loans for Community Pharmacies
Community pharmacists are always in need of capital due to the nature of their business and its challenges. Pharmacists have a lot to manage and must deal with many challenges when operating a pharmacy. Getting capital to help run the pharmacy is essential for cash flow to balance the Inventory of drugs, margin pressures from insurance companies, and over-the-counter products sold at the pharmacy. You often have to purchase supplies and meet payroll before funds come in from clients or insurance. Traditional banks can make it challenging to get funding for small business owners such as pharmacies. It’s no secret that it’s hard for a borrower to get a loan or any financing, for that matter, from a bank.
AdvancePoint Capital can provide that working capital to independent pharmacies like yours, so you focus on running your business and make it grow.
There are many financing options that pharmacy business owners can use to their benefit. Finding the right pharmacy financing that works best for your business may take some guidance. That’s why we put together the eight best small business loan options for funding small, independent pharmacies. Each of these financing options offers unique benefits and qualities that may work for your company. Take a look.
The 8 Best Small Business Financing Options for Independent Pharmacies
1. Long-Term Small Business Loans for Independent Pharmacies
Long-term business loans have a repayment duration of 2 years or greater. These pharmacy business loans offer a fixed lump sum upfront, repaid over an extended period of time (2 to 10 years), with the costs based on a principal and interest rate.
Product Overview
Rates: Interest rates starting treasury index plus 1% to 2.5% (currently 5.5%)
Terms: 2 to 10 years
Fees: Origination fees 0% to 3%
Payments: Monthly or bi-weekly payments
Credit Standards: All types considered, good to excellent preferred
2. Small Business Line of Credit for Independent Pharmacies
A small business line of credit is an open, revolving line that allows Ohio small business owners to draw funds when needed on-demand and make purchases up to a certain limit. Small business lines of credit require renewal, either semi-annually or annually, to be extended. The biggest benefit of this product for pharmacies is its flexibility, allowing you to draw funds at any time up to a limit.
Product Overview
Rates: Principal and interest rates start at treasury or prime rate index plus 1% to 2.5%
Terms: Open revolving line
Fees: Origination fees 0% to 3%
Payments: Monthly, bi-weekly or weekly payments
Credit Standards: All types considered, good to excellent preferred
3. Small Business Administration (SBA) Loans for Community Pharmacies
The Small Business Administration (SBA) is a federal government agency that provides programs, guidelines, and loan guarantees to approved lenders for business loans. The SBA is not a lender and merely provides a guarantee that gives approved lenders the ability to take on the risk of business lending with attractive rates and terms that could not normally be afforded to small businesses.
Without the Small Business Administration (SBA) to provide guarantees, the approved lender would not be comfortable lending under the terms outlined by Small Business Administration (SBA). The Small Business Administration’s SBA loans are very popular but difficult to acquire due to the requirements, guidelines, and restrictions. AdvancePoint Capital can help guide pharmacies through the process in a clear, fast, and efficient manner to have the best likely hood of approval.
Most Popular SBA Loan Programs:
- Standard 7(a) SBA Loan Program – This is the SBA’s primary program designed to provide financial assistance to small businesses. Like the guaranty percentage and loan amount, the terms and conditions may vary by the type of loans to small businesses.
- 504 SBA Loan Program – This is a powerful commercial real estate loan program that will provide small businesses another avenue for business financing while promoting business growth and job creation. The use of proceeds from SBA loan 504 must be used for fixed assets such as construction, real estate, land or land improvements (and certain soft costs) or can also be used to refinance existing debt. Commercial Real Estate will be needed for collateral.
Product Overview
Rates: Interest rates starting at treasury index plus 1% to 2.5%
Terms: 3 to 25 years
Fees: Origination fees range from 0% to 3%
Payments: Fixed monthly payments
Credit Standards: Good to excellent preferred, but all types considered.
Documentation: You will need to provide complete documentation. Application, six months of business bank statements, two years of business tax returns, year-to-date profit & loss, and a balance sheet, and more documents may be requested upon review.
- (New) Paycheck Protection Program (PPP) SBA Loan – The Small Business Administration (SBA) has established the SBA Paycheck Protection Program loan to provide funding to small businesses affected by the COVID-19 crisis. Contact AdvancePoint Capital for additional information about this disaster relief. A pharmacy is an eligible industry.
4.Business Credit Cards
Business credit cards are open lines of revolving credit that offer principal and interest rates with a set limit. A card is issued and can be used for making payments or purchases. It is not uncommon for a pharmacy to utilize business cards as well as other business financing options.
Product Overview
Rates: Introductory rates starting at 0% up to 28.99% (based on prime rate)
Terms: Open revolving line with a set limit
Fees: Annual fees range from $0 to $500
Payments: Flexible monthly payments
Credit Standards: Must have good to excellent rating and deep credit history
5. Short Term Small Business Loan for an Independent Pharmacy
Short-term business loans are loans that have a repayment duration of 6 to 18 months. Short-term business loans feature a fixed lump sum of money offered, with a fixed payback amount calculated using a factor rate. This pharmacy financing option is popular with pharmacy owners that cannot get approved through traditional means because of documentation requirements or credit tolerances.
Product Overview
Rates: Factor rates ranging from 1.09% up to 1.45%
Terms: 6 to 18 months in duration (typically 12 months or less)
Fees: Origination fees 0% to 5%
Payments: Weekly, bi-weekly, and in some cases, daily
Credit Standards: All types considered
Application Process: 1-page application
6. Business Cash Advance for an Independent Pharmacy
Business cash advances (BCA) are a type of purchase of future sales agreement that advances future sales at a discount to the business. The business is responsible for paying back a fixed amount (also known as a specified amount). The difference between the advance amount and the specified amount is called the “factor rate or cost.” A fixed percentage of future overall sale deposits is the method used for repayment. The payments are collected by an ACH fixed daily or weekly from the business bank account based on the specified percentage of future deposits.
Reconciliation can occur at the end of every month. If the fixed payments taken are more than the set percentage of deposits in the agreement, a business owner can request a refund to the business for overpayment, so the set specified percentage of revenue matches the sales volumes.
Product Overview
Rates: Factor rates from 1.09% up to 1.45%
Terms: No term limit
Fees: Origination fees that range 0% to 5%
Payments: Weekly or daily
Credit Standards: All types considered
7. Merchant Cash Advance for an Independent Pharmacy
A merchant cash advance (MCA) is also known as a purchase of future sales agreement that operates very similarly to a BCA. The most significant difference is the repayment process, which is connected to the future credit card revenue instead of overall deposits. No fixed payment is deducted from the business bank account. The set percentage of future card sales payment method is used. A pharmacy may use this option because most of the prescription sales payments come from credit cards.
Product Overview
Rates: Factor rates 1.09% up to 1.45%
Terms: No term limits (payoff depends on future revenues)
Fees: Origination fees range from 0% to 3%
Payments: Fixed percentage of future credit card revenues as payment
Credit Standards: All types considered
8. Equipment Financing for Pharmacies
Equipment financing is used for the purchase of equipment, securing the equipment as collateral. This type of funding comes in the form of a loan or a lease.
Product Overview
Rates: Factor rates 1.09% up to 1.45% or interest rates 4.5%-28%
Terms: 2 to 10 years
Fees: Origination fees range from 0% to 3%
Payments: Monthly fixed payments
Credit Standards: Good to excellent credit required
Time Frames: Same day to 3 days depending on the lender
The fast, convenient, and straightforward way to get the funding you need for your business – now!
Get your business a quote and more information today by filling out the simple form on our website.
Benefits of Business Loans for Pharmacy Owners
Working Capital Loans
Operating a pharmacy can be complex. Pharmacy owners need to balance customers, inventory purchases, employee payroll.
Inventory
Inventory financing for prescription medications, over-the-counter drugs, healthcare industry products, household goods, and other items often offered at pharmacies.
Renovations/Facility Maintenance
When running a pharmacy, the pharmacy facility needs to have a customer experience that is appealing, accessible, and convenient. Pharmacy owners may need to renovate the facility to draw in or maintain customers against competition like CVS, Rite Aid, and Walgreens. Projects such as these require various pharmacy financing. Real estate loans may be necessary to improve the property due to the high costs of renovations.
Marketing and Advertising
Many pharmacists need advertising to maintain and grow their customer base. Business loans allow you to design and optimize a website for greater exposure and access other marketing methods, including pay-per-click advertising, SEO and buying leads. Traditional outlets like radio, newspaper, and signage may also help grow your business.
Making Payroll
As a business grows, payroll will grow into something that must be managed and maintained with zero tolerance for cash flow shortages. Unexpected issues related to pharmacy business receivables can put a business in a position they can’t afford to be in, which is missing a payroll.
Working capital and other operational costs are a necessity for successful pharmacy businesses. The right pharmacy financing option to help is a real game-changer. The vast and diverse range of pharmacy business loans gives pharmacists the freedom to make sound financing decisions and eliminate payroll as a problem.
Frequently Asked Questions
Are business loans for pharmacies difficult to obtain? What qualifies for a business loan?
This may depend on which type of loan you’re looking for for your pharmacy. Luckily, there is a wide variety of options for you to choose from for a pharmacy, each with different qualifications based on the business’s health so that you can discover a solution that works for you.
Can I qualify for a pharmacy business loan if I have bad credit? What type of credit score do you need for a business loan?
Yes, there are pharmacy funding options that you can take advantage of even if you have a poor credit history. A business line of credit, shorter-term options, and invoice financing are great options for pharmacists struggling with creditworthiness.
Can I get a startup pharmacy business loan?
It is possible to obtain a startup loan for a pharmacy, but the options may be more limited and difficult to qualify for. The SBA has some incredible financing opportunities for startups. However, SBA financing is not easy to be eligible for and may require excellent credit health from businesses that are applying.
What’s the best pharmacy business loan for my business?
That depends on a wide range of factors, including how long you’ve been a pharmacy, what you need the funds for, credit history, and the pharmacy’s current financial health. The best way to determine which financing option is best for your company is to look at all of your options or consult with a lending professional regarding your unique circumstances.
What information is need on a business loan request?
Typically a lender will require ownership/ borrower name, business name and business address, phone number, and business bank statements for review will check off the box for most Lenders.
The Bottom Line
When searching for a pharmacy loan, the bottom line is that pharmacists have to evaluate all the financing products available in the marketplace. You shop insurance companies, don’t you? The same goes for acquiring a pharmacy loan. Bank loans aren’t always the way to go due to a lack of flexibility with credit, cash flow, and financials for pharmacy loans that a bank would offer.
AdvancePoint Capital can take those challenges your pharmacy may have at getting approved at a bank and turn those problems into solutions with various loan programs at our disposal.
Get Started and Grow Your Pharmacy Business Now!