There are many decisions that should be made before you finance the development of a new pharmacy or the purchase of an existing pharmacy location. Financing should only be approached once the ownership planning process has been completed.
Many different types of financing are available today. Most people think first of traditional lenders, such as banks and organizations like the Small Business Administration (SBA). Others think of suppliers and wholesalers. Financing can also come from a current pharmacy owner “taking back a note.” Loans from parents and other relatives are commonly used for financing, as well.
Rarely is just one type of financing used in the acquisition of a pharmacy. For this reason, it is important to understand the breadth of financing options available in order to determine the best options for your needs.
RxOwnership® can help qualified buyers explore short- and long-term financing options directly through McKesson.
Traditional types of financing for buyers
Traditionally, financing is classified as short-term or long-term:
Short-term financing is defined as financing with a term of less than one year in duration. Typically, short-term financing takes the form of dating (extended payment terms) and short-term notes. Short-term financing is typically not appropriate to fund the purchase of a pharmacy, unless the borrower expects to be able to repay debt very quickly. It’s typically only used to fund the opening inventory order.
Long-term financing typically remains in effect for more than a year. Long-term financing generally is required when an owner purchases an existing pharmacy or builds a store from the ground up. As an example, long-term financing from McKesson frequently takes the form of a promissory note with equal amortization of the principal amount.
RxOwnership can help qualified buyers explore short- and long-term financing options directly through McKesson.
Accessing the sources of financing your purchase
There are many sources of financing for pharmacies, including institutions like the Small Business Administration (SBA) and banks, as well as family members or existing pharmacy owners. Larger institutions, such as McKesson, are also important sources of financing.
Traditional lenders — including banks and financial institutions — underwrite each loan to assess the creditworthiness of the borrower. These institutions typically require specific data about the pharmacy in order to perform an analysis of the potential loan. This is their way of ensuring that the prospective borrower will be able to repay the loan.
When McKesson finances an independent pharmacy during ownership transfer, the same rigorous data gathering and analysis is conducted. While McKesson may have some of the financial and credit data in-house, based on its business relationship with the owner, additional information is also required in most cases.