Health and care practices

Pharmacy Business Funding

Independent pharmacies are written by SBA lenders, banks, working-capital and receivables lenders and equipment lenders. The capital usually opens or buys a store, adds automation or a compounding lab, refinances debt, or carries the gap between the wholesaler's debit and the PBM's payment.

What lenders weigh in a independent pharmacies file

  • Script counts by month, the generic dispensing rate and gross margin by payer, because top-line pharmacy revenue says little about the cash a store keeps.
  • Payer mix and concentration: a store that depends on one long-term-care facility, one 340B contract or one Medicaid plan is priced for that dependence.
  • The reimbursement cycle, meaning the days between the wholesaler's debit and the pharmacy benefit manager's remittance, and whether the bank statements show that gap carried without overdrafts.
  • Licenses and contracts in good standing: the board of pharmacy permit, DEA registration, PBM or PSAO contracts and the primary wholesaler agreement, and whether each transfers in a sale.
  • The wholesaler's security interest in inventory and receivables, which a lender must subordinate or carve around before it can take its own collateral.
  • The owner's pharmacy experience and the pharmacist-in-charge, because an underwriter wants a credentialed professional accountable for the permit and the prescription file.

What gets funded

  • SBA 7(a) through pharmacy-minded lenders: Pharmacies are eligible under 13 CFR 120.110. The common route to opening a store, buying one, refinancing expensive debt or a buildout at a long term, with an equity injection and personal guaranties from the owners.
  • Working-capital lines of credit: Sized to the reimbursement cycle, the line carries payroll and wholesaler orders between the debit and the PBM remittance. Banks write them for established stores, non-bank lenders for younger or faster-growing ones.
  • Healthcare receivables financing: Advances against adjudicated third-party claims for a growing store or one carrying a large long-term-care book. Costs more than a bank line and is written on the quality of the payers rather than the owner's collateral.
  • Equipment financing for automation and compounding: Dispensing robots, pill counters, compounding hoods and clean-room equipment, refrigeration, point-of-sale systems and delivery vehicles, secured by the equipment itself, often with a modest down payment.
  • Wholesaler terms and dating: Extended dating on opening inventory and prompt-pay discounts are often the cheapest inventory capital in the deal. The security interest that comes with them is accommodated in the senior lender's structure.
  • Owner-occupied real estate loans: SBA 504 and conventional lenders fund the building when the pharmacy owns or buys it, which adds collateral every other lender can see and fixes the occupancy cost for the long term.

Independent Pharmacies funding guides

How MercFinancial places independent pharmacies requests

MercFinancial is a commercial funding brokerage in Houston, not a lender, and it has no pharmacy program and no promise of approval. A pharmacy request starts with the file: the script counts and margins, the payer mix, the wholesaler and PBM contracts, the bank statements, the lease, the licenses, and what the money is for, whether that is a new store, a purchase, automation, a compounding lab or the cash to carry the reimbursement cycle. From there, the funding sources among MercFinancial's more than 160 whose credit policy allows pharmacies and the structure in question are identified, one file is placed with all of them, and the offers are compared side by side.

Whether any product is available depends on the funding source, and when nothing fits yet, you are told that plainly along with what would change the answer. Stephanie, the lending assistant, pre-qualifies a request in a few minutes with a soft credit pull that does not affect your score, and a free call with a funding specialist is booked at the contact page.

Frequently asked questions

Can an independent pharmacy get a business loan?

Yes, and from more kinds of lender than most owners expect. Pharmacies are eligible for SBA 7(a) loans, banks and practice lenders write term loans and lines for established stores, receivables lenders advance against third-party claims, equipment lenders fund automation and compounding equipment, and the wholesaler extends dating on inventory. Which fits depends on the store's stage, its numbers and the funding source's policy.

Why does a pharmacy need a working-capital line?

Because the wholesaler is paid before the pharmacy benefit manager pays the pharmacy. A claim adjudicates at the register, the wholesaler debits the account on short terms, and the PBM remits on its own cycle, so payroll and the next order fall in the gap. A line sized to that cycle carries it without overdrafts, which is also what keeps the file at bank pricing.

How do I finance buying a pharmacy?

Most often with an SBA 7(a) acquisition loan for the goodwill, fixtures and working capital, a seller note for part of the price, and a buyer equity injection, with the inventory counted and priced at acquisition cost on the closing date. Lenders size the loan to the store's historical cash flow, checked against its script data, and want a plan for transferring the permit, the DEA registration and the payer contracts.

Can I get a loan to open a compounding pharmacy?

Yes, usually through SBA 7(a) with equipment financing for the lab. A start-up compounding file needs a pharmacist with compounding experience, the compliance plan for sterile or non-sterile preparations, an executed lease, a wholesaler agreement, a budget for the clean room and equipment, and an operating reserve while prescribers and patients find the store. Lenders want the ramp funded, not assumed.

What do lenders ask for from a pharmacy?

Monthly script counts and margin by payer from the pharmacy system, business and personal tax returns, interim financials, six to twelve months of bank statements, a recent physical inventory at cost, the board permit and DEA registration, the PBM or PSAO contracts, the wholesaler agreement, the lease and a personal financial statement from each owner. A file with all of it ready places in days.

Financing for this industry

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MercFinancial is a commercial funding brokerage, not a lender. Approval, loan amount, rate, term and funding are decided by the funding source on the strength of the file; nothing on this page is an offer or a commitment to lend.