£750,000 funding to buy a pharmacy - even with a short lease

Published on 7th October 2019

Banks and other lenders may be very willing to agree funding for an established business, or an experienced business owner. They see a successful trading record as a sign that the business will be profitable in the future - and they are likely to be paid back.

But what happens when the future for the business does not look as positive - because the lease is too short to cover the payback? 

Our client was a pharmacist who had several years experience running a series of chemist shops. With four shops in his chain he saw a fourth that might be a worthwhile addition to his business. 

“I saw the property in the next town to where we live and had a look inside. It had a lot going for it, with a good position and a busy street location - and plenty of footfall. It might need a little refreshment inside, but nothing too drastic - and with my existing businesses, it would mean I could enjoy economies of scale. I even had a manager who I could put in.”

It had a good location in the centre of a town not too far from his other shops and there were no major competitors nearby.

With a thriving existing business he should have had no problem securing the new business, at the asking price of £750,000 which was reasonable for the region and the level of profit the business was already generating. However, there was a problem. 

A short lease - and lenders

The lease on the new property was just six years long. It would be impractical to provide the level of funding required - £650,000 - over that period. Repayments would be upward of £100,000 per year.

“I knew the property was a potential gold mine because of the location and once I had taken over the business, I was confident that I could renegotiate a renewal of the lease with the landlord.“

It seemed a sound strategy but, despite his excellent business record, lenders would not lend on that basis. 

The business owner approached us for a solution. We knew that banks can provide the most cost-effective source of funding for many small businesses, but they have very tight lending criteria that they must follow. We realised that there was scope to get the funding required - if we could provide a way to overcome the restrictions banks set for themselves. 

Looking for funding for a pharmacy? Is your funding request not straightforward? Talk to Rangewell about innovative funding solutions or apply today 

How we helped

We set out a plan of action designed to provide an answer. We used our personal contacts at other Tier One Banks to talk to decision-makers we felt would recognise the potential of the business and be in the best position to help, and arranged a term loan over 15 years, which would allow the repayments to be reduced to a manageable level.

We included within this agreement a break clause at six years. This would allow our client to repay without penalty after six years, with the intention of then arranging a refinance agreement, which would reflect his business at that time - which should include a new long-term lease agreement. 

Under these circumstances, the bank was able to offer the funding required 

Because we had contacts at the bank, we were able to streamline the application - which can take months - and get the offer in principle inside a week - which allowed our client to agree the deal with the outgoing owner. 

  • £650,000 at 4%
  • 15 years term
  • Current monthly
  • Repayments £4,476.14
  • Annual cost £53,712

“Obviously, I will have some work to do in the future to keep my new branch running - but by then I should have the lease sorted out - and I know that Rangewell will be able to help me again.”

At Rangewell, we help pharmacists - and other business owners - find the answers they must have for their funding needs. 

Our service is independent, fast and absolutely free - and means having an expert working to find you the financial answers you need. To find out more about what we can do for you, simply call us at Rangewell.


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