£831,000 funding to buy a pharmacy - a 95% loan to value finance package

Published on 9th August 2019

Business finance is a complicated area, and many pharmacists will turn to a broker when they have a large-scale funding need to help them get the deal they want. 

However, most brokers lack the necessary expertise in the sector. This lack of expertise can often mean a failure to secure the best rates because they do not understand the details of the pharmacy business, such as NHS contracts. In extreme cases, it can result in a failure to secure funding at all. 

We were recently approached to provide the funding to allow a pharmacist to buy a business, after the brokers he had initially approached had failed to provide any finance offers after weeks of trying.

Buying or selling a pharmacy requires some specialist skills and knowledge of the market and the economic realities. Most buyers will seek a bank loan to buy their first pharmacy and, generally, banks will consider pharmacists and pharmacy purchases as being a relatively good risk.

However, some specialist understanding will be required. Lenders find it easy to agree funding for established businesses but they can be much more reluctant to lend to a new business owner. What’s more, a pharmacy is not simply a high street shop. To help a lender see the potential of your plans, you may need to prepare a detailed business plan which will require the support of an expert team.

The challenge

Our client was a pharmacist who had worked as a locum for several years and had an excellent understanding of all aspects of managing a successful business. He now felt the time had come to run his own business, and had found a leasehold pharmacy close to his home that he was ready to buy. He saw that the business had a good location on a high street with plenty of scope for retail growth on top of a thriving script business.

However, when he approached banks directly they were unable to help him.

He realised that finance was not his core expertise, and turned to business finance brokers for help. He provided them with a series of documents that they requested but, after two months, realised that he was no closer to getting any kind of offer.

He asked the selling agent who found the business he wanted for help - and he suggested that the pharmacist came to Rangewell to for a solution that would provide the funding he needed.

How we helped when others could not

Our service is always personal, and our expert teams work closely with clients to find the answers to their needs.

In this case, our client had a very clear need. He wanted the highest possible Loan to Value (LTV) funding to keep his own contribution as small as possible. 

This can be a particular challenge as most lenders have set the levels of LTV that they will offer, and most will offer less than 80%.

We have a specialist team working to provide solutions for the pharmaceutical sector, and we set out to provide the answers that others could not.

First, we contacted the lenders we know with the specialist knowledge to support the sector. Then, to let our client build a compelling business case, we helped him build an expert team, made up of an IFA, a solicitor and an accountant, all of whom had expert knowledge of the sector.

Then with their help, we provided the bank with a detailed business case, based on our knowledge of the sector and the particular factors - such as NHS contracts - that affect it.

We were able to secure an offer of 80% funding in a matter of days - but we believed that we could do better.

By providing a second legal charge over the client's home, we were able to negotiate a 95% LTV - reducing the client's contribution needs, and allowing his purchase to go ahead. 

We provided a total of £831,000 at just 3.25% over 15 years. The high LTV meant that the annual repayment cost was around £70,000 per year - but this allowed our client to buy a business offering turnover of £200,000, with plenty of scope to grow. 

However, we did not stop there. We provide all types of funding for the sector - and helped arrange a Revolving Credit Facility that would provide £65,000 of stock for his new business. 

We help pharmacists - and other business owners - with all their funding needs. If you are ready to buy a pharmacy, our Pharmacy Funding Specialists are ready to provide the help you need. 


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