Seeing potential and finding a solution - £500,000 funding to buy a pharmacy

Lenders such as banks find it easy to agree on funding for an established business - because they can see then the business has a record of successful trading. They can be much more reluctant to lend if the business, or the owner, is new. 

However, there are solutions to help new businesses and new business owners raise the funds they need. At Rangewell, we can use our expertise to help new business owners find the funding they need - and help banks to say ‘yes’.

The challenge

Our client was a pharmacist who had joined a high street chain after qualifying, and gone on to run the in-house pharmacy at a large supermarket for several years. He now felt ready to run his own business and had found a leasehold pharmacy close to his home that he was ready to buy. He was confident that the business had a good location close to the town centre, and had plenty of scope for growth.

However, when he approached the leading banks - which he felt would provide the most cost-effective funding -  they were unable to help him.

He realised that he needed expert help, and came to Rangewell for a solution that would provide the funding he needed.

How we helped

Our service is always personal, and our expert teams work closely with clients - because we know that it can be the best way to find the issues that block finance and to find ways around them. 

When one of our specialists in the pharmacy sector conducted a detailed fact-find, he saw the issues that had prevented the banks from lending. We saw there were some negatives.

The pharmacy was priced at £500,000 but our client only had £30,000 as a cash contribution. He owned his own home with his wife - but had little equity in it. His home was worth £350,000 but he had a £270,000 mortgage.

It looked as though the business would not generate sufficient turnover to make the loan affordable.

But we dug a little deeper and found that the potential of the business was far greater than the current figures would suggest.  We saw that the solution would be to go back to the banks and use our expertise to support the application. 

Banks will still often provide the most cost-effective source of funding for small businesses, but they are restricted in what they can do by very tight business criteria. We realised that there was scope to get the funding required - if we could provide a sufficiently detailed business case.

We set out a plan of action designed to support the application.

• We put the customer in touch with a specialist pharmacy valuer to discuss the best practices, and the costs and revenues to be expected.
• We called in a specialist accountant and built a business plan based around a reduction in locum fees and reduced staff costs from having our client work as an owner-manager.
• We developed a revised cash forecast, based on our client's plans for a new layout, with additional display space and a new consultation room to deliver extra income.

Helping the bank get to ‘yes’

We believed that the most appropriate approach would be an unsecured loan. We then used our personal contacts at other Tier One Banks to talk to the decision-makers we believed would recognise the potential of the deal. 

The result was 3 offers from 3 tier one Banks at 90% LTV 

Our client selected the most attractive rate - just  2.75% for an unsecured loan

Our client was more than happy with the offer. Thanks to the fact that mainstream banks recognised the viability of his plans, he was able to call on a slightly larger contribution from family to support his funding needs.

He has taken over the new business, and with renovations underway, has already seen an increase in revenues, with more to come.

At Rangewell, we help pharmacists - and other business owners - with their funding needs. Buying a business, buying out a partner, start-up finance for your pharmacy - plus Asset Finance, Commercial Mortgages or any other kind of finance - call our Pharmacy Funding Team for help with your funding needs.