Securing £50,000 asset finance for a pharmacy

The chemist shop is a feature of every high street - but the rapid evolution of the retail world means that many older businesses need to react to survive in the increased competition from supermarket pharmacy counters, the discount chains and franchises. Small independent chemist shops based around a dispencing pharmacy are likely to be with us for many years yet - but, like the business itself, they will need to evolve to survive. 

“There is still money to be made with a pharmacy. People will always need to come in to have their prescriptions filled so you have a ready flow of customers. But you can’t think that it is enough just to stock a few extra items. You will have to take a professional approach to retailing and to work for every sale you make.”

However, the sector faces fierce competition form the supermarkets and franchised chains, and owners of independent pharmacies need to run efficient businesses to be sure of their share in the success the sector enjoys.

In the case of a client we worked with recently, that meant a major programme of redevelopment.

“Your pharmacy is essential, but if you are going to make money, you need to provide all the other things people expect in chemist shops. These days it is not just cosmetics that are money spinners. People want electrical beauty, hair products and more. You need plenty of retail space just to show everything - and you need the latest displays and lighting to make sure everything looks its best.” 

He ran a business with two chemist shops in a large city in the North-East of England. Both were in good positions, one in a major high road and the other in the city centre. Business was running well, but he was conscious of increased competition from supermarket pharmacies and other retailers offering cosmetics.

He looked at his premises and saw they were both dated - but that with some investment, he could greatly increase his retail space and potential for profit, and provide a more attractive retail experience. He costed out the work and building and re-equipping came to around £135,000. 

He recognised that this was a large sum, but necessary for the future of his business and approached us at Rangewell to find the most cost-effective way to pay for it. 

“We are still doing well - but not so well that we can afford to throw money around. Watching the costs is vital for anyone in retail now - none of us know what is around the corner.”

Getting help from Rangewell

When there is a complex business project, there may be a need to arrange more than one kind of funding for it. 

This can be impossible if you go direct to a lender, such as a bank but, at Rangewell, we are independent and can help you cherry pick the most appropriate funding for each aspect of the job you need to tackle or the challenge that you face.

In the case of our pharmacist client, this was complicated by the fact that he already had some outstanding loans - at a rate of 12% - which we believed was unnecessarily high.

We broke down his funding needs:

• Re-equipping two branches -  £50,000
• Building work - £85,000
• Existing finance -  £120,000

His initial thought was to arrange additional funding to cover his development work. We saw that there was an opportunity not only to fund his development plans, but to cut the cost of his existing finance.

This would require several different types of funding.

Buying equipment

Most types of business can call on asset finance when they need to bring in equipment. Pharmacy equipment financing is a type of lending where the loan is secured on the equipment you buy. 

Having this security makes it more cost-effective than other types of lending because the risk to the lender is reduced - if you run into problems and cannot repay, they can simply take the assets and sell them to recover their costs.

This is good for the lender because it reduces their chances of loss - but it is good for you too because this reduced risk means the lender can reduce the cost of the finance. 

Our pharmacist needed equipment such as retail displays, lighting and a POS/stock system, all of which are ideal for asset finance. Asset Finance covers a number of funding arrangements. Hire Purchase - or HP - spreads the cost of buying your equipment. You pay a deposit plus fixed monthly instalments for the agreed term, which lasts between 12 and 72 months. HP is the solution for durable equipment you‘ll want to keep for long term service. You can also lease equipment.

Building work

There are various ways to pay for building work. A straightforward business loan might be the most appropriate, and you may want to consider both secured and unsecured loans. A secured loan may work out cheaper but will require you to offer your property or premises as security. An unsecured loan will be based on your personal or business credit rating. In the case of our client - the owner of a successful pharmacy business - there should be little difficulty in arranging this type of funding.

Refinance

Having an existing loan agreement can be an issue if you are applying for further funding - but it can also present an opportunity to save. We can use our contacts throughout the lending market to find a better rate for funding you already have - helping you pay it off and to save money with your new agreement. 

The deals we arranged

• We saw that asset finance was the most appropriate to our client’s equipment needs, and were able to arrange a total of £50,000 worth of asset funding as a hire purchase arrangement over five years, at just 2%.
• Funding for the building and refurbishment work could be covered by an unsecured loan, supported by the owner's personal guarantee. Because of his excellent credit record, we were able to provide this at just 5%, again over five years. 
• We also saw that by extending this facility to cover our client’s existing finance commitments, we could help him pay off his old lender. By providing a total of £250,000 he could cover his building costs, refinance his existing loan, and have some cash to invest in his business - and still pay less than he was paying for his old, expensive loan.

“Rangewell are not just someone on a phone somewhere. They always go the extra mile to solve problems - and that means leaving you with better answers for your financial needs and less to pay. They were happy to put in the extra effort simply to save us money.”

Cutting existing payments

If you have an existing finance arrangement and want to reduce costs or free up cash, we may be able to help find a refinance option. A new lender will pay off what you owe under your original agreement and set up a new finance arrangement with lower monthly costs.

Rangewell finds the financial solutions that your business needs. Whether you work in a pharmacy or any other sector, when you need finance for your business, you can be better off with Rangewell.

Our service is easy to use - and lets you talk to a funding expert to get a solution that is planned around your business needs.

Just call us and one of our Pharmacy Funding Experts will be able to discuss the options and work out the most cost-effective ways to provide the funding you want - whatever the challenge your business plans present.

We’ll search the entire lending market to find the most affordable solutions to your funding needs - and in most cases, our services are absolutely free.

Taking your business forward costs less with help from Rangewell

• Asset finance expertise - for all types of asset 
• Individual arrangements tailored to your circumstances
• Adverse Credit – no problem
• Repayments geared to your turnover
• Understanding the funding challenges for your sector
• Personal service

Talk to Rangewell – the business finance experts