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Pharmacy Business Loans: Best Options for Pharmacists

These days, pharmacy giants like CVS and Walgreens are everywhere. However, it is still possible to open and grow an independent pharmacy. With pharmacy loans, you can receive the funding you need to meet your goals, no matter how far-fetched they may seem.

Pharmacy Business Loans and Financing
Anna Baluch
Freelance Copywriter
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Since the startup costs to open a pharmacy are sky-high, you’ll need hundreds of thousands of dollars right off the bat. Once your pharmacy is up and running, you may want to invest in new revenue sources like health screenings, vaccines, and health improvement programs. By doing so, you can compete with big-name chain pharmacies and increase your chances of success.

We’ve compiled this handy list of the best pharmacy business loans to help you find the best financing options. Before you accept any loan offer, be sure to shop around to ensure you receive the best rates and terms.

Top Picks for Pharmacy Business Loans by Finimpact.com

Top Picks for Pharmacy Business Loans

There is no shortage of small business loans for pharmacists on the market. Each one has its own unique features, making it important to compare all your options. In this review we highlight the terms, rates and fees of each lender and explain what makes them a good option. We also share potential downsides of each lender, and provide a methodology you can use to select the best option for your needs.

 

Best Pharmacy Business Loans for 2022 - Full Overview

Kabbage: Best for Business Lines of Credit

Kabbage

Kabbage is an alternative lending company that was acquired by American Express. Its line of credit can be a good option if you’d like to withdraw funds for your pharmacy business as you need to, up to your set credit limit. You’ll only pay interest on the amount you borrow.

Pros
Have a very low monthly revenue requirements
Easy application: You can apply for a line of credit online in minutes with minimal paperwork.
Fast funding: As long as you’re approved, you may begin to withdraw funds that same day.
Cons
High rates: You’ll likely have to pay higher interest rates, which can increase your overall cost of borrowing.
Unclear fees: Since the fees aren’t clearly defined, it may be difficult to budget your line of credit ahead of time.

Lines of credit through Kabbage range from $2,000 to $250,000 with terms of 6, 12, or 18 months and monthly fees of 2-9% for 6 month loans, 7.5-18% for 12 month loans, or 15.75-27% for 18 month loans. To get approved, you need $3,000 monthly revenue and a business history of at least 12 months.

The Bottom Line

For a flexible pharmacy loan and the peace of mind of having fast funding at your disposal, a Kabbage line of credit is a great choice.

Try Kabbage

Biz2Credit: Best for Commercial Real Estate Loans

Biz2Credit

Founded in 2007, Biz2Credit offers loans to small businesses, including commercial real estate loans. If you need to buy a property for your pharmacy, these loans, which work a lot like mortgages, can come in handy.

Pros
Fast funding: You can receive your funds within 72 hours of approval.
High borrowing limits: Biz2Credit’s commercial real estate loans go up to $6 million.
Quick application: Once you fill out an application, you’ll find out what you’re eligible for in minutes.
Cons
Strict eligibility criteria: Biz2Credit does have rigorous requirements that may be difficult to meet.
Additional fees: While fees aren’t clearly disclosed, you may have to pay between 1% and 6% in origination fees.

Biz2Credit’s commercial real estate loans range from $250,000 to $6 million with terms between 12 and 36 months. APRs start at 10%. For a chance at approval, you need a minimum credit score of 660, at least $250,000 in annual revenue, and an 18-month business track record.

The Bottom Line

If you have good credit, a commercial real estate loan from Biz2Credit can make it easier to cover the costs of an attractive, modern space for your pharmacy.

Try Biz2Credit

Fora Financial: Best for Short-Term Loans

Fora Financial

Fora Financial is a fintech lender that offers short-term loans to all types of borrowers, including those with bad credit. These loans can help your pharmacy solve cash flow shortages and cover any any emergency expenses that may pop up.

Pros
Leninant requirements: Fora will look beyond your credit when reviewing your application.
Quick application: You can apply online within minutes.
Fast funding: Depending on when you submit your application, you may receive the funds in as little as 72 hours.
Cons
Rates might be high: If you don’t have the best credit, you can expect higher than average interest rates.
Fees: You might have to pay origination fees, late fees, and other fees in addition to interest.

To secure a Fora short-term loan for your pharmacy business, you’ll need a credit score of at least 500, $12,000 minimum in earnings, and six months of operations under your belt. Loan amounts range from $5,000 to $500,000 with terms between four and 15 months.

The Bottom Line

A short-term loan from Fora Financial is worth considering if you can’t wait long for funding and have various day-to-day and unexpected expenses to cover.

Fundbox: Term Loans

Fundbox

Fundbox is an alternative lender that uses artificial intelligence to connect borrowers to loans. If you know exactly how much money you want to borrow for your pharmacy, you might benefit from one of its term loans. You’ll receive a lump sum of money upfront and repay it via fixed monthly payments or installments.

Pros
Fast approvals: Once you fill out Fundbox’s simple application, you can get approved for a term loan in minutes.
No extra fees: Aside from interest, you won’t have to pay fees to borrow money with Fundbox.
Easy repayments: Fundbox lets you automatically debit payments from your bank account.
Cons
High rates: Compared to similar lenders, Fundbox charges higher interest rates.
Small maximum amount: You’ll only be able to borrow up to $150,000 to fund your pharmacy venture with Fundbox.

Fundbox term loans range from $1,000 to $150,000 with APRs that start around 18% to 20%. For a chance at approval, you must have a credit score of at least 600, minimum annual revenue of $100,000, and a track record of six months in business or more.

The Bottom Line

If you have an idea of how much capital you need and on the lookout for a smaller loan, a Fundbox term loan should be on your radar.

Try Fundbox

SmartBiz: Best for SBA Loans

SmartBiz

SmartBiz supports local economies through affordable lending to small businesses like independent pharmacies. It’s an SBA-approved lender so it offers SBA loans that are partially guaranteed by the U.S. Small Business Administration. There are several types of SBA loans which offer low rates and lengthy repayment terms of up to 25 years.

Pros
Low rates: If you have good credit, you can lock in a low interest rate.
Long repayment terms: You’ll be able to spread your loan out over multiple years.
High borrowing limits: With a SmartBiz SBA loan, you can land up to $5 million in funding.
Cons
Long application: It will take some time to complete the SBA’s rigorous application process.
Fees: Depending on the SBA loan you choose, you might have to pay fees, like origination fees and maintenance fees in addition to interest.
Difficult to qualify for: You’ll need a strong credit score to take out an SBA loan.

SmartBiz SBA loans range from $30,000 to $5 million with repayment terms between 10 and 25 years. Interest rates cap out at 7%. To get approved, you must have a credit score of at least 640 and a business history of two years or more.

The Bottom Line

As long as you have good credit and have owned your pharmacy for at least two years, SBA loans from SmartBiz can help you lower the overall amount you pay in interest.

Try SmartBiz

Credibly: Best for Long-Term Business Expansion Loan

Credibly

Credibly is a Michigan-based online lender that offers long-term business expansion loans. If you’re an established pharmacy with plans to expand, a long-term business expansion loan can be a solid choice. You may use the funds to move a larger location, open a second store in a new area, and hire additional pharmacists and staff.

Pros
Simple application process: You can apply online quickly, in about 10 minutes.
High borrowing limits: Credibly allows you to borrow up to $5,000,000, which should be enough to expand your pharmacy venture.
Long repayment terms: Since repayment terms go up to 10 years, you can take your time repaying your pharmacy loan.
Cons
Higher interest rates: Compared to other lenders, Credibly’s interest rates for pharmacy loans are higher than average.
Fees: You may be on the hook for other fees in addition to interest, like origination fees.

Credibly doesn’t disclose its credit score, annual revenue, and minimum time in business requirements for its long-term business expansion loan. However, you can borrow anywhere from $150,000 to $5,000,000 with repayment terms between 3 to 10 years. APRs range from 8% to 25%.

The Bottom Line

A long-term business expansion loan from Credibly is a solid pick if you’re ready to take your established pharmacy to new heights.

Try Credibly

How to Choose the Best Pharmacy Business Loans

  • Loan Features: Loan amounts, terms, and repayment plans vary from lender to lender. If you’d like to own your own pharmacy, large amounts, lengthy terms, and flexible repayments are a must.
  • Application process: Since it takes a lot of time to open and operate a pharmacy, an easy application you can complete in minutes is preferred. A prequalification option that allows you to check your offers without any impact to your credit score can be useful as well.
  • Interest rates and fees: Ideally, you’d choose loans that offer low interest rates and minimum to no fees. But this may not always be possible, especially if you’re a pharmacy startup.
  • Qualification process: Some loans cater to more established pharmacy owners while others are open to newer pharmacy businesses with limited credit, revenue, and time in business.
  • Customer support: As a pharmacy business owner, there’s a good chance you prefer easy access to customer support should you ever need it. This may be available via phone, email, live chat, or resources on the lender’s website.
  • Online user reviews: Third-party reviews and ratings on sites like Trustpilot and Better Business Bureau (BBB) provide an unbiased look at the lender’s reputation and track record.
  • Perks and Bonuses: In addition to funding, some pharmacy loans offer perks like hardship assistance, mentoring, and credit score monitoring.

 

Main Features of the Best Pharmacy Business Loans

CompanyMin. Credit ScoreMin. Time in BusinessMin. RevenueLoan Amount
Biz2Credit66018 months$250,000$250,000 to $6 million
Fora Financial5006 months$12,000$5,000 to $500,000
CrediblyNot disclosedNot disclosedNot disclosed150,000 to $5 million
Fundbox6006 months$100,000$1,000 to $150,000
Kabbage64012 months$3,000 (monthly)$2,000 to $250,000
SmartBiz6402 yearsDepends on your specific situation$30,000 to $5 million

 

The Pharmacy and Drug Store Industry in the United States

The pharmacy and drug store industry encompasses a variety of prescription and over-the-counter medications, health and beauty items, and other consumer goods. Its market size, which is measured by revenue, is $346.3 billion in 2022, making it clear that there is a huge demand for pharmacies. It’s no surprise that the pharmacy and drug industry is the 30th largest industry in the U.S.

When compared to the overall economy, the market size of pharmacies and drug stores has skyrocketed. Since federal funding for Medicare and Medicaid is likely to increase in 2021, there is great opportunity for pharmacy owners. You can support senior citizens and lower-income consumers with their prescription drugs they can purchase at subsidized rates.

The U.S. pharmacy market has also focused on specialty drugs, which are either limited in supply, require special handling, or very expensive. These drugs can treat both rare diseases, such as multiple sclerosis and more common conditions like arthritis.

The use of generic drugs, which are more affordable than their brand-name counterparts have increased as well. As a pharmacy owner, you can take advantage of these trends and grow your business.

 

What Are the Costs of Running a Pharmacy?

To start a pharmacy, you'll likely need between $880,000 and $1,800,000 per year in funding. Of course, your pharmacy location will play a vital role in how much you’ll need to pay for your commercial property, inventory, and staffing.

You can expect the majority of your funds to go toward inventory as the average pharmacy will turn over its inventory up to ten times per year and spend about $100,000 per month or anywhere between $600,000 and $1.2 million per year just on inventory.

Staffing is another significant expense you should prepare for as the average salary of a pharmacist is $128,710, according to the U.S. Bureau of Labor Statistics. You’ll also have to cover the costs of pharmacy technicians, which earn an average of $35,100 per year.

 

How to Use Pharmacy Loans?

There are many uses for pharmacy loans including:

  • Inventory: Since inventory will likely be your largest expense and you’ll need to replenish it on a regular basis, a pharmacy loan can come in handy. Ideally, you’d use the funds to buy your products in bulk and save as much as possible.
  • Remodel Your Pharmacy: One way to stand out among big-name pharmacy chains is to modernize your pharmacy. You can use your loan proceeds to buy iPads, televisions, comfortable furniture, and new lighting.
  • Working Capital: Working capital refers to ongoing, day-to-day costs like payroll, utilities, insurance, and taxes. A pharmacy loan may help you cover them, especially when you’re short on cash flow.
  • Hire More Staff: When you first start your venture, you may be the only pharmacist. However, once you expand, you might want to hire additional pharmacists and support staff to make your life easier. A pharmacy loan can allow you to do so.
  • Invest in New Technology: By using the latest and greatest technology, you can provide excellent service and remain competitive. You can use a loan to upgrade outdated tools and systems.

 

How to Qualify for Pharmacy Loans?

To increase your chances of getting approved for a pharmacy loan.

  • Start the Process Early: Since the approval and funding process can take weeks or even months, get started as soon as possible. Don’t wait until the exact moment you need money to shop around, compare offers, and fill out applications.
  • Check Your Credit: No matter what type of loans you apply for, your credit will likely be considered. While some lenders have rigorous credit requirements, others are more lenient. Regardless, it’s a good idea to review your credit reports, dispute any inaccuracies, and work to improve your credit score.
  • Develop a Sound Business Plan: A business plan can educate lenders about the goals you have with your pharmacy as well as how you intend to use the loan proceeds. Make sure it's professional, polished, and free of grammar and spelling mistakes.
  • Look for Secured Loans: If you don’t have the best credit and find it difficult to get approved for unsecured loans, you might want to consider unsecured loans that require you to secure collateral, like your property or equipment. Keep in mind that if you default on your payments, the lender may seize your collateral.

 

Bottom Line

While running a pharmacy is expensive, it can also be very lucrative and rewarding. Fortunately, pharmacy loans can help you obtain the capital you need to launch and grow your business. Just make sure you only borrow what you need and repay your loans on time, every time. Best of luck with your pharmacy venture!

About the Author

Anna Baluch

Anna Baluch

Freelance Copywriter

Freelance copywriter who enjoys writing for large publications as well as startups, small to medium sized businesses. Anna Baluch is a personal finance writer with over 7 years of experience covering topics related to mortgages, debt management, student loans, personal loans, and more.

More about me

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