Pharmacy Business Loans: Best Options for Pharmacists

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.

Our Experts 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.

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 rating methodology you can use to select the best option for your needs.

Best Pharmacy Business Loans for 2023 - Full Overview

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.
   

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 secured business 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.

*The required FICO score may be higher based on your relationship with American Express, credit history, and other factors.