Business Loans
for Pharmacy Owners

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Picture the corner pharmacy of the 1950s, with a striped awning and jars of candy on the counter. The corner drugstore was a staple of most communities, but drugstore chains have gradually replaced it. There are still healthy independent pharmacies throughout the country, however. If you dream of being a neighborhood staple like in different times, your dream is not out of reach.

Opening an independent pharmacy can sound like a simple proposition – sign a lease and set up a storefront. But this simple plan can become quite complicated. You will need to budget for seven to eight months of negative cash flow before you break even or start turning a profit. Your business plan should consider the target customers you plan on serving, whether you are opening in an area with young families or near retirement communities, and how you will reach them.

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What Do I Need to Qualify?

Below is a list of the requirements to get approved for business funding with our most basic program.

  • At Least 3 Months in Business
  • 530 Min. Credit Score
  • $10,000 Min. Monthly Revenue
  • How Do I Apply?

    Applying has never been easier. You can either call our toll free number 24 hours 7 days a week at


    Submit your online application by clicking apply below and entering a few basic details about your business.

    Types of Business Loans Available

    Merchant Cash Advance

    Merchant Cash Advances serve the needs of borrowers who are unable to qualify for a loan with a bank. One of the biggest issues for pharmacists could be their outstanding student loan debt.

    On average, pharmacists graduated with student loan debt of $166,528 in 2018, which will impact your ability to qualify for loans. Banks look at your debt service coverage ratio, which is the amount of your revenues used to cover debt payments. If you are still making payments on your student loans, the ratio may be too high even if you have a decent credit score.

    If your pharmacy has only been open a few months, traditional lenders will turn down your loan application. Alternative lenders work with borrowers with as little as two months in business, but banks require several years of tax returns and bank statements to even apply for a loan. Alternative lenders offer merchant cash advance loans to borrowers with credit scores as low as 500 so credit is never an issue with this type of funding.

    Working Capital Loans

    Working capital represents the money you have available to cover your business’s operations. It can be calculated by subtracting current liabilities from current assets. During your pharmacy’s first year in business, you may struggle to balance cash flow. If bills come due, but healthcare providers have yet to reimburse you, it creates a cash flow gap. Working capital loans help you manage these gaps.

    You can take out a working capital loan for as little as $10,000 up to $1 million. Shield Funding requires minimum monthly revenues of $10,000 and a credit score of 650. These unsecured loans give you the funding you need to keep the lights on and the rent paid while you are launching your new pharmacy.

    Short Term Business Loans

    Short term business loans can see you through a temporary cash flow crisis. These loans have terms of less than a year, and are not intended to fund a major expansion or ongoing cash flow needs. However, there are times when a short term business loan could be quite useful.

    Apply Directly to One Source!

    Work with a direct lender and get a business loan as fast as the same day. Shield Funding offers competitive rates and terms on all it’s funding programs. Apply now with a trusted lender that has been helping business owners secure working capital for almost two decades.

    Financing Tips for Growing Pharmacies

    State of the Industry

    The number of independent pharmacies in the United States has been on the decline for years. It fell from 23,2016 in 2011 to 21,909 in 2017. Many older pharmacists are selling their businesses in order to exit and retire, and others struggle to compete against supermarkets, drug chains, and mail-order pharmacies. But the outlook is not all bleak.

    Dispensing revenues for specialty drugs at retail and specialty pharmacies totaled $146 billion in 2018, growth of 6.0% over 2017. Independents still make up 35% of all retail pharmacies, and many have been able to grow and flourish by offering the hands-on, customer-centric care that impersonal retailers lack.

    If you can offer excellent customer experience and identify your niche, you can make money. The average independent pharmacy’s profit margin in 2016 was 22.1%, which could provide a healthy income to a pharmacist. But many struggle to pay in business due to the realities of how pharmacies get paid.

    While customers pay their copay or percentage of a drug when they pick it up, their health insurance provider reimburses the bulk of the drug’s cost. Pharmacists have to wait to receive their money, and the amount remitted for each drug varies by insurance company.

    Pharmacists also pay Direct and Indirect Reimbursement or DIR fees to the pharmacy benefit manager, sometimes months after the initial sale of the drug. This, plus shrinking provider reimbursements and Medicare part D fees, can make it harder for an independent to make money on a transaction. Even larger retailers have had to cut staff or close pharmacy counters, which were losing money after reimbursements and fees.

    When deciding to open or grow your independent pharmacy, be aware that these realities could make it hard to predict your eventual profit. You will have to learn how to manage your cash flow effectively while waiting for provider reimbursement to succeed.

    Opening or Growing a Pharmacy

    Whether you are opening your first location or have just signed the lease on a new space across town, you will need to plan for growth. Without growth, your business cannot succeed. Your first customer must turn into ten more customers to build a viable business. Here are some tips to think about when writing up your business plan.

    Pick a Great Location

    Restaurants are subject to seasonal downturns, another type of business cycle that affects businesses outside of economic disasters. It just happens. Many restaurants rely on foot traffic, and that’s likely to go down in the winter. Others bank on their outdoor or rooftop seating, which might not even be available in the colder months.

    If your restaurant relies on visitors to another attraction or event, like a sports stadium or ski resort, you’ll face seasonal swings. It’s something almost every restaurant has to deal with.

    Define your Niche

    Will you help the elderly with managing multiple prescriptions and possible drug interactions? Specialize in drugs and treatments for certain diseases, for example, if you are located next to an oncology center? Many pharmacists at the big chains must know a little about a lot to serve their customers, which may leave their clientele upset and frustrated when they don’t receive the in-depth advice and consultation that they need.

    Developing a niche can allow you to compete against bigger chains and attract the desired clientele. Consider partnering with doctors in private practice in your area who serve this population, too. Talk to local office managers and healthcare providers. Demonstrating your professionalism and knowledge builds connections and a referral network.

    Market your Pharmacy

    Let people know that your pharmacy is open and ready for business! Or expanding to a new location! Invest money in marketing to support launch and growth initiatives. Marketing your business lets potential customers know that you exist and can meet their needs.

    Advertise locally, in the local newspaper, with flyers on community boards, and in local newsgroups, to reach your local clientele. Remember, your local presence and knowledge are a distinguishing factor from impersonal, large corporations. Be present at local events, from running a 5K to community meetings, so that people recognize that you’re a member of the community.

    Use direct mail and email lists to keep current customers informed about specials or new initiatives, or to send useful health advice. One of the biggest differentiators that independent pharmacies have from big box stores is their customer service, which extends beyond the counter and into your customer’s lives.

    Add Services and Technology

    More and more, pharmacists are also becoming providers. They provide counseling and medication management to customers, not just dispense medicine. Consider adding wellness counseling or medication management services to generate additional revenue.

    If you live locally, and so do many of your customers, you could offer home delivery for a small charge. This allows you to compete against the mail-order pharmacies. Listen to your customers when they express frustration with other pharmacies and providers, and think about how you could do better or offer them more.

    Technology gives you the tools to compete. Investing in a service that allows customers to place refill orders over the phone, or through an app, can pay off and keep them refilling at your pharmacy. Many people now expect to receive text alerts when their prescription is close to needing a refill, and appreciate the reminder.

    Inventory tracking systems which track on-hand inventory and send reorder alerts will help you keep the pharmacy stocked. If you are always running out of a particular drug, customers may switch their prescriptions. They will also automate many of the customer reminders and cut down on fraud. While these systems could cost you in the beginning, they will pay off in the long run.

    Keep an Eye on the Competition

    What is your competitor down the street charging for the same drug? Are they running specials? Perhaps you can’t match their prices, but are people regularly complaining online about long wait times? You could capture business by promising, and delivering, on fast service. You are running a business, and successful businesses keep an eye on their competition to try to match or beat them.

    Capital and Why You Need It

    It can take a while for any new business to break even, or for an expansion to begin generating revenues to cover its costs. Many businesses lose money in their first year. Opening an independent pharmacy will take significant upfront capital. Purchasing inventory, building out shelves and counters, and investing in computers and systems will all have to be done before you generate your first dollar of revenue.

    If you already own a successful pharmacy and are adding another location, you can use some of the revenues from your business to fund the expansion. At some point, however, you will probably have to borrow funds to see the new store to opening day.

    Opening a pharmacy or adding one to your chain requires significant upfront capital, particularly for your prescription drug inventory. A short term business loan allows you to make large, lump sum purchases before your doors open. Shield Funding’s short term loans last for periods of six to twenty-four months, by which time you should have sold through your opening inventory.

    You could also use a short term business loan to pay the rent at your second location, or to cover remodeling costs, before it begins generating revenue.

    The Final Word on Running a Successful Pharmacy

    If you decide to strike out on your own, you will need to add the skills of a business owner on top of your pharmaceutical knowledge. Learning the ins and outs of cash flow and inventory management, putting together a business plan, and successfully marketing will all be important to your eventual success. Investing the time to learn or hire experts will ensure that your capital investment generates a good return. And you will have the satisfaction of knowing you are serving your community’s needs.

    Funding Business Dreams Everywhere

    Want to find out more about how our loan products can help your eye care business? Get in touch today and we’ll help you find the right loan for your business!