Health lending is entirely different to applying for bank home loan, e.g. there is a big variation between how much lenders will provide towards buying a pharmacy. The range is anywhere between 65% to 80% of the valuation of the pharmacy. This is not only dependant upon the institution but also your own financial situation, if there’s a shortfall between the purchase price and the valuation of the pharmacy, you need to come up with the difference.
Sellers require a deposit of between 5% to 10%, in some cases an amount that is acceptable to seller by special arrangement. The deposit is held in a Trust Account where it stays until funds are distributed at settlement. Other costs involved in the transaction are State Government stamp duty which varies from state to state, and is paid on completion of the sale.
To facilitate all aspects of your purchase you will also need to engage an accountant and solicitor. We advise that you only engage professionals that are experienced in Pharmacy matters. Believe us when we say this can save a lot of heartache AND money.
Also impacting on the borrowing process, lenders take into consideration your experience within the pharmacy industry. You need to demonstrate that you are capable of owning and running a business successfully.
Taking all of this into account, now you need to source a pharmacy that is making enough net profit to sustain yourself, operating the business and also the servicing of the loan comfortably.
When buying a pharmacy don’t just look at the figures! Don’t get me wrong figures are a big part of it, but you also need to look at the potential! Do you think you could increase the gross profit with better systems? Could you increase stock turnover? Buying power – could you join a group that can get you a better deal on stock purchases? Develop working relationships with doctors! Basically, just look outside the square!