How Pharmacy Equipment Financing Can Help Your Pharmacy.
1. Equipment Financing
- Conserve Working Capital: By financing equipment purchases, pharmacists can spread the cost over several years, preserving cash flow for other operational needs.
- Lower Initial Investment: Avoid large upfront costs, which can be particularly beneficial for small pharmacies operating on thin margins.
- Tax Benefits: Potential tax deductions on financed equipment can improve overall financial health.
2. Business Loans
- Working Capital Loans: Provides immediate funds for daily operations, payroll, and purchasing inventory, helping to manage cash flow during slow periods.
- Expansion and Renovation: Loans can be used to expand services or renovate existing space, attracting more customers and increasing revenue.
- Competitive Edge: Access to funds allows small pharmacies to invest in technology and equipment that improve efficiency, helping them compete with larger chains.
- Flexible Terms: Liberty Capital offers various loan products with flexible terms and repayment options tailored to the needs of small pharmacies.
Benefits for Pharmacists
- Increased Efficiency: Investing in modern equipment and software can streamline operations, reduce errors, and improve customer satisfaction.
- Improved Cash Flow Management: Financing options help maintain a steady cash flow, which is critical for purchasing inventory and covering operational costs.
- Competitive Advantage: Access to the latest technology and equipment enables small pharmacies to offer services comparable to larger competitors.
- Sustainable Growth: With the right financial support, small pharmacies can grow sustainably, investing in areas that drive long-term success.
Top 10 Pharmacy Equipment Your Pharmacy Can Finance
- Automated Dispensing Systems
- Average Cost: $50,000 – $200,000
- Used to streamline the medication dispensing process, reduce errors, and improve efficiency.
- Pharmacy Management Software
- Average Cost: $5,000 – $20,000 per year
- Helps manage prescriptions, patient information, inventory, and billing.
- Pill Counters
- Average Cost: $1,000 – $5,000
- Automates the process of counting pills to improve accuracy and save time.
- Refrigeration Units
- Average Cost: $2,000 – $10,000
- Essential for storing temperature-sensitive medications and vaccines.
- Compounding Equipment
- Average Cost: $10,000 – $50,000
- Includes mixers, scales, and other devices for creating custom medications.
- Barcode Scanners
- Average Cost: $100 – $500
- Used for inventory management and reducing prescription errors.
- Prescription Filling Robots
- Average Cost: $100,000 – $200,000
- Automates the prescription filling process to increase efficiency and accuracy.
- POS Systems
- Average Cost: $2,000 – $10,000
- Point of sale systems for processing transactions and managing sales data.
- Security Systems
- Average Cost: $1,000 – $5,000
- Includes cameras and alarm systems to protect the pharmacy from theft.
- Packaging Machines
- Average Cost: $10,000 – $50,000
- Used for packaging medications in compliance with safety regulations.
If your pharmacy relies on cash flow, tying up your funds in fixed assets can be costly in the long run. It’s often more beneficial to use equipment financing with a fixed monthly payment, allowing you to invest your cash in inventory that continuously generates revenue.
How Equipment Financing Works For Pharmacy Equipment
Financing Considerations When Acquiring Pharmacy Equipment.
Equipment financing is one of many avenues a business owner can entertain when acquiring business essential equipment. A type of loan also known as “equipment lease” that enables businesses to acquire equipment without paying the full equipment cost upfront. This type of financing is crucial for industries that rely on heavy duty equipment and machinery, commercial equipment, medical equipment, commercial trucks and trailers, or technology hardware are just the few types of equipment that are typically financed when purchase.
Definition:
Equipment financing is a form of business financing for any industry, where you acquire business essential equipment for a specific term rather than purchasing it outright using borrowed or your own working capital. At the end of the term, you may have the option to buy the equipment, renew the lease, or return the equipment if there’s a buyout. Here are the top three forms of equipment financing.
FMV Lease – Fair Market Value – (True Lease): Payments are deductible as business expenses. No Section 179 deduction available because the lessee does not own the equipment.
***Alternatively, there is 10% FMV LEASE where regardless of the market value, your buyout is predetermined at signing rather than letting the Market Value dictate your buyout.
Dollar Buyout Lease: Treated more like a purchase for tax purposes. Lessee can claim Section 179 deduction.
Equipment Financing Agreement: Treated as a loan. Lessee can claim Section 179 deduction.
Leasing vs. Buying
Ø Equipment Leasing: Lower initial costs, ability to upgrade to newer technology, and tax benefits. Leasing companies may offer flexible terms like deferred payments. Your business can grow through financing without giving up equity or profit.
Ø Buying: Higher initial costs, lost opportunity to use cash for other profitable investment. Fixed asset shouldn’t be paid cash especially depreciating assets. Ownership of the asset yes but can’t monetize it for potential cashflow. You can collateralize it for other loans for better long-term cashflow funding.
Loans and Financing Options
Ø Bank Loans: Traditional financing through banks has the most competitive interest rates and terms; however, only for well-qualified borrowers who are well organized who can jump through hoops to get it. Going to the bank is guaranteed you’re going to an A Credit Lender. So, are you an A Credit borrower? Do you have your audited financial statements? Do you have personal financial statements prepped? How can you tell whether you’re bank approvable or not. Having good credit isn’t the only criteria they look at. Remember the “5 C’s” in credit underwriting requirements?
Ø Equipment Financing Companies: Specialize in commercial equipment. Equipment leasing and equipment loans my differ, offering tailored financing solutions like equipment finance agreement where it’s financing rather than leasing. There is no balloon or buyout at the end of the term.
Ø Vendor Financing: Many Trailer manufacturers offer in-house financing options to make purchasing their equipment more accessible. Vendor financing doesn’t always cover those with low or marginal credit. Our Equipment Vendor Financing programs cater to all types of credit. Our credit requirements are wider than most the benefit of working with a reliable and trusted equipment loan broker.
Covers many types of equipment
Easier to get than a traditional business loan
Less paperwork
Fast processing time
Less stringent requirements for qualifying
No collateral needed, the equipment is the collateral
May require less credit score for you and your business as well
Choosing the Right Financing Company for your Pharmacy.
Research: Look for reputable leasing companies with experience in the industry. Make sure lender or broker is licensed. Don’t pay for any deposit or application fee upfront.
Compare Terms: Examine the terms and conditions of multiple financing companies. It’s not what they say over the phone it’s what’s in the agreement that matters to you. To them it’s what they say, just sign and don’t worry about what I say. That’s not how it works with Liberty Capital. We make sure we explain the contract and the language of the terms should you need to understand, and all the lender’s financing disclosures explained.
Typical Equipment Leasing Terms no matter where you go:
Ø Lease Term duration between 3 to 7 years.
Ø Most will not finance used equipment over 10-year-old, some go older.
Ø Equipment is not illegal or obsolete.
Ø Down payment will be requiring up to 40% for most start-ups.
Ø Down payment will be required for most low credit who are eligible to get an approval.
Ø Monthly payments with very little upfront capital outlay are hard to come by unless you have been in business long enough with strong credit.
Ø Interest rates ranges based on personal credit, equipment type, equipment age, whether you’re buying from a dealer or private seller.
Ø End-of-lease options- lease to own is always $1.00 buyout, or Equipment Finance Agreement where there is no buyout. Some states require $101 buyouts.
Understanding Equipment Lease Agreements WHen Financing Pharmacy Equipment
Reviewing the lease agreement carefully before signing is critical to make sure you’re not signing an FMV Lease when the salesperson says dollar buyout but the contract is actual FMV or Fair Market Value. Key components to check include:
- Payment Terms: Understand the monthly payment amount and due dates.
- Interim Rent: Is there an interim rent, which is rent in between the time of the next billing from the date of acceptance or lease commencement.
- Maintenance and Repairs: Determine who is responsible for maintenance and repairs. However, most equipment financing don’t apply warranty into the financing agreement.
- End-of-Lease Options: Know your options at the end of the lease, such as purchasing the equipment for a dollar or $101 for some state like FL, renewing the lease it has a balloon, or returning the equipment.
- Early Termination: Be aware of any penalties for early termination of the lease. You may not pay any penalty for paying it early, but you’re still liable for the full term regardless of when you pay it off.
- Advance Payment: First and Last, security deposit or down payment might be required. Check your equipment lease agreement to make sure you are aware of any money upfront to consummate the lease financing agreement.
- Down Payment: Down payment reduces the amount financed.
- Security Deposit: Security deposit is typically refundable unlike down payment.
Tips for Successful Pharmacy Equipment Financing Experience
- Plan Ahead: Start the financing process early to ensure all equipment is ready for your opening day. Provide credit and funding stipulations upfront. Don’t alter any documents. Get pre-approved Know you have the option to get financing.
- Contact your equipment dealer: Get an invoice/quote for the lender to review and approved. Apply with your bank so you know whether they’re an option or not for a peace of mind. Alternatively, if you know you won’t qualify at your bank, contact Liberty Capital Group, Inc.
- Vendor Approval: Each transaction a vendor must be approved. They want to make sure vendor is reputable who will deliver what you lease or purchase.
- Equipment Approval: Every financing transaction, equipment must be approved. They need to make sure a restaurant is not buying a restaurant equipment. A restaurant can’t buy a backhoe. It doesn’t make sense.
- Equipment must be business essential.
- Negotiate: Don’t just negotiate with the vendor, you can also negotiate with the lender. Don’t be afraid to negotiate lease terms to get the best deal possible.
- Consult Professionals Equipment Loan Broker: Work with a financial advisor or accountant to understand the financial implications of financing. They’re the best source for information on how you can maximize your financing options.
Pharmacy equipment financing can be a strategic move for any business owner, providing flexibility and preserving working capital is a good cashflow management strategy.
By understanding the equipment financing process and carefully selecting your equipment and financing partner, you can set your business up for success faster, rather than waiting for cash to come by. Don’t let opportunity hold you back due to lack of capital. You have funding options with Liberty Capital. Contact us today. We’re ready to help your business grow and elevate to the next level. Best of luck! Liberty is your Freedom!
Bank Hopping for Pharmacy Equipment Loans: Why It’s Time-Consuming and How Liberty Capital Can Help.
Searching for the right equipment lender especially if you’ve already been turned down by your bank, by hopping from one bank to another just trying to figure out whether they will approval you can be a time-consuming and frustrating process, especially if you have challenging credit. Each application involves time-consuming paperwork and potential rejections. If you get turned down, how many more lenders will you apply to before seeking better options from a loan broker?
Special Financing programs
- $0 Down for qualified lessee
- 1 Advance Payment
- 90-day deferred payment
- $1 buyout, no prepayment penalty
- Monthly payment up to 5 years
- Equipment finance Agreement
- Low Admin and doc fee
- $99 for first 6 months
Working with an equipment lease broker like Liberty Capital can streamline the process, saving you both time and money. Brokers have access to multiple lenders that can structure any credit profile specific to you, even if your credit is less than perfect. With their expertise and network, brokers can navigate the complexities of loan applications and increase your chances of approval. You may not know all the intricacies of equipment financing thus a loan broker will be able to help you navigate.
So why go through the hassle of bank hopping when Liberty Capital can do the work for you, ensuring you get the best possible deal?
What do I need to apply?
- ONLINE APPLICATION:You can fill out our application, upload and authorized us to process your application. We do soft-inquiry, and our lender will do hard inquiries once you are approved for Equipment Financing only.
- Equipment Invoice or Quote for the pharmacy equipment you want to buy. Multiple vendors accepted. We’ll lump them into one monthly payment for you. We’ll accept bill-of-sale for some private sale.
- Banks statements (3-4 months) – Proof income, proof of banking, and proof funds availability in case down payment is needed and to match for ACH Payment Drafting – as an auto pay.
Our small business financing experts are available to guide you through the funding Process.
Despite technological advancements, loans, especially in pharmacy equipment financing, predominantly involve personal interaction with an underwriter to ensure as fraud prevention. Automation may not suffice, particularly when dealing with a third party like the vendor and the complexities of equipment purchase. In such scenarios, business owners are often better served by collaborating with a Business Loans Broker like Liberty Capital Group, Inc., who can steer them in the right direction.
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