Financing

Whether you are looking to purchase a pharmacy, or finance an existing location Washburn & Associates can assist you obtain the financing you need. We are direct correspondents to major financial institutions, fund mangers, and investors.

Debt Financing requires a clear and concise business plan. Terms and interest rates are determined by the lender and are established after the review of the business plan, credit checks, and owner equity position.

Currently the pharmacy industry is experiencing a decline in financial margins, and this affects the ability of a borrower to service debt. Pharmacies typically don’t offer much security as far as hard assets are concerned. Inventory can quickly disappear. Displays and shelving are usually old. The business is usually operated out of a leased location. Due to these factors a borrower must offer a strong personal financial position, personal guarantees, and possibly other assets.

For transactions that do not need assistance with developing a business plan, have provided all the appropriate information, and signed agreements are in place, we will immediately contact our Investors and Funding Sources.

This funding package needs to include the business plan, current corporate and personal financial information, and additional supporting documentation. Depending on the detail of the funding package and the type of funding requested, the transaction will progress forward.

Clients are responsible for all expenses associated with pre approved costs for property appraisals, business valuations, CPAs, Attorneys, demographic studies, travel, copies, etc. Closing Commissions are 2% unless otherwise stated.

When a funding package needs assistance: For deals that have viability and do not have the proper documentation we charge a consulting fee for file build up and our time while assisting with the reworking the documentation to meet funding standards. Our minimum fee, for any project that needs assistance, is $2,500. The amount goes up with the complexity of the project. It is customary that the Client pay for all costs associated with the development and presentation of the plan.

We understand that Clients resist paying any up front costs. This is usually due to the fear they will pay fees and still not get funded. We understand that point of view and we also understand that the work still must be done to have any chance of a successful funding.

Are you serious about receiving funding? Do you understand the process, and know there is a considerable difference between presenting quality documentation and trying to receive money on a half-baked plan? Since you now know the difference, do you understand that closing commissions do not cover the costs of property appraisals, business valuations, CPAs, Attorneys, demographic studies, travel, etc., just as those commissions do not cover the cost of building an appropriate funding package? Will the funding lead to a more profitable business? Do you prefer to continue to spin your wheels and waste time, or are you ready to move forward with a quality funding package? Are you now ready to have a professional handle the project for you?

Closing Commissions are 2% unless otherwise stated. Closing commissions are separate from consulting fees. Consulting fees must be paid on the front end, and commissions are paid at the closing. Fees and commissions collected by Washburn & Associates are not part of and do not set, the interest rate, the yield rate, Funder’s closing costs, Due Diligence Fees, third-party consultation fees, or other fees which the Funder, other firms, or other persons may charge.

Business Plans

As business owners, or those starting a business, make the decision to obtain financing they need to have an understanding of what it takes to get a business loan. All business loans will begin with the clear communication of the facts, which influence a Funding Source to consider the transaction. This communication comes in the form of a business plan.

Great insight into the business owners company comes from the business plan. Therefore, a plan needs clear and concise data stating the Client’s product, or service who they are, their track record, the funding request, financial statements, and other informative information. Clients must use the plan to effectively communicate their strategies, and their commitment to the success of the project.

It is advisable for the Client to have a good understanding of all the elements necessary to make a successful plan. Many new business owners are so caught up in the excitement of the new venture, that they assume everyone else, including investors and lenders will have that same enthusiasm, thus they put off completing the best business plan they are really capable of. This is a major mistake. As the saying goes, “those who fail to plan, plan to fail.” To expand on that, plan with depth, provide information overload, and provide details, details, details.

Unless the owner can communicate all the details, the Lender will not have the ability to complete a through analysis of the data, and come to a sound business decision.

There are a number of books and sources available to assist the Client develop a better understanding of writing and presenting a business plan.

When approaching a Funding Source, Clients should remember that if a person is job hunting, does a quality resume, or a sloppy one have the greatest possibility of assisting the job hunter? The answer, of course is “quality.” When seeking capital for projects, the same is true concerning business plans. Someone who really wants to obtain funding will put out the effort so they can show their Funder they have thought through all the details and have the ability to communicate those details to others.

Many transactions are not funded due to the fact that the “Plan” is not adequate and will never be successfully accepted by a Funder. Clients need to understand that the expectations of successfully funding a project diminish greatly when they are unable to present a quality business plan. Submitting an inadequate plan, or completing a plan with partial effort, will not get successful results.

There are going to be times when a Client will ask a Consultant to assist in the development of the new plan. Consultants charge a Consulting Fee for this service. It is customary that the Client pay for all costs associated with the development and presentation of the plan. Washburn & Associates does provide consulting services and can assist in the business plan development and funding process.

Pharmacy Business Notes
"A Private Finance Option"

There has been a major consolidation of the pharmacy industry in the past few years. The majority of Pharmacies are sold to the major pharmacy chains because the Chains have the capital to pay cash, and they pay a fair market value based on a cash price. Individuals and smaller chains are not usually as well capitalized, and will require the seller to carry a note for all, or a portion of the sale price.

Many pharmacy owners are at a stage in their career where they need an exit strategy, but refuse to sell to a major chain. Other owners prefer to sell to a relative, friend, or employee. Since most individual buyers are not able to offer a cash price, it leaves the prospective seller in a dilemma. They have worked their whole life to get to a point where they can “cash out” and retire. However, selling to an individual, or small chain, means holding a note, which puts pressure on retirement dreams.

Washburn & Associates is happy to announce that there is now a solution to the predicament of owner financing. We have developed a program where Pharmacy Business Notes can be sold and the transaction can be structured to fit the Note Seller’s needs, with either “Full Liquidation,” or a “Partial Sell.”

We have an exclusive arrangement with an Investor who will purchase Pharmacy Business Notes. The “Private Finance” option can also be used when a storeowner wants: A. to sell to a relative, manager, or another pharmacist instead of a chain. B. to sell just “a portion” of the business and have a working partner.

Advantages of Creating and Selling a Business Note

1. When the total amount of cash the Note Seller receives with the sale of a business note is calculated, it will usually be about the same as they would have received from an “all cash” business sale.

2. The process of selling a business to an individual can be easier, and less time consuming than selling to a major chain.

3. By offering “seller carry back financing” a seller of a Pharmacy can greatly increase the number of potential buyers for their business, and most likely sell the business at a higher price.

4. When a note is created there are the options of keeping it for monthly income, selling the entire note for a large lump sum, or selling part of the note to meet current financial needs and keeping the remainder for future income.

5. Selling either a portion, or all, of the note frees up capital that can be used for new ventures, or paying off old debt.

6. When a note is created and sold, with the proper guidance, a transaction can be structured that allows the business seller the biggest advantage in achieving the seller’s goals.

Accounts Receivable Finance

Is your business expanding faster than you are currently able to collect your outstanding receivables? When your reimbursements are being delayed 30 days or more you become a bank, at 0% interest, for those insurance carriers. You can accelerate your cash flow by using a financial tool called Accounts Receivable Finance. A/R Finance is the sale and purchase of an asset - your receivables. This is not a loan. No debt is incurred. Accelerating your cash flow allows you to pay your vendors in a timely manner and take advantage of their discounts, saving you money. The process allows you greater control when you can set the schedule for your cash flows.

Please contact me to learn more about any of the financial tools available