Types of New Mexico Pharmacy Financing Available

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<h1> Types of New Mexico Pharmacy Financing Available</h1><strong> Author: <a href='http://www.articleseen.com/profile_Brad Mac.aspx'>Brad Mac</a></strong><br /><p>There are a number of different options available for funding NM pharmacy franchises, specialty pharmacies, and traditional community drug stores. SBA Financing for New Mexico Pharmacy Business Loans The U.S. Small Business Administration (SBA) partially guarantees loans for pharmacy franchise lenders reducing the risk exposure for the lender. A loan program called 7(a) is a standard for funding pharmacy franchises in New Mexico. These loans can provide funds for pharmacy franchise entry fees, real estate where the pharmacy will be located, property improvements, working capital, and pharmacy related equipment. Borrowers for the pharmacy franchise must be creditworthy, without any bankruptcies, have ample down payment, but there are variations here, and the business must be able to repay the loan from the cash flow of the pharmacy. Terms can range from 5 to 20 years. Within SBA standards interest rates may be adjustable or fixed and will be negotiated by the lender dependent on the financial strength of the New Mexico pharmacy transaction. There are SBA fees for guaranteeing New Mexico pharmacy business loans. These fees, which are paid to the government and not kept by the bank, can be rolled into the pharmacy financing. Patriot Express Business Loan Program This is another SBA loan program that can be used for pharmacy franchise business loans and is reserved for military veterans, active service members, their spouses, and survivors. The Department of Veterans Affairs would be involved in the New Mexico pharmacy loan process. Pharmacy funding from the Patriot Express program can furnish relatively fast approval times, may accept a smaller down payment from the borrower than traditional business loans, and lower credit scores may also be accepted. Patriot Express business loans provide opportunities for lower interest rate New Mexico pharmacy business loans. Funding for Pharmacists in NM Who Are Veterans There are specific franchise loan programs available for honorably discharged veterans and these Vet programs can be considered for pharmacy franchise loans. New Mexico Pharmacy Financing From the Franchisor Financing a pharmacy franchisee is a usual topic in discussions with a pharmacy franchisor. Franchisors should be able to direct potential drug store franchisees toward funding programs that have previously been successful for their other New Mexico pharmacy franchisees. Preferred lenders will already be familiar with the pharmacy franchisor and their systems. Pharmacy franchisors in New Mexico may also provide some funding internally. Lower collateral will be offset by higher interest rates. This may help with qualifying for a pharmacy acquisition of a franchise, but may hurt the franchisee’s long term cash flow. Due diligence of pharmacy franchisor funding should be completed before any final decisions are made. Personal Assets Used in NM Pharmacy Finance It isn't guaranteed that a pharmacy franchise owner will have enough cash on hand. A portion of the pharmacy financing may necessitate the borrower to liquidate some personal stocks, provide their personal assets as collateral, refinance their home, or use their 401k to help the lenders security in order to successfully make the pharmacy business loan. If the borrower still does not have enough personal assets then a family member or a friend may be required as a partner in the New Mexico pharmacy. Since the NM pharmacy partner’s cash and assets will also be at risk of loss, these partners may require some controlling interest in the drug store. Retirement Accounts Used in Pharmacy Finance Retirement Plans can be self-directed and used to invest into a pharmacy franchise. The retirement plan can purchase stock in the pharmacy franchise. This is similar to how the retirement plan currently may be investing in publicly traded stocks and mutual funds. Lower debt service and higher profit potential may result when incorporating this option that uses less external financing in funding the franchise. The downside is, if the pharmacy crashes, so does the retirement fund. The method of providing less expensive financing for the pharmacy needs to be weighed against the risk of failure. Because of the factors involved such as deferred taxes, early or improper distributions, and IRS involvement, funding a pharmacy transaction with a retirement account should be handled by a company who has expertise in this arena. Pharmacists and investors in New Mexico interested in using this financing structure should research the Employee Retirement Income Security Act of 1974 (ERISA). Pharmacy Franchise Agreement Buyout Funding Understand that pharmacy situations are changing, economic factors are a concern, mail order pharmacy is growing, and market shares are shifting. All of these can have a negative impact on the cash flow of a New Mexico pharmacy franchise. Drug store owners paying franchise royalty payments may not survive the tightening profit ratios. Due to this, these pharmacy franchises in Nevada may only have the options of bankruptcy, or buying out the franchise agreement when allowable. Buying out the franchisor allows the pharmacy in New Mexico to remove the franchisor from the equation. This in turn allows the pharmacy owner more flexibility in their business decisions. The pharmacy franchisor sold the drug store franchise with expectations of earning income from the cash flow their pharmacy franchisees. Due to their long term plan, Franchisors may not be willing to allow the NM pharmacy franchisee to remove itself from the franchisor. However if a Franchise Agreement Buyout can be negotiated, the buy-out transaction can also be financed. Unfortunately many banks don’t understand the dynamics of the New Mexico pharmacy industry. This lack of pharmacy knowledge results in the banks looking at the funding request and all they see is a business that has very little collateral compared to amount of financing the pharmacy is requesting. To assist the successful funding process a NM pharmacy owner is advised to use a pharmacy industry specialist to capitalize on the funding opportunities that are available. </p><strong>About the Author:</strong><br />To read more about opportunities for funding available for retail, specialty, and franchised New Mexico pharmacies, go to www.SellAPharmacy.com and sign up for the free Newsletter. Permission to reprint this article is granted provided this resource box is kept unchanged and included with the article. <p> Article Source: <a href='http://www.articleseen.com/Article_Types-of-New-Mexico-Pharmacy-Financing-Available_63526.aspx'> http://www.articleseen.com/Article_ Types of New Mexico Pharmacy Financing Available_63526.aspx</a></p>

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Category : Business : Business