Partners · 02
Pharmacy lending is its own discipline.
Pharmacy is one of the few sectors where major banks maintain dedicated healthcare lending teams — because script volumes, PBS revenue and goodwill behave differently from ordinary small business. Generalist finance often mis-prices the risk.
What they actually do
What a pharmacy lender is really assessing.
Lenders separate PBS-subsidised dispensing from private script revenue and front-of-shop retail, because each behaves differently through policy changes and each carries a different margin. Concentration matters too: heavy reliance on a single prescriber, clinic or aged-care contract is treated as risk, not as strength.
The purchase price usually splits across goodwill, stock at valuation and plant and fit-out. Lenders apply different appetites to each, because goodwill is the part with no resale market. This split, not the headline price, is what determines how much cash you need to bring.
Acquisition, stock, fit-out and working capital are typically funded as separate facilities with different terms. A structure that funds the purchase but leaves nothing for the first quarter's stock and wages is a common and avoidable mistake.
Expect financial covenants, personal guarantees and security over the business assets, sometimes supported by property. Covenants are tested periodically after settlement, so understand what triggers a breach and what the lender may do if one occurs.
Settlement is a fixed date with a stocktake, adjustments and licence transfers all landing at once. The lender has to have funds available and conditions cleared by that morning — which is why unconditional approval timing, not indicative approval, is the date that matters.
Where they fit
When in the process you need them
Get an indicative position before you shortlist, but a lender does its real work once there is a specific site: pricing the risk, valuing the goodwill and clearing conditions before settlement.
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Shortlist
Offer
Matters most
Due diligence
Matters most
Settlement
Before you engage one
Questions worth asking first
01
Do you have a dedicated healthcare or pharmacy lending desk, and who will manage this file?
02
How do you treat goodwill versus stock and fit-out in your lending calculation?
03
What deposit or contribution are you looking for on this type of purchase?
04
What covenants will apply after settlement, and what happens if I breach one?
05
What's your realistic time to unconditional approval, not indicative approval?
06
Will you lend against a leasehold with limited term remaining, and what lease length do you require?
Costs
How they’re charged
| Fee structure | Usually paid by | What to watch |
|---|---|---|
| Establishment fee | Borrower | A one-off fee charged on setting up the facility, often expressed as a percentage of the loan amount. |
| Ongoing facility or line fee | Borrower | A recurring charge on the limit of a facility, payable whether or not the facility is drawn. |
| Broker commission | Lender | Finance brokers are usually paid by the lender on settlement, sometimes with a trail. Ask for the commission to be disclosed in writing so you can weigh the recommendation. |
| Valuation and legal costs | Borrower | The lender orders the valuation and its own legal documentation, then passes the cost to you. |
| Break costs on fixed rates | Borrower | Payable if a fixed-rate facility is repaid or restructured early. The amount depends on market rates at the time, so it cannot be known in advance. |
Structures vary. Confirm fees in writing before engaging.
We don't provide financial advice and we don't take commissions from lenders. Compare offers independently.
FAQ
Common questions
Because a large part of the revenue is government-subsidised under the PBS, the number and location of approved pharmacies is regulated, and ownership is restricted. That regulation makes cash flow relatively predictable but also makes the asset harder to repurpose, so specialist desks price it on its own terms.
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