Types of Financing

Financing Options

Types of Financing

Sources of Financing

Traditional types of financing for sellers.

Traditionally, financing is classified as short-term or long-term:

Short-term financing is defined as financing with a term of less than one year in duration. Typically short-term financing takes the form of dating (extended payment terms) and short-term notes.

Short-term financing may be needed for the following reasons:

• Opening orders
• Expansion of inventory within an existing store

These types of financing may require a credit review, depending on the customer’s total credit exposure. In most cases, short-term financing requires security and a personal guaranty.

Long-term financing is defined as financing that will be in effect for more than a year. It is typically only appropriate for sellers looking to rapidly grow/expand their pharmacies prior to selling.

Long-term financing for independent pharmacists usually takes the form of a promissory note with equal amortization of the principal amount.