Financing Tips for Independent Pharmacies in 2026

What Unique Challenges do Pharmacies Face?

The neighborhood pharmacy today faces huge challenges that may need several types of financing necessary for various parts of their businesses. For example, a pharmacy might need a loan to cover operating costs while it waits to be reimbursed for drug costs. Some of the main challenges they face are:

1. Competing with large chain operators such as Walgreens and CVS and mail-in prescription services. Large, national retailers can undercut prices and receive favorable treatment from PBMs in terms of drug pricing.

2. The natural cash-flow crunch that pharmacies face — the period between selling prescriptions and waiting for reimbursements from pharmacy benefit managers. Large retail chains often have the cash on hand to operate during these periods, but independent pharmacies may not.

3. Direct and indirect renumeration (DIR) fees. These fees, often called “clawbacks,” are retroactive chargebacks imposed by PBMs for Medicare Part D prescriptions weeks or months after the original sales. These clawback fees are imposed on all pharmacies but hit independent pharmacies harder because they are operating on lower profit margins than large retail chains.

4. Increased exclusion from preferred networks caused by large retailers and mail-in companies, often owned by PBMs.

5. Rising costs of technology, especially the costs of robotic arms used by large pharmacies to count and fill prescription bottles.

6. Staff and supply shortages. Drug stores do not just offer prescriptions - most of them also sell over-the-counter medications, first aid supplies, and non-medical retail products. Supply chain shortages and rising costs caused by the evolving tariff policy. The cost of labor has also increased, which has hurt independent pharmacies more than large retail stores that are in better financial positions to absorb higher costs.

7. Dealing with new best practices, such as the Maximum Fair Price (MFP) initiative launched on January 1, 2026, and established by the Inflation Reduction Act of 2022, and the TrumpRx executive order. The MFP establishes a ceiling price negotiated by the Center for Medicare and Medicaid Services (CMS) for high-cost Medicare Part D drugs. TrumpRx, put simply, established price caps on crucial medications such as insulin.

These challenges almost make financing necessary for independent pharmacists. Financing can help them bridge the gap between point of sales and PBM reimbursements to purchasing technology and hiring staff.

What Types of Financing Are Available for Pharmacies?

Independent pharmacies may be abe to use an optimized array of financing tools to meet distinct parts of their businesses.

• Medical Practice Loan. Many lenders offer specialized arrays of financing tools specifically geared towards small businesses in the healthcare industry, including independent pharmacies. These lenders often waive the typical borrowing requirements for small businesses such as years in business and strong credit ratings due to the heightened strength and reliability of healthcare practices. They are designed to fund startups, expansions, partner buy-ins, equipment purchases, hiring staff, and working capital.

• SBA 7(a) Loan. An SBA 7(a) loan is essentially a term loan that is, in part, guaranteed by the SBA and offered by private lenders backed by the SBA. It is often referred to as the gold standard for small business loans because it offers a lower cost of capital for qualified applicants than term loans from most other private lenders. It is an ideal choice to expand an independent pharmacy, either organically or through an acquisition. The proceeds of the loan can also be used to purchase equipment, hire additional staff, or launch new products and services.

In a 7(a) loan, the lendee receives a lump sum of cash that is paid back in installments with interest. The drawback, however, is that 7(a) loans are difficult to get approval for because the requirements are generally high, and the application process requires a good amount of paperwork.

• Term Loan. Term loans are offered by both traditional banks and many online lenders and have the same general structure as a 7(a) loan. While most have lesser requirements than a 7(a) loan in terms of cash flow history and credit score, they usually charge a higher interest rate. Most lenders often short-, intermediate- and long-term duration term loans to fit the needs of the lendee.

• SBA CDC/504 Loan. An SBA 504 loan is issued by certified development companies and can be used by independent pharmacies to promote local economic development. These loans can be as high as $5 million and can be used to purchase equipment, hire additional employees, and renovate storefronts and surrounding property. Essentially, independent pharmacies can use these funds to help establish themselves as fixtures in their local communities.

• Revenue-Based Financing. In a revenue-based financing arrangement, a funding providerprovides a lump sum of money to an independent pharmacy and in exchange, the pharmacy would pay back the funds with a percentage of its estimated future receivables. The total amount paid back would be based on a multiple (factor) of the pharmacy's future revenue. While revenue-based financing is generally more expensive than many other types of financing, it can provide quick funds to a local pharmacy that can be used to offset sudden expenses while providing a flexible repayment plan, while providing a flexible repayment plan.

• Business Line of Credit. A business line of credit provides a predetermined credit line to an independent pharmacy. Lines of credit provide flexibility, as independent pharmacies can borrow funds when they need them and pay interest only on the amount borrowed. Lines of credit can be especially important to independent drugstore owners because they provide quick funds that can be used to pay for unexpected costs that often arise when running a pharmacy, such as unexpected spikes in inventory costs and surprisingly high clawback charges from PBMs.

• Purchase Order Financing. Purchase order financing can be used by small pharmacies to quickly fulfill large orders for specific medications when there is sudden, high demand. For example, if there is a sudden outbreak of the flu in the local neighborhood of an independent pharmacy, that pharmacy can use purchase order financing to borrow funds to fulfill a high demand for flu medications such as Tamiflu or Relenza, or over-the-counter cold medications. Once patients pay for the medications, the pharmacy would pay back the lender plus a factoring fee.

How Can a Pharmacy Prepare for a Loan?

Independent pharmacies, like any other small business, would have to prepare to apply for financing by improving their credit score and have the requisite paperwork such as its EIN and several months of bank statements. For independent pharmacies, many lenders also want to see:

• Diversified business offerings. Some lenders want to see that an independent pharmacy offers services beyond prescriptions. That includes immunity shots for the local community, strong community participation that can help an independent pharmacy differentiate itself from large retailers and special sales of popular retail products.

• Strong Business Plan. Some lenders, typically traditional banks, will require a business plan from an independent pharmacy. This plan should include the techniques that independent pharmacists plan to use to compete with larger competition, particularly since the pharmacy space is dominated by large retailers.

• Strong Relationships with PBMs. Strong relationships with PBMs are key to the survival of any independent pharmacy and is something that medical practice loan providers look at closely. A pharmacy's contract with PBMs dictate which insurance networks that pharmacy can participate in. PBMs also dictate reimbursement rates and patient copays, often using pharmacy services administrative organizations (PSAOs) to handle negotiations between drugstores and PBMs. Generally, the stronger the relationships with PBMs, the more favorably medical practice loan providers will look at the pharmacy when applying.

• Cash flow history. Every lender looks at cash flow history, but for independent pharmacies, lenders want to see repeat patients picking up prescriptions from an independent pharmacy. The more repeat patients, the better when applying for a business loan.

Be Prepared, Updated

For independent pharmacies, getting approved for financing isn't just about standard lender requirements such as credit score and strong cash flow, it's also about staying up-to-date on the most recent pharmaceutical regulations and drug pricing rules, as well as showing competitiveness in an industry that is continuing to get dominated by juggernaut retailers such as CVS, Walgreen's and Amazon. The ability to get financing is crucial for independent pharmacies, and owners need to take the time to prepare.