Invoice Finance for Pharmacists

As an integral component of the healthcare industry, pharmacists are responsible for ensuring that patients receive the appropriate medication. Running a pharmacy business, however, represents a formidable challenge, particularly when it pertains to cash flow management. A considerable number of pharmacists find themselves in the situation of having to wait for an extended period – sometimes weeks or even months – to receive payment from insurance providers or other clients. This delay in payment may cause a dearth of cash and negatively affect the ability of a business to pay suppliers, employees, and other expenses on schedule. The good news is that invoice financing is an excellent alternative for pharmacists who want to enhance their cash flow. This post aims to delve into the mechanics of invoice financing, as well as its advantages and how it can help pharmacists manage their cash flow more effectively.

Introduction to the challenges pharmacists face in managing cash flow

Pharmacists are an important part of the healthcare industry because they provide patients with essential medicines and healthcare products. Even though pharmacists play a crucial role, managing a pharmacy is difficult, and many find it difficult to maintain a healthy cash flow. Inventory management is one of their biggest challenges because they need to keep a steady supply of medicines and healthcare products to meet demand.

Additionally, insurance companies and other third-party payers frequently offer deferred payments, which severely disrupt cash flow. In addition, unexpected expenditures, such as the purchase of new technology, store maintenance, or the repair of equipment, can put a strain on finances.

Another obstacle pharmacists face when managing cash flow is seasonal fluctuations in demand. The demand for sunscreen, insect repellent, and other summer-related products rises during the summer months, whereas the demand for flu vaccines and related products rises during the winter months.

Pharmacists may face financial difficulties as a result of any one of these issues, but invoice financing is a viable option for boosting cash flow. Pharmacists can get the money they need to run their business by using invoice financing.

Action Plan

Pharmacists play a vital role in healthcare, yet managing a pharmacy poses significant cash flow challenges. Inventory management is key, alongside navigating deferred payments from insurance companies. Unexpected expenses and seasonal demand fluctuations further strain finances. Invoice financing emerges as a solution to bolster cash flow and sustain pharmacy operations effectively.

Click to read our article: 6 Reasons UK Pharmacies Should Outsource their Accounts

What is invoice financing and how does it work?

Companies can get a cash advance on unpaid invoices with invoice financing, a financial tool. Businesses can choose to receive an immediate cash injection rather than waiting for customers to pay their invoices. This will allow them to cover their expenses, manage their cash flow, and invest in growth opportunities without taking on additional debt.

Pharmacists can use invoice financing to effectively manage their cash flow and avoid cash flow gaps caused by late invoice payments from customers. By using receipt support, drug specialists can get to the assets important to cover overheads, buy stock, and put resources into promoting and development exercises.

Invoice financing is a simple process. A third-party financier licensed to advance them a percentage of the invoice value is available to a pharmacist once they have issued an invoice to a customer. Depending on the provider and the customer’s creditworthiness, the percentage of the invoice value that is advanced typically ranges from 70% to 90%.

The financier deducts their fees and transfers the remaining funds to the pharmacist when the customer pays the invoice. Pharmacists looking to improve cash flow and maintain a stable financial position can benefit from this procedure because it is a cost-effective and efficient solution. Pharmacists can gain access to the working capital they require to succeed and expand their businesses by capitalising on the value of their unpaid invoices.

Action Plan

Invoice financing offers pharmacists a swift solution to enhance financial stability. By leveraging unpaid invoices, they can improve cash flow, access funds without collateral, and customize solutions to their needs, potentially bolstering credit ratings through timely payments.

Pharmacist Finance

Benefits of invoice financing for pharmacists

Pharmacists may find that invoice financing is an excellent choice for bolstering one’s finances. It is a type of financing that lets businesses get money from unpaid invoices even before customers pay them. 

From invoice financing, pharmacists can benefit in the following ways:

  1. A stronger cash flow: Pharmacists have the ability to improve their cash flow by prompting the payment of any outstanding invoices. This is especially important for people whose invoices are being paid by insurance companies, as this can frequently cause lengthy delays.
  2. Faster payment: With receipt support, pharmacists can get installment for their exceptional solicitations in a couple of days. They may feel less anxious about having to wait for payment to arrive before they can pay for their expenses as a result of this.
  3. No insurance required: As an unsecured loan, invoice financing does not require pharmacists to pledge an asset as security. Pharmacists who lack the assets to secure a loan may greatly benefit from this.
  4. Customizable: Invoice financing is adaptable and can be tailored to meet the specific needs of pharmacists, such as the amount of money they want to borrow and the repayment terms.
  5. Boosted credit rating: Invoice financing can help pharmacists improve their credit by giving them a way to pay their bills on time. For pharmacists who have previously struggled with bill payments, this could be extremely helpful.

Who can qualify for invoice financing?

For pharmacists seeking to enhance their cash flow, invoice financing can be an outstanding choice. Nonetheless, not all merchants may meet the eligibility criteria for this kind of financing. Most frequently, invoice financing is offered to corporations that possess a substantial volume of invoices and a dependable customer base. Hence, pharmacists that have a consistent flow of invoices and customers may be entitled to this form of financing. Additionally, a lot of invoice financing companies mandate corporations to have operated for a specific period, which typically ranges from 6 months to a year.

When gauging eligibility, invoice financing companies also contemplate creditworthiness. Certain invoice financing enterprises may necessitate a minimum credit score to be eligible for their services. Nonetheless, other factors such as the company’s financial statement robustness and its payment record could be scrutinised by other invoice financing firms.

It’s worth noting, however, that the requirements for eligibility may change based on the invoice financing firm. Consequently, pharmacists must conduct extensive research on various financing companies to find one that is perfect for their needs and qualifications. By doing this, pharmacists can avail themselves to the advantages of invoice financing and advance their cash flow.

Action Plan

Invoice financing is typically available to businesses with a steady flow of invoices and a reliable customer base. Firms must often have operated for a specific period, ranging from 6 months to a year, and meet certain creditworthiness criteria. Requirements may vary among invoice financing companies, so pharmacists should research different firms to find the best fit for their needs and qualifications.

Click here to watch our webinar on raising finance to buy a pharmacy.

How to apply for invoice financing

To apply for invoice financing, you need to follow a simple application process. You will have to furnish your pharmacy’s name, address, and invoice details, which are intended to be financed. The invoice amount, due date, and the customer’s name must be included as well.

Furthermore, you are obligated to submit bank statements and tax returns to assess your creditworthiness, which is critical for the lender.

The lender will examine your application after collecting the necessary information before granting your loan request. Upon approval, the funds will be available to you within a few days.

When applying for invoice financing, it is critical to select a reputable lender who has a history of assisting pharmaceutical companies like yours in securing financing. To get the best deal, compare financing offers from various lenders. By implementing an effective financing strategy, you could boost your cash flow and expand your pharmacy business.

Action Plan

To apply for invoice financing, submit your pharmacy’s details and invoice information along with bank statements and tax returns. After the lender reviews your application, funds can be available within days. Choose a reputable lender experienced with pharmaceutical companies, compare offers, and implement an effective financing strategy to improve cash flow and grow your pharmacy business.

Understanding the cost of invoice financing

As a means of enhancing cash flow, invoice financing can work wonders, provided you have a clear comprehension of the costs connected with this particular financing option. Basically, when you opt for invoice financing, you are vending your due invoices to a lender in exchange for an advance sum of cash. The lender would then recover the sum owed on the invoice from your clients, and you would receive the rest of the payment (minus the fee).

The costs that come with invoice financing depend mainly on the lender and the terms of the agreement. In general, there are two different charges that are related to invoice financing- a discount fee and an interest rate fee.

The discount fee is the percentage of the invoice amount that the lender levies for providing the cash advance, and this varies from 1-5% of the invoice amount, depending on the lender and the creditworthiness of your clients.

The interest rate fee is the interest rate imposed on the cash advance and is generally computed on a monthly basis. This fee is different depending on the lender and ranges from 1-2% each month.

It is crucial to thoroughly examine the terms of the agreement with the lender and fathom all the charges related to the invoice financing. This will assist you in establishing if this method of financing is appropriate for your business and if the fees are reasonable enough to outweigh the advantages of enhanced cash flow.

Action Plan

Invoice financing typically involves two main charges: a discount fee (1-5% of the invoice amount) and an interest rate fee (1-2% per month), varying by lender and client creditworthiness. It’s essential to review these costs carefully to ensure they align with the benefits of improved cash flow for your business.

Click here to read our article on How to finance a healthcare business.

Tips for using invoice financing effectively

Invoice financing can be a very useful tool for pharmacists who need to increase their cash flow. However, just like with any financial product, its usefulness is determined by its efficiency. 

To get the most out of invoice financing, consider the following:

  1. Know what you need for cash flow: Understanding your cash requirements is essential before engaging in invoice financing. How much cash do you require to cover your day-to-day costs and how quickly do you need it? This is important information that will help you choose the best invoice financing option and ensure that you get the money you need when you need it.
  2. Choose a trustworthy financier: Since there are a lot of companies that offer invoice financing, you need to find a partner who is reliable, honest, and trustworthy. Find a partner who provides excellent customer service, straightforward terms and conditions, and reasonable rates.
  3. Take charge of your invoices: Being proactive with your billing is essential if you want to get the most out of invoice financing. Ensure that your invoices are accurate and sent out on time, and promptly follow up if payment is not received. The quicker your invoices are paid, the sooner you will be able to get the money you need.
  4. Make prudent use of the funds: When you get money from invoice financing, you need to use it wisely. Prioritise your spending and make a clear plan for how the money will be used. Don’t put the money to waste on long-term or unnecessary investments that won’t pay off right away.

Pharmacists can use invoice financing to their advantage, increasing their cash flow and expanding their businesses, if they follow these guidelines.

We trust that after reading this, you have gained a more comprehensive comprehension of how pharmacists can expand their liquid assets with the help of invoice financing. With invoice financing, waiting for insurance companies or other third-party payers to settle the payment after 30, 60, or 90 days will no longer be a concern. This option allows for prompt compensation, granting pharmacists the ability to shift their focus towards enhancing their business and providing better service to their patients. Should you be struggling with financial constraints, invoice financing might just be the solution required to elevate the success of your pharmacy.

Action Plan

To optimize the benefits of invoice financing, pharmacists should first assess their cash flow requirements, and then select a reputable financier offering transparent terms and fair rates. Proactive management of invoices, including accuracy and timely billing, is crucial for swift payment processing. Finally, the judicious allocation of funds to essential expenses ensures optimal use of the financing. With these steps, pharmacists can leverage invoice financing effectively to improve cash flow and expand their businesses.

Click here to know more about funding options for pharmacists in the UK

Business Loans for Healthcare Businesses

We’ve been helping to fund the future of British healthcare businesses for over 20 years and our team are made up of former bankers with decades of experience in the UK’s healthcare lending sector.

You can find out more about working with Samera and the financial services we offer by booking a free consultation with one of the Samera team at a time that suits you (including evenings) or by reading more about our financial services at the links below.

For more information on raising finance for your healthcare business, including more articles, videos and webinars check out our Learning Centre here, full of articles and webinars like our How to Guide on Financing a Dental Practice.

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

6 Reasons UK Pharmacies Should Outsource their Accounts

Pharma is known as an industry that is highly dynamic and constantly changing – something that has become more apparent since the pandemic. But in order to provide consumers with the best value on medications and to increase profit margins, a pharmacy needs to adopt strong accounting foundations to become a sustainable business venture. There is a lot more to pharmacy accounting than what meets the eye, including the need to plan for tax returns and the configuration of cost-saving measures for products. Your pharmacy can easily and quickly achieve long-term success and financial compliance with accurate accounting and bookkeeping.

In the pharmaceutical sector, where manufacturing costs make up a significant portion of the company’s overall expenditure, it is essential to build a solid foundation before tackling the numerous challenging aspects of pharmacy accounting. As a result, you can better manage your pharmacy, streamline everyday operations, strengthen controls, and maintain a proactive attitude in the complex pharmacy market of today.

In this blog, we go over 4 reasons why you need professional accounting services for your pharmacy in the UK and the long-term benefits it can bring to your business.

Business Incorporation (Self Employed Vs Limited Company)

Whether your pharmacy is a limited company or a sole trading entity can have a big effect on your tax liabilities as well as accounting practices.

Self-Employed: As a self-employed pharmacist, there are going to be tax liabilities on your earnings. Therefore, you must keep thorough records of any expenses you intend to claim back because many business-related costs might be subtracted from your earnings before taxes are computed. In comparison to other business structures, a self-employed trader is more closely related to their business, therefore the line between a sole trading pharmacist’s business liabilities and personal assets is very thin. While it is not possible to deduct personal costs from your income before determining your tax obligation, a self-employed pharmacist may be held personally responsible for the obligations of their company.

Limited Company: Pharmacists who opt to work as a limited business are able to safeguard their personal assets in contrast to self-employed arrangements. A limited corporation, which is a separate legal entity from its directors, has the advantage of business continuity. Your personal assets would not be impacted, for example, if the business was unable to pay its bills or was involved in expensive litigation. While directors of limited businesses have more flexibility in terms of the benefits, they may claim prior to corporation tax being calculated, self-employed pharmacists have the same ability to deduct business expenditures from their profits before tax is computed.

Action Plan

Professional accounting services are crucial for pharmacies in the UK, providing essential support in navigating tax liabilities, business incorporation, and financial compliance. Whether self-employed or operating as a limited company, pharmacies benefit from expert guidance to optimize their financial structures and ensure long-term success in a dynamic industry.

Tax Liability and Compliance

Your pharmacy’s business type is directly related to the tax legislation you have to adhere to. In the case of a self-employed pharmacy, you are liable to pay an income tax on your earnings. Alternatively, if your pharmacy is incorporated as a limited company, your business will have to file under corporate taxation. Making sure your accounting system integrates with your tax filings is the first step in building a strong pharmacy accounting foundation.

Accounting records, such as balance sheets, trial balances, profit and loss accounts, and bank reconciliation statements, will have to be accurately kept by your pharmacy, At the end of each financial year, your pharmacy must file its accounts to Companies House. Corporate Tax must be paid to HMRC within the same time frame. The next stage is to begin reconciling the balance sheet after your tax returns have been reconciled to the books, which may be a very difficult process. Depending on the state of your records, this requires going over every single balance sheet account and reconciling. Typically, they will be prepared and submitted on your behalf by your CPA or outsourced accounting partner.

Action Point

Ensuring tax compliance is essential for pharmacies, with business type dictating tax obligations. Self-employed pharmacists face income tax liabilities, while limited companies must adhere to corporate taxation. Integrating accounting systems with tax filings is crucial, requiring accurate record-keeping and timely submission of accounts to Companies House. Additionally, balancing the balance sheet post-tax reconciliation is vital, often managed by CPAs or outsourced accounting partners for efficiency and accuracy.

Save Money with Digitised Accounting

Having an in-house accounting team adds up to the mounting expenses of running a pharmacy. Now, with the UK government introducing the Making Tax Digital effort, all your accounting needs to be digital, software-driven, and cloud-backed. This move has put a greater imperative on businesses like pharmacies, dental practices, and vet clinics to digitise their books and integrate tax management with the rest of business processes through software.

But building this level of digital accounting infrastructure could turn to be a very tedious and costly task for a pharmacy. This is where outsourcing pharmacy accounting can be extremely beneficial for your pharmacy business. When you outsource your pharmacy accounts, the service provider takes the onus of making the necessary infrastructure changes in accordance with your business’s requirements. By outsourcing tech support and updating their books to cloud-based accounting platforms, pharmacies can unlock savings on hiring accountants and align with the HMRC’s Making Tax Digital strategy while also getting better value for their money on their information technology requirements.

Action Point

Digitized accounting offers pharmacies the opportunity to streamline operations and comply with the UK government’s Making Tax Digital initiative. However, building such infrastructure in-house can be costly and complex. Outsourcing pharmacy accounting can alleviate this burden, as service providers handle infrastructure changes and transition to cloud-based accounting platforms. By outsourcing tech support and embracing digital solutions, pharmacies can save on hiring accountants, align with HMRC regulations, and optimize IT investments, ensuring better value for money.

Cash Flow and Cost Control

Pharmacies can manage prescription payments, payrolls, and inventory levels more effectively and gain a clear financial view with the help of a solid accounting infrastructure since a contemporary accounting system will also provide automatic financial reports. Pharmacy inventories typically range widely in size. The exact numbers should be checked on a monthly basis so that all the information may be gathered in one place before the quarterly reports. For pharmacists, this provides additional insights about potential patterns in their stock portfolio while also forecasting correctly on better drug inventory management and replenishment.

Although controlling cash flow is a major stumbling block when starting a new pharmacy, efficient accounting can assure to manage your pharmacy’s cash position as it expands. Until you establish a payment history with a supplier, it is possible that they won’t initially offer you favourable credit terms. Hence, it is critical to plan cash flows as much as possible to make sure the pharmacy is staying within its means. Accounting can also be helpful in this situation by regularly reviewing expenses to make sure you are not overpaying and looking for areas where you can actively decrease costs, leading to successful cash management.

Action Point

Efficient accounting enables pharmacies to enhance prescription payments, manage payrolls, and optimize inventory levels. With modern systems providing automatic financial reports, pharmacists gain insights into stock portfolios, aiding inventory management. Effective accounting practices help manage cash positions and establish favorable credit terms with suppliers. Regular expense reviews and cost-saving strategies ensure successful cash management as pharmacies expand.

Ability to Scale with Business Growth

Having an outsourced accounting partner can help you easily scale your accounting plans while looking to start a new pharmacy. Having the flexibility to scale up or down rapidly is one of the key advantages of outsourcing accounting and finance. Pharmacies can find it difficult to manage accounts for various locations, particularly if their books are kept on site. This could slow down growth and end up costing your pharmacy a lot of money.

Accounting outsourcing firms provide a wealth of expertise and have the ability to unlock scalability with a wide variety of services and automation. Outsourced accounting and finance reduce the chance of human error, enables real-time data ingestion, helps with improved financial visibility, and enables higher workload bandwidth when the pharmacy encounters a bottleneck.

Action Plan

Outsourcing accounting facilitates scalable solutions for new pharmacies, allowing flexible adjustments as the business expands. With expertise and automation, outsourced firms reduce errors and offer real-time data access, enhancing financial visibility and workload capacity during growth phases.

Automated Inventory and Supplier Management

For pharmacies, onboarding new suppliers is a troublesome and time-consuming procedure. Automation-driven accounting support can help your pharmacy with automating invoicing and order-to-cash procedures, notifying staff of drug expiration dates, tracking shipments, and pointing out delays or anomalies with supplier payments or stock delivery. This in turn enables you to prevent overstocking of inventory or, conversely, going out of stock.

By automating data ingestion, like ledgering in sales and payments to suppliers, accounting automation software helps your pharmacy cut labour expenses. Automation allows for the faster and less expensive processing of more records while also running automatic and timely audits of your books. Your pharmacy can benefit from accounting automation by streamlining compliance procedures, automating tasks, improving reporting, and keeping an eye on compliance risks. This will lead to better outcomes through better business risk insight, better risk forecasting, and better prioritization of tasks.

Action Plan

Automated accounting systems simplify inventory and supplier management for pharmacies, reducing manual tasks and errors. By automating invoicing, order processing, and tracking, pharmacies prevent overstocking and stockouts while ensuring timely payments to suppliers. This improves efficiency, reduces labor costs, and enables faster processing of transactions and audits, enhancing compliance, risk management, and decision-making for better business outcomes.


The importance of effective accounting for pharmacies cannot be overstated. When it comes to dealing with your pharmacy business’s tax accountability and structure, it is important to gain expert assistance given the acute degree of regulation around the pharmaceutical sector and the complexity of UK tax legislation.

With a seasoned pharmaceutical accounting partner or tax advisor by your side, you can be confident that your pharmacy is complying with all current HMRC rules. Also, by using specialised CPAs, you can plan your pharmacy’s taxes pre-emptively and make sure that any decisions you make in the future regarding your business or employment align with your tax liability. With the right accounting support, UK pharmacists can handle their accounting needs, tax obligations, and company operations in an efficient and effective manner.

Further Information on Accounts & Tax

Our team of specialist accountants and tax experts can help manage, process and structure your business’s finances. From management accounts and payroll & pensions to tax planning and cash flow management, we can take care of the full back-office function of your business.

Book a free, no-obligation consultation with one of the team to find out how we can make your accounts & tax easier, quicker and cheaper.

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

Raising Finance to Buy a Pharmacy

In this webinar, we take a look at what you need to know about raising finance to buy your pharmacy.

Click here to read our blog on how to finance a healthcare business.

Business Loans for Healthcare Businesses

We’ve been helping to fund the future of British healthcare businesses for over 20 years and our team are made up of former bankers with decades of experience in the UK’s healthcare lending sector.

You can find out more about working with Samera and the financial services we offer by booking a free consultation with one of the Samera team at a time that suits you (including evenings) or by reading more about our financial services at the links below.

For more information on raising finance for your healthcare business, including more articles, videos and webinars check out our Learning Centre here, full of articles and webinars like our How to Guide on Financing a Dental Practice.

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

Gootkit Malware Update

In this video, Uros takes a look at Gootkit Malware and how it can affect your business.

Get Started: Cyber Security for Healthcare

Cyber security is an essential part of keeping your patients, data and business protected online.

With Samera Cyber Security, you get the tools you need, the know-how to use them and digital copies of all your data. This three-pronged approach means you can keep your business safe and your data safe.

Contact us today to find out more about how our cyber security training, digital protection products and back-up contingencies can help you.

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

How to protect your dental practice online

In this webinar, Arun and Uros discuss the different threats facing your dental practice online, and what you can do about it.

Click here to read our articles.

Get Started: Cyber Security for Healthcare

Cyber security is an essential part of keeping your patients, data and business protected online.

With Samera Cyber Security, you get the tools you need, the know-how to use them and digital copies of all your data. This three-pronged approach means you can keep your business safe and your data safe.

Contact us today to find out more about how our cyber security training, digital protection products and back-up contingencies can help you.

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

A Guide to Inheritance Tax

The inheritance tax nil rate band has been frozen at its current level of £325,000 since 6th April 2009. The nil rate band is the amount of your estate that is exempt from inheritance tax. 

It will remain at its current level of £325,000 until 5th April 2026 – a 17-year freeze! However, since 6th April 2017, a new additional nil rate band has been available for the ‘family home’.

Click here to read our guide on income tax and National Insurance.

Generally speaking, effective inheritance tax planning should be carried out on a long-term basis. However, it is worth remembering the following points, which should be considered on an annual basis. 

Annual exemption

The first £3,000 of gifts made by any individual during each tax year is completely exempt for inheritance tax. In addition to this, if the previous year’s annual exemption was not fully utilised, it can be carried forward into the following (current) tax year.

This means, in one tax year you are able to have up to £6000 of gifts that will be exempt from any tax only if you have not made any gifts during the previous tax year.

This exemption is specific to a per person basis, so married couples can also make gifts of £3,000 each.

Small Gifts Exemption

Gifts of up to £250 per tax year made to any one individual are also exempt from any inheritance tax and do not count towards the annual exemption. These types of small gifts are an exemption for you as you can make as many of these gifts as you like to different people.

However, the annual exemption cannot be used for further gifts to the same recipient in the same tax year. 

Habitual Gifts Out of Income

Habitual gifts out of income are an exemption from inheritance tax, in order for these gifts to be classed as ‘habitual’, they need to be made consistently for a number of years. Which is why it is important to remember to keep these up every tax year. 

The Family Home

An additional nil rate band is available for the ‘family home’ for any deaths occurring after 6 April 2017. This exemption is only available on a property which has been the deceased residence at some point during their life. If the deceased has passed while owning more than one or multiple qualifying properties, the personal electives can elect which property this exemption should apply to.

The exemption is only applied once the property is passed. This is usually done to a direct descendant of the deceased and in this case, any stepchildren, foster children or adopted children are all accorded the same status as one another for this sole purpose.

Similar to the £325,000 nil rate band, any unused proportion of the exemption will pass to the deceased’s partner or spouse.

When a person downsizes or ceases to own a home after 8 July 2015, the residence nil rate band is available to them as well as assets of an equivalent value, up to the value of the additional nil-rate band, are passed to direct descendants.

The residence nil-rate band that was introduced in 2017/18 and increased from £100,000 to its current value to £175,000. This level is set to remain until 5 April 2026.

Click here to read more about inheritance tax.

Inheritance Tax: Example

Margaret divorced her husband many years before her death in June 2021.

She leaves her estate, worth £600,000, to her daughter.

Margaret’s estate includes her former home, which is worth £250,000 at the time of her death. The residence nil rate band available for 2021/22 exempts £175,000 of the value of Margaret’s former home. This reduces her taxable estate to £425,000 before deduction of her main nil rate band of £325,000, which reduces it to £100,000.

The IHT payable on Margaret’s estate at 40% is thus £40,000. The residence nil rate band is withdrawn from estates worth in excess of £2 million (this threshold is also frozen until 5th April 2026).

This withdrawal is at the rate of £1 for every £2 by which the estate exceeds £2 million. Any mortgages or other loans secured over a property will have to be taken into account when allocating the exemption. For example, where the deceased held a property worth £250,000 which was subject to a mortgage of £180,000, the exemption will be limited to just £70,000.

Further Information on Accounts & Tax

Our team of specialist accountants and tax experts can help manage, process and structure your business’s finances. From management accounts and payroll & pensions to tax planning and cash flow management, we can take care of the full back-office function of your business.

Book a free, no-obligation consultation with one of the team to find out how we can make your accounts & tax easier, quicker and cheaper.

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

Raising Finance for a Pharmacy

We believe that pharmacists and all potential pharmacy owners and managers should have access to all the necessary information, finance options and support they need in order to successfully open, start and finance their pharmacy business.

Whether you are a qualified pharmacist or already a pharmacy owner, buying, starting or running a pharmacy could be a rewarding next step for you. 

We can help provide financing  for: 

  • Purchasing a pharmacy 
  • Refurbishment funding
  • Specialist equipment/technology asset finance 
  • Equity purchase 
  • Tax funding 
  • Commercial mortgages

Do banks like to lend to the pharmacy sector?

The first place most would-be pharmacy owners will go to seek finance to buy or grow a pharmacy would be the high street banks.

All banks have different risk appetites, and while this varies from sector to sector (as well as individual circumstance), most banks consider pharmacists and pharmacy finance as being a relatively low risk and a good investment. Generally, the pharmacy sector is seen as a green sector which means banks and quite often happy to lend to pharmacists.

Why is there more demand for pharmacies at the moment?

There has been a big increased demand for pharmacies, especially within the last years. Pharmacies have definitely been one of the few businesses that traded well during the entire rise of the Covid-19 pandemic outbreak and through the following lockdowns.

This has also meant that pharmacy goodwill values have also held up throughout the entire pandemic. Pharmacies are businesses that are a necessary and vital service to all local communities (e.g. helping with the vaccination program). 

It is also important to note that there is a barrier to enter the market. There are restrictions to where new pharmacies open. There are ru;es about not being able to open a new pharmacy right next to an existing pharmacy. This could in fact work to your advantage as it diminishes the amount of competition in the area which gives your pharmacy a higher/ better chance to succeed. 

Action Plan

The demand for pharmacies has surged due to their indispensable role during the COVID-19 pandemic, ensuring continuous access to essential medications and participating in vaccination efforts. This sustained demand has also bolstered pharmacy goodwill values, while entry barriers limit new competition, further strengthening existing pharmacies’ prospects.

Start or buy a pharmacy?  

Many pharmacists dream of owning their own pharmacy. So, what is the best way of making this happen? To build? Or to buy? 

Both options come with a lot of pros and cons that you need to weigh out depending on your individual circumstances. On the downside, buying a business is often more costly than starting from scratch but it also has many added benefits.

It is much less common to start a pharmacy from scratch. This is because most areas that need a pharmacy already have one. However, if there is a gap in the market, it is possible to fill it.

Action Point

Starting or buying a pharmacy both have their pros and cons. While starting from scratch offers more control but requires significant investment and market analysis, buying an existing pharmacy provides immediate clientele and established infrastructure at a higher initial cost. The decision depends on factors like market demand, financial resources, and entrepreneurial goals.

Setting up a pharmacy

Setting up and building your pharmacy business from scratch is often accompanied by some substantial costs. 

To begin with, there will be the cots for the premises itself, which is most likely to be a rental agreement for at least the first couple of months or even years. The costs of applying to physically set up your pharmacy are fairly minimal however, you will need to set some money aside for necessary NHS contracts and premises registration fees. There also may be additional planning fees if a specific change of use is required.

Action Plan

Setting up a pharmacy involves substantial costs such as premises rental and regulatory fees for NHS contracts and premises registration. Budgeting for these expenses is essential for a successful establishment.

Contact us to find out more

Registering a pharmacy in the UK 

A pharmacy can only be registered by a pharmacist, a partnership consisting entirely of pharmacists or a corporate (usually a limited company). There are two key parts of the process of registering your pharmacy in the UK. The first is to make an application to the local NHS England Team for inclusion in the pharmaceutical list. Before a registered pharmacy can dispense  This process can take from four months or even longer in event of appeals. The second is the pharmacy premises needs to be registered with the General Pharmaceutical Council which can also take up to 3 months. 

What does a start up pharmacy need to fund?

If you’re going to start a pharmacy from scratch, you’ll need to purchase the property, the equipment, consumables, everything! These are the kind of costs you’ll need to consider and factor into your projections.

  • Inventory, consumables and supplies
  • Equipment
  • Staff 
  • Property
  • Technology/IT
  • Marketing
  • Legal & insurance
  • And more…

Action Point

Starting a pharmacy from scratch in the UK requires funding for various essentials including inventory, equipment, staff, property, technology, marketing, legal, and insurance. These costs must be carefully budgeted for and factored into financial projections.

How to open a pharmacy in the UK 

There are two key parts to the process, the first is to make an application to the local NHS team in order to be included in the pharmaceutical list. Before a registered pharmacy is able to dispense prescription issues under the National Health Service, it must be included in the pharmaceutical list relating to a Health and Wellbeing Board Area.

It is important to note that this process can take up to four months or even longer in the event of appeals. The second is that the pharmacy premises must be registered with the General Pharmaceutical Council (which can take up to 3 months). 

Action Point

To open a pharmacy in the UK, you must apply to the local NHS team to be included in the pharmaceutical list for dispensing prescription medicines under the National Health Service (NHS). This process can take up to four months or longer. Additionally, the pharmacy premises must be registered with the General Pharmaceutical Council, which can take up to three months.

Assemble a team of advisors 

Tapping into some expert advice may be pricey, but will be essential for you. Find a solicitor who understands you, your business plans and goal and most importantly someone who understands the independent retail pharmacy business. Having a financial broker will also help you immensely. One of the first steps in starting your business is setting up its legal status. You will also need advisors in real estate and insurance as well as lenders who are all instrumental in making your pharmacy business real. To create your own team of expert advisors you can start by enlisting our help with funding and accounts.

Create a solid business plan

Creating a business plan is one of the most important things that you need to take time out to perfect. In a way there is always a demand for people’s pharmaceutical needs. However, most of your potential customers may already be going somewhere else for all their pharmacy needs. Because of this, your business plan needs to specify why those customers will come to your pharmacy instead.

Action Plan

To open a pharmacy in the UK, gather a team of advisors including a solicitor, financial broker, real estate advisor, insurance advisor, and lenders. They’ll assist with legal, financial, and operational aspects. Craft a strong business plan highlighting reasons why customers should choose your pharmacy.

Find the optimum location

When it comes to any retail business it’s always location, location, location. It is the most critical success factor. In order to choose where the optimum location to open you pharmacy will be you must consider:

  • Traffic: Are your ‘ideal customers’ likely to travel to this location?
  • Visibility: Will your pharmacy be easily visible to attract customers to provide a constant flow of business to your pharmacy?
  • Access: Does this location allow people to easily enter and exit? Is there parking or even a drive through option?
  • Size: Can your pharmacy grow in this location?

You need to do your research! Has an independent pharmacy recently closed in the area? If so, it is important that you understand the reasons why. This may present an opportunity for you to capture a customer base that was already going to an independent pharmacy. It is also important to note that you will probably only have a six-month window to save that existing customer base.

Even the largest retailers such as KFC and Starbucks conduct extensive research before settling on a location, so maybe having one of them near you is a good sign. If you are able to set your pharmacy apart with your unique products and services, your pharmacy can thrive being near one of the big chain pharmacies. 

When choosing a location for your pharmacy you need to also consider the proximity of other businesses. 

Action Plan

When selecting the optimal location for your pharmacy, consider factors like traffic, visibility, access, and size. Research recent closures of independent pharmacies in the area to understand opportunities. Proximity to big chain pharmacies can be beneficial if you offer unique products and services. Also, consider the proximity of other businesses in the area.

Financing options for a pharmacy

Like any small business owner, it is important to pick the right financing option for you. At this stage, having a financial advisor or broker is crucial to begin the process as there are many financing options available including loans from traditional lenders such as commercial banks. There are 3 key elements that most lenders are primarily looking for:

  • Good credit history 
  • Sufficient working capital 
  • A significant initial upfront investment

When you are preparing to ask for a loan, your business plan and financial statements should include three types of funding:

  • Built-out capital to pay for the building of the store itself and any renovations, fixtures or any other fixed assets.
  • Opening inventory financing, this is to pay for the initial stock you need to acquire to stock your pharmacy. While wholesalers can usually provide favourable terms for you it is highly unlikely that you will have a positive cash flow for at least the first six months.
  • Working capital in order to fund day to day operations such as utilities, bills and payroll.

Contact us to find out more

Action Plan

When financing a pharmacy, traditional lenders offer loans requiring good credit history, working capital, and a significant initial investment. Funds for built-out capital, opening inventory, and working capital are essential. Buying an existing pharmacy can be profitable with proper evaluation and a skilled team. Consider fees and explore options like buying out a partner or acquiring shares.

Buying a pharmacy in the UK

Buying a pharmacy, especially one in the right location, can definitely create a good profit. You might decide to buy an existing business rather than start your own venture from scratch. The biggest advantage of buying an existing pharmacy is that products, staff, premises, equipment, regular sales and customers are already in place.

However, buying an already operating business can be hazardous and if you aren’t careful, an extremely expensive process. This is why having the rightly skilled team in place from the get-go is so important. The team with the right skills, experience and legal know-how will be able to ensure that you do not have to pay through the roof.

Income streams and future cash flows from existing businesses are a lot easier to predict than if you were to start the business fresh from the ground up. You are in an even better position if you are able to assess the performance of the business to understand its current cash flow and value. It will be easier to agree to a price that works in yours and the seller’s best interest.

You need to also consider solicitors and accountant fees that you will need to pay. If the business you are trying to acquire is a large practice, you may need to do so as a partner. Another great option for you would be to buy out a current partner who may be retiring or selling their shares. We recognise that there are many challenges that come with Buy In and Buy Out finance and its provided funding tailored to help you make full use of the opportunity.

What information should you look at when buying a pharmacy?

  • Local Competition. 
  • GP practice in the local area – patient numbers.  
  • Number of prescriptions that the pharmacy is doing.  
  • The over the counter sales (OTC). 
  • Cash flow, debts and assets of the business.

How long does it take to buy a pharmacy?

Once you have found a pharmacy that you would like to purchase, there are a few factors that can impact the time scale such as:

  • Transfer of the property lease – third party landlords.
  • Change of ownership – you will need approval from NHS England.
  • Due diligence – make sure you use a specialist Pharmacy solicitor.

It is almost impossible to say how long any given sale of a pharmacy will take. On average, you will be able to realistically buy a pharmacy in 3-6 months.

Action Plan

When buying a pharmacy, consider local competition, patient numbers, prescription and over-the-counter sales, and the pharmacy’s financial health. The timeline for purchase varies but typically takes 3 to 6 months, contingent on factors like lease transfer, NHS approval, and due diligence.

Costs to consider when buying a pharmacy

The purchase of a Pharmacy is a major financial commitment and for most, a long-term one

Of course, you most likely need to raise acquisition finance to purchase the actual pharmacy business. You will also need to take into account any leasehold or freehold costs, or any rent and business rates.

When you are buying a pharmacy there will be many ongoing expenses that you will have to prepare for such as security measures, leases and payroll for your employees. Your largest expense is and will remain to be maintaining your prescription medication supply.

It can be difficult to maintain as you must always have enough on hand to meet monthly demand while ensuring that no medicine that you have expires before it is dispensed. Salaries and payroll come as a very close second.

You will also need to consider your ongoing costs for IT and cybersecurity, accounts, tax and marketing.

Action Plan

When purchasing a pharmacy, consider upfront costs like acquisition finance, leasehold or freehold expenses, and ongoing expenses such as security measures, payroll, and prescription medication supply. Additionally, budget for IT and cybersecurity, accounting, tax, and marketing.

Contact us to find out more

How can Samera business advisors help secure funding to purchase a pharmacy?

At Samera, we are committed to offering you financial services that will fit your business needs as well as your personal ones. We have a team of former bankers, all with extensive experience in the UK’s healthcare lending sector. We understand the sector and have the necessary contacts to ensure you get the best terms available and we connect you with the right contacts to make sure you get the best experience while obtaining your new pharmacy.

How much deposit do you need to buy a pharmacy?

We typically see pharmacists achieving 70-90% LTV (loan-to-value) rates, meaning you will often need a deposit of 10-30% of the value of the business. It all depends on the strength of the business you wish to purchase though.

What will the bank need to see before they lend? 

Target Pharmacy  

  • Last three years accounts 
  • Sales particulars  
  • FP34 Statements – Can often take minimum 6 months  

This information will give you an indication of how the business has been trading over a period of time. What is the turnover, how many prescriptions have they undertaken (is this consistent) and what are the business profits? 

Personal information 

  • CV 
  • 6 months personal bank statements  
  • Personal profile form 
  • Last two years tax returns  

This information is important as lenders want to understand what experience you have as a pharmacist, have you taken on any extra management responsibilities that would help you run a business. 

Banks also want to understand how you conduct your personal finance, are your personal accounts well run, do you have assets in the background (property/cash)?

Action Plan

At Samera, our expert advisors specialize in securing pharmacy acquisition funding. With tailored solutions and industry connections, we help pharmacists navigate the lending process. Typically, a deposit of 10-30% is required, with loan-to-value rates ranging from 70-90%. Banks assess eligibility based on financial documents and personal information provided by the applicant. Our streamlined approach ensures efficient financing tailored to your needs.

Funding options for pharmacists in the UK.

When funding your pharmacy, whether it be to start, buy, grow or maintain the business, you have various financial options.

  • Acquisition finance. 
  • Buy out a business partner/partner buy in finance
  • Asset Finance
  • Smaller loans to help with cashflow or stock purchase.  
  • Relocation loans – Help to move the pharmacy, maybe into a GP practice.  
  • Refurbishment loans – It is more important than ever for pharmacies to have the right clinical look or to add a consultation room. 
  • Tax loans.

The pharmaceutical profession, like many others in the healthcare sector is highly competitive. As the demand for chemists is continuously increasing, you can find chemists on every high street, many of which are large chains or franchises. If you are working as an independent pharmacy, you will need to find a way to provide the same level of equipment as they do, which is one aspect that Samera specialises in. 

We can help you find the right type of funding for all your pharmacy needs such as: 

  • Setting up a new business
  • Acquiring new premises for your pharmacy 
  • Acquire assets and equipment 
  • Paying tax 
  • Providing capital for growth 
  • Acquire a pharmacy franchise

We help to match pharmacists with lenders and loaning options that are best designed and suited to you and your business specifically to assist with the growth and development of your business. The market for loans and finance options is so crowded that you may need assistance with finding the right financing option for you. This is where we are able to use our contacts and expertise to help you build your business in the most cost effective way. 

Action Plan

In the UK, pharmacists have various funding options:

  • Acquisition Finance: For buying existing pharmacies.
  • Partner Buy-In/Buy-Out: Partner-related financing.
  • Asset Finance: Equipment funding.
  • Working Capital: Small loans for cash flow.
  • Relocation and Refurbishment Loans: Premises-related financing.
  • Tax Loans: Covering tax obligations.

Contact us to find out more

Unsecured business loans

Like many types of financing, Unsecured Business loans provide you with a large sum which you will agree to pay back over a certain term including interest. This is usually done through fixed monthly repayments. 

They are much like personal loans and are quite easy and simple to arrange. Lenders choose to approve your loan request based on various factors including your personal credit history and the credit rating of your business. 

Unsecured loans differ from secured loans in that they do not require you to put up any assets as security or collateral. This means that in the unfortunate event that something is to go wrong and you are unable to keep up the repayments of your loan, the lender will not be able to seize any assets.

However, to make up for the lack of security on the loan, lenders usually expect a personal guarantee from you and any business partners you may have. This will ensure to the lender that you will be able to make the repayments even if your business cannot. You can usually secure less money through an unsecured loan, due to the risk to the lender. You may also face higher interest payments.

Why you need Samera to arrange an unsecured loan for you.

In this day and age there are many unsecured loan providers for Pharmacists in the UK ranging from traditional high street bank lenders to the new generation of online lenders. All of whom have terms and rates that vary substantially. 

Finding the right lender for you is essential to minimise the cost of your borrowing. Here at Samera, we work with you to ensure that you get the loan that is most favourable to your needs. We use our knowledge of the UK market to find lenders that suit you with the most competitive deals. 

Action Plan

Unsecured business loans, akin to personal loans, don’t require collateral but may necessitate a personal guarantee. Samera specializes in securing these loans for UK pharmacists, offering tailored solutions with competitive terms from a range of lenders, ensuring minimal borrowing costs.

Secured business loans

Secured loans can be one of the most cost effective ways to borrow large amounts at once. If you are looking to borrow from £50,000 or more, a secured loan will probably be a good option for you. A major advantage of using secured loans as a means of financing your pharmacy is that it can cut the cost of borrowing and can help you borrow larger amounts than other types of lending. 

Secured loans are ‘secured’ by something you use as security in case you cannot pay the loan back. This ensures the lender that in the event that you are unable to repay back the loan, they can possess whatever assets you put up as security instead. If you do not repay as upon the agreed terms, the lender had the right to take ownership of the assets. Assets can be anything of value such as estate, cars or stock. 

You are usually able to borrow more through secured loans as they are less risky for lenders. This is why they are usually a more cost effective option as they can have lower rates of interest than Unsecured loans. 

Why do you need us to arrange a secured loan

Just like unsecured loans, secured loans have many different lenders offering various terms and rates and each of their rates vary substantially based on the ‘security’ being offered. We use our expertise and contacts to ensure that we find the most appropriate lender for you with the most competitive deal. We can also help you decide on the most appropriate and suitable form of security to offer. 

When large sums of money and long financial commitments are involved, it pays to have expert support on your side to guide you through what is often a stressful process. Our aim is to use our expertise to ease the stress and burden off you so you can focus on what you do best in your business.

Action Plan

Secured business loans offer a cost-effective solution for borrowing larger sums, typically £50,000 or more. With assets like property or inventory serving as collateral, lenders are assured repayment, often resulting in lower interest rates compared to unsecured loans. Samera helps pharmacists navigate secured loan options, securing favorable terms to support business growth.


Leasing is often a great idea if you want to maximise the use of the equipment you need without the full expense and responsibility of owning it. Leasing gives you the flexibility and freedom that could work in your favour.

With leasing you receive up to date equipment which allows you to always be ahead of your competitors and there are no upfront deposits required which works well for your cash flow.

You also have easier cash flow budgeting as repayments are fixed. The repayments are usually tailored to suit your individual circumstances. Leasing is also tax efficient as repayments may be offset against taxable profit. 

Action Point

Leasing offers flexibility and cost-effectiveness, providing access to up-to-date equipment without the upfront expense or responsibility of ownership. With no need for upfront deposits, leasing supports cash flow management. Fixed repayments facilitate easier budgeting, tailored to individual circumstances. Moreover, leasing can be tax-efficient, as repayments may be offset against taxable profits. Samera assists pharmacists in navigating leasing options to optimize equipment acquisition.

Buy-Ins and Buy-Outs

A management buy-out allows a company owner to sell their entire business to an existing management team. Instead of starting a whole new business on your own, you can join an existing practice. The simplest way to do this may be a Partner Buy-In. This is where you become a new partner and join an existing team. 

Partner Buy-Ins are common with professional practices and may be an opportunity for an existing firm to bring in new financial partners or even new talent. The most common way to Buy-In is when an existing partner is looking to leave the business or retire. 

As a new partner you will be required to put down funding to either to support the growth plans of the business or to compensate the existing partner. 

Asset finance 

Asset finance offers financial support for both small and medium sized businesses. It is the funding raised by usually a third party company, to either purchase or hire the necessary assets for your pharmacy business. Asset financing can work in a number of different ways and the terms of your loan will vary depending on the provider. 

Samera can ensure simple, fast and transparent assets and equipment finance for you.

Action Plan

Management buy-outs enable company owners to sell their business to an existing management team, while partner buy-ins allow individuals to join an established practice as new partners. Samera facilitates partner buy-ins, supporting the acquisition process and financing needs. Asset finance provides funding for acquiring essential assets for your pharmacy business, with Samera ensuring swift and transparent financing solutions tailored to your requirements.

Contact us to find out more

Tax loans

Paying your taxes is something that unfortunately no business can escape from. Within your first 6 months of starting your business profit margins are usually quite low, and you may even run into cash flow issues. Tax loans allow you to spread out the cost of your tax demand into affordable monthly payments. They benefit your business as you will have a controlled cash flow, they often have flexible repayment terms and you will not have HMRC on your back or receive any fines as they will receive the funds from you on time. These types of tax loans are also quick and simple to arrange. 

Acquisition Finance

Acquisition finance is the capital you need to obtain for the sole purpose of buying another business, like a pharmacy. Acquisition financing may be the best financing option for you to buy a pharmacy as it provides immediate resources to users that can be applied to the transaction, allowing you to meet your acquisition aspirations quickly. 

Action Plan

Tax loans offer a solution to managing tax obligations by spreading payments over affordable monthly installments, ensuring controlled cash flow, and avoiding HMRC penalties. Acquisition finance provides immediate capital for purchasing a pharmacy, enabling the swift realization of acquisition goals.

Click here to read our article on How to finance a healthcare business.

Our Expert Opinion

“Understanding how pharmacy practices are financed is key to securing the best terms available. This means using a broker that knows the pharmacy market and also the banks requirements is key to funding your pharmacy practice”

Business Loans for Healthcare Businesses

We’ve been helping to fund the future of British healthcare businesses for over 20 years and our team are made up of former bankers with decades of experience in the UK’s healthcare lending sector.

You can find out more about working with Samera and the financial services we offer by booking a free consultation with one of the Samera team at a time that suits you (including evenings) or by reading more about our financial services at the links below.

For more information on raising finance for your healthcare business, including more articles, videos and webinars check out our Learning Centre here, full of articles and webinars like our How to Guide on Financing a Dental Practice.

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

A Guide to Tax Loans

Tax bills are a recurring expense for all businesses including dental practices that can often take their toll. This is where tax loans come in and help manage this overbearing expense by helping you take control of your cash flow. They also help ease the costs of taxes by spreading the costs of your tax bill into manageable monthly payments. 

The amount of taxation that a business incurs is based on current tax laws that determines their tax liability. Tax liability is the amount of tax debt owed by an individual, business, corporation or any other entity. Tax liabilities are therefore incurred from earning any income from a business, a gain on the sale of an asset, estate or other taxable events. 

When a business’s tax liability is due, as a dental practice, they have to ensure that they have enough cash flow at hand to meet the demand of the tax laws in place. Unfortunately owing tax isn’t an easy debt to get out of. A tax bill cannot be put off until the business itself pays the bill. HMRC do not hesitate in issuing penalties for late or non payments. The tax rules are very strict and failure to adhere to them can become very costly for you and your business. 

In some instances, late penalties are one of the more tranquil consequences that the HMRC gives out. Penalties for late payment or non payment can have very bad consequences on your business. If you default on your payments for a very long time, the interest of your tax bill increases and so does your fines. This could lead to you having to liquidate a company in its entirety or its assets in order to fully pay HMRC what is owed through your tax liabilities. 

It is normal for a business’s cash flow to fluctuate over the different seasons, however, it is imperative that funds are put aside in order to meet tax obligations. However, this is often not always the case. The cash flow may not always be there and unforeseen circumstances do occur to hinder you from being able to pay your taxes. This is where tax loans come in handy for businesses. 

VAT and corporation tax payments come around regularly but they can still be a problem if your business does not have sufficient funds. Tax loans are designed to help manage your cash flow. Tax loans can fund personal tax, corporation, capital gains, inheritance tax amongst other overbearing tax bills you may incur. Tax loans allow you to spread the cost of your tax demand into more affordable monthly payments, allowing you to pay your tax bill comfortably. 

Contact us to find out more

What is VAT funding?

When quarterly VAT payments are looming for your dental practice and there is limited cash in the business to secure paying this bill, access to additional finance is very useful. 

VAT funding enables businesses to pay your quarterly VAT payments over the course of an agreed term (usually 12 months). This will be paid back over a series of monthly payments. This loan provides the liquid funds needed for businesses to settle their VAT bill without provoking any consequences from HMRC. Obtaining this loan will boost the company’s overall cash flow position as well as pay your VAT bills smoothly. 

As a business owner, there are a few things that may be worrisome for you. Owing the government funds can unfortunately often be part of that worry. A lot of business owners are not aware of the options that are available to them when they do not have enough working capital to pay the necessary bills. 

Businesses try to optimise their profits and strive to have working capital to reinvest and take advantage of business opportunities. For this reason, tax loans are becoming increasingly popular. These loans allow businesses to free up cash flow while meeting the demands of HMRC on time.

Forfeiting a tax payment or paying late is something you must try to avoid at all costs. Owing a debt to the HMRC is not something to be taken lightly. Often those who default on their tax payments are dealt with enforcement actions being taken against them. 

Regardless of what your business is, taking out a tax loan can be the financial solution that you need as it will enable you to spread out the cost of your tax bill over the course of  a 6-12 month term helping businesses navigate through the costs of tax while avoiding the wrath of HMRC and racking up late payment charges. 

Why are tax loans useful?

Tax loans are incredibly helpful and convenient to help pay your tax bill on time. On the one hand, it is in your best interest to stay within HMRC’s good graces by paying all your tax bills on time while on the other, you also want to leave yourself available cash for the essential day to day running of your business. Tax loans help you do both, very comfortably. 

Many lenders design your loan specific to your needs, there are loans that are specifically designed to pay tax bills. In some cases, funding a VAT bill can have tax benefits. This is because interest payments are often offset against corporation tax later in the financial year. 

Benefits of tax loans

  • Improved cash flow as well as control of cash flow
  • Easy, fixed monthly repayments
  • Flexible repayment terms
  • Easy quick and simple to arrange
  • HMRC receive payments directly and on time
  • Protects existing bank facilities
  • Keeps your bank funding lines open
  • Fixed rates
  • Fast decisions and fast funding
  • Personal service and dedicated account manager 

Many tax loan facilities operate in ways to enable you to receive the funds you need in a simple and timely manner. The main benefits tax loans have to businesses is that this loan will allow their cash flow to remain in their control, lift the weight of their tax bills by spreading out the costs into manageable monthly payments and avoiding any late payment consequences. 

How do I apply for tax bill funding?

As a dental business owner, VAT or tax payments can be detrimental to your business profits. Time constraints are very common, especially when it comes closer to the time to pay your tax bills. This is why the process of applying for funding is quite quick and simple. 

Unlike many other loans, detailed business plans and security assets are not needed, nor is it necessary to make long winded appointments to discuss the security of your loan. Many processes are flexible and quick with great affordability and transparency. 

Tax refund

Loan against tax refund

Taking out a loan against your tax refund is also known as a refund-advance loan. It is a type of secured loan. This means that you need to put up something in this loan to use as collateral. Usually this would mean an asset or an estate but in this case collateral refers to your anticipated tax refund. 

Tax refund loans are short term loans that must be repaid when you receive your tax refund. You will often receive this loan as a deposit into your bank account . When you get your tax refunded, it will be deposited into that same bank account and the loan amount will be deducted from the amount given. Interest and other fees will also be deducted from the amount of tax refund given to you. 

Pros and cons of tax refunded loans

Here are a  few things to consider before you take out a tax-refund loan. 

Pros of tax-refunded loans

Fast funding

When you apply and are approved for a ta-refund loan, the funds are available to you as little as 24 hours after you are approved. Usually the time it takes from your tax to actually be refunded to you is a minimum 21 days. 

Cons of tax-refunded loans


Unfortunately getting a tax refund loan may often involve paying interest on said loan. This is not the case with all tax refund loans, there are some lenders that are able to give you an interest free loan. However, even with an interest free loan, there still may be fees you will need to pay, for example, administrative fees that are associated with transferring your refund.

High risk 

There are potential risks with this kind of refund loan. The key risk being that the amount of the loan is based on how much you anticipate getting back in the refund. This may not accurately represent how much your tax refund will actually be. There are several factors that could impact that amount you are expected to receive and the actual amount you are given. 

An example of this is that if you owe a state debt such as a student loan or back taxes. These debts will be taken from your tax, therefore, your tax refund will be reduced. This will result in you receiving less funds than you had anticipated when taking out the loan. 

Tax refund loans

While tax refund advance loans can be a helpful and timely option to get the quick cash flow you need, there are many factors you must keep in mind before you decide to apply for this type of loan. 

If you do decide to apply for a tax-refund advance here are a few things we advise: 

Proceed with caution:

These loans can often come with a high interest rate and hidden fees.

Read the terms and conditions carefully:

To allow yourself to make the most out of this loan, you must ensure that you fully understand the terms and conditions of the loan and all the costs in their entirety. This includes any contractually included late fees or any prepaid card costs associated with the loan. 

Contact us to find out more

Corporation Tax Loan 

Corporation tax is the one of the most important taxes your business, however large or small, will pay. If you are unable to pay your corporation tax bill, you will be hit with penalty charges which will increase the longer you default on your payment and will exceed the overall amount you originally owed, fundamentally resulting in you being in a worse financial situation.

Charges begin from the day your payment is late, the interest of the lay payment will also continue to rack up over time so it is important to meet your payment deadlines.

If you are unable to pay your tax bill because the time for paying your taxes has come at a very inconvenient time for you, then a corporation tax loan would be ideal for your situation. It is an effective way to spread your tax demands across monthly repayments that are affordable for you.

What is corporation tax?

Corporation tax is a tax that all limited companies must pay. It is a tax that is payable against the profits the company makes. A corporation tax bill is based on the level of income a business has earnt through trading. It is the income derived from taxable events throughout the tax year such as asset sales. You are liable to pay corporation tax if your business is a member’s only club, a trade association, a limited company, a trade or housing association, or a group of individuals outside a partnership operating as a business. 

The current rate in the UK for corporation tax is 20%. This also applies to any companies you may have overseas but have an office or branch residing in the UK. HMRC usually calculates your corporation tax bill roughly 9 months after the business accounting year comes to an end. 

If your tax liabilities are not paid on time, similar to your business tax expenses, there will be penalties issued by HMRC. If your tax bill is quite high, the business itself could be forced to liquidate completely in order to pay your tax bill. The real truth for many businesses is that they sometimes simply are not in a position to be able to pay their bill which is why corporation tax bills can be very useful. It is important to note that HMRC will not send reminders about your tax bill until you are overdue.

This is a difficult situation to be in, especially if your current available capital does not allow you to meet the demanded amount of the corporation tax bill. Ideally, the best option is to set aside funds during the year to meet your tax bill however, It is normal for cash flow to fluctuate over the year based on different activities. This makes it hard to put a large amount of money aside especially when you have unexpected costs to pay. This is why corporation loans are becoming increasingly popular to help regulate cash flow and pay for a business’s tax bill. 

Who pays corporation tax?

All limited companies are liable for corporation tax. The tax is also aligned to the financial year of the business. However, there are a few exceptions such as when a new business changes its year end accounting date. 

Businesses are bound to pay taxes on any profits the business makes in its financial year. Corporation tax is also due on any money the business makes from investments and any chargeable gains. 

Benefits of a corporation tax loan

Corporation tax loans improve a businesses cash flow which is why they are increasing immensely in popularity amongst many different types of businesses. This added stable cash flow allows businesses to take advantage of this added capital to their business to fund unexpected costs or any drops in income.

A major benefit of a corporation taking a loan is the added cash flow to your business. The loan also helps avoid the risk of high and very costly charges for late or non payment of your taxes. The loan itself will improve the flow of your capital, this means that when your next corporation tax loan is due, you will be in a much better position to comfortably pay the bill. 

Regardless of the type of business you operate, it is possible for you to qualify to apply and receive a corporation tax loan. The loans have various options that are flexible for you and they will enable you to spread your tax bill over the course of several months. You will have fixed monthly or quarterly payments to repay your loan. 

There are a variety of lenders who specialise in commercial finance loans. They are able to design a plan that is flexible and suited to your specific repayment abilities to ensure that you will be able to pay your tax bill comfortably with monthly installments. 

Using corporation tax funding allows businesses to avoid the potentially costly HMRC penalties for late or non payments. You can usually get a decision on your corporation tax loan inquiry within as little as 24 hours in most cases. 

Where to apply for a corporation tax loan

There are a number of lenders who specialise in finance loans specific to paying tax such as corporation tax loans, which gives you many options to choose from. There are various online comparison tools that will be perfectly aligned to the needs of your business. These comparison tools and websites will also help you filter through different loans that are best suited to you with the lowest interest rates. 

Click here to read our article on How to finance a healthcare business.

Business Loans for Healthcare Businesses

We’ve been helping to fund the future of British healthcare businesses for over 20 years and our team are made up of former bankers with decades of experience in the UK’s healthcare lending sector.

You can find out more about working with Samera and the financial services we offer by booking a free consultation with one of the Samera team at a time that suits you (including evenings) or by reading more about our financial services at the links below.

For more information on raising finance for your healthcare business, including more articles, videos and webinars check out our Learning Centre here, full of articles and webinars like our How to Guide on Financing a Dental Practice.

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

A Guide to Bridging Loans

What is a Bridging Loan?

Bridging loans are a short term financing option that are quite different from a standard bank loan. They are often used by property buyers to essentially ‘bridge’ the financial gap between the sale of their current home and the final sale of their next property investment. However, these loans can be very helpful in many ways for businesses to use immediate funds to obtain quick capital for their dental practice, integrate cash flow or make necessary refurbishments. They are one of the most useful and viable options when you need to move quickly to buy a property. 

Bridging loans are usually offered between 1-18 months, with the loan repayable in full at the end of the term. An open bridging loan does not have a repayment date, but will still be a short term loan. For example, a 12 month bridging loan must be repaid on the 12th month or before the 12 month period ends. It is in your interest to repay the loan as early as possible in order to save on interest payments.

Bridging loans are very easily accessible and immediate financing which means that they typically have high interest rates and fees. 

What is Bridging Finance?

Bridging finance is a kind of commercial property finance which is usually used by companies and sole traders to quickly fund the purchase of a property. Traditional commercial mortgages often take months to arrange. Bridging finance companies can lend money much faster. This type of funding allows clients to obtain immediate funds to complete the purchase of a property or to bridge the gap between selling and buying a new estate. The loan will usually be secured against a charge of the property you are purchasing. 

How Much Can I borrow with a Bridging Loan? 

The amount that you can borrow is solely dependent on the value and the type of security property that you use. Bridging lenders will quote a maximum loan to value (LTV), this is usually between 65-80%. You are able to get a bigger loan depending on your exit strategy. 

Bridging loans are only meant for short term periods, so attempting to get a very large amount of money through a bridging loan without an adequate exit strategy is quite unlikely. 

Why is Bridging Finance Useful?

Bridging finance is useful for dental practice businesses because it is a loan option that is fast and flexible. This short term property loan option can be approved and released so quickly that it could be done in a matter of days. In many cases, this is a very valuable asset to obtain in the property industry. 

These loans are a highly useful tool for businesses to bridge the gap between two property transactions. Bridging loans are a practical solution for those who need extra time to sustain suitable long term finance. 

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What is Bridge Capital?

Bridge capital is temporary funding that helps businesses cover its costs until it can get permanent capital. The repayment terms for bridge capital vary on the individual, but usually payment is made in full when the loan reaches the end of the term. Usually, by this time, the company receives the necessary capital from their investment or a longer term loan. Bridging loans are typically secured on any real estate asset a borrower can offer. This can include commercial or mixed-use properties. 

How do I get a Bridging Loan?

Bridging loans are not widely available and are not offered by a lot of high street banks. Bridging loans are usually highly available from mortgage brokers and advisers. 

Although bridging loans are generally quicker to arrange than a mortgage, do not make the mistake that they are easier because lenders are less thorough. Lenders still make thorough checks of your current finances, the value or your perspective property and your current home. 

How Much do Bridging Loans Cost?

Bridging loans can end up being very expensive because they charge you a range of fees as well as interest. You will be charged monthly interest on your loan. Your lender will not quote the annual percentage rate (APR) as most bridging loans do not even last a whole year. 

You will be charged interest on your loan in 1 of 3 ways:

  1. Monthly interest: This is the most common way interest will be added to your loan. You will pay the interest each month, and it will not be added to the balance of your loan. You will pay off the full balance at the end of the term.
  2. Rolled up interest: This is when you pay all of the interest including your original loan, at the end of the term. The interest will be added each month and accumulated this way, however you will just pay the full amount when your term comes to an end.
  3. Retained interest: Your lender will calculate the amount of interest you will have to pay over the time-frame of your term when you first take out your loan. You will borrow the interest amount from the bridging lender when you apply for your loan including your initial figure. This will cover the monthly interest payments for a set period. You will then pay the loan back and the end of the term including the extra money borrowed for interest payments. 

Exit Strategies for Bridging Loans

An exit strategy is the term used to explain how the bridging loan will be repaid at the end of the term. A strong exit strategy is a vital part of any bridging loan application. It is having a strong exit strategy that makes the process of the loan application faster and lenders to be more flexible with your requests. 

Why is an Exit Strategy Important?

Having a preplanned and strong exit strategy is very important on a bridging finance provider’s checklist. These loans are based on an interest only basis. How you plan to settle the end of your loan at the end of its term is the most crucial part of your loan.

When your term has come to an end, your lender will expect your loan to be paid back in full as agreed. In the case that you are unable to do this, your account will then be put into default. If this happens it could affect your credit record. In order to avoid this situation you will need to resolve the situation as quickly as possible.

Here are a few options for you:

  • Extend your loan with your lender. This may mean that you will continue to add interest on your current loan if you are near your maximum loan to value. It is also important to note that your lender may not agree to renew the loan. If they do agree, they may charge a higher interest rate in exchange for the renewal.
  • Refinance to a new lender. This option could get very expensive for you as you will have to restart the process and pay all setup costs again. 

Remember that if you do refinance your loan, you still need to consider what your exit plan is for your new loan. Refinancing blindly is a temporary solution, you will just be delaying the inevitable unless you plan a way to properly pay back the loan.

What if I can’t Pay Back the Loan by the End of the Agreed Term?

Bridge loans in their nature are arranged for short term requirements and the lender expects all clients to contractually abide by the terms of repayment within the set time frame agreed. 

Bridge loans, like many other loans, are set up with a set plan to arrange how the loan will be repaid. Usually, the lender will not allow the loan to proceed if there are any hesitations about your ability to repay the loan. 

When you hit the end of your term, you are expected to repay the loan in full. Acceptable exit methods are usually sale of property or refinance. There are a range of different exit strategies that may work for you. 

Loans are a contractual agreement, however, it is inevitable that some loans will overrun the agreed term. The lender will often contact you (the borrower) at least 3 months prior to the end of the agreed term to examine how things are going for you and determine whether you will be able to pay back the loan in time of the agreed term. If the lender believes that it is not likely, they will usually recommend other steps that you can take to ensure that you can get back on track and eventually, you will be able to fully repay your loan.

The lender will obviously want the loan repaid as and when agreed but they will normally work with borrowers who have over run their term only if the borrower is open about their situation and is in continuous regular contact with the lender. This way you and your lender are able to work out a plan to get you back on track together. 

We always recommend that when taking out a bridging loan, you opt for the longest term available as many plans can over run the expected timeframe. 

How Long Can I Take Out a Bridging Loan for?

The average term for a bridging loan is approximately 6-7 months. In different circumstances, longer terms can be discussed and arranged. It is often dependent on how much your loan is for that your term can be extended. 

Are Bridging Loans Regulated?

A bridging loan becomes ‘regulated’ when the loan is secured against a property that is or will be occupied by the borrower. A regulated loan can be secured by a first or second charge, the bridging loan will be regulated by the FCA. 

Bridging loans that are unregulated are usually associated with commercial buy-to-let properties. 

Can I Get a Bridging Loan Without a Credit Check?

No. Like most other loans, bridging finance involves a thorough check into the finances of the borrower. 

Applicants with clean credit history are often more attractive to lenders which results in these applicants receiving favourable rates. However, good credit is not only what lenders look for. There are other aspects and details of your loan that will help you get approved by your lender even though you may have a bad credit history. 

Can I Still Get a Bridging Loan if I Have Credit Issues?

Although thorough checks into your credit history will be taken before you take out your loan, bridging loans can still be available to you even if you have a poor credit rating. Your bridging finance is often determined by the security of the property being offered as well as the exit route. Your lender will also take into account the size of your deposit and the assets you put up as security. 

A lender’s biggest concern is that having poor credit history will prevent you from repaying the loan at the end of the term. It is highly dependent on what you put up as security and what your exit strategy is. If you have a strong exit strategy such as, to sell the property or another estate, then there is a lesser chance to have an impact on you taking out the loan. 

Closed-Bridge and Open-Bridge Loans

What is a closed bridging loan?

A closed bridge loan is for people who have set a fixed date to repay the loan. A closed bridging loan includes a feasible exit strategy as part of the lender’s application. If you are able to produce proof to your lender that you are able to repay the debt as soon as your transaction is completed, then a closed bridging loan is the most effective and sensible option for you. They are defined by the set repayment date and are the most common type of bridging finance option available. Closed loans are usually offered with lower interest rates and have the highest rates of approval.

What is an Open Bridging Loan?

An open-bridging loan differs from a closed bridging loan as an open loan does not require a clearly defined exit route in place to provide to the lender.

Due to the unpredictable nature of repaying an open bridging loan, they are a lot harder to arrange. However, if this is your preferred loan type, it would be in your best interest to be able to provide enough security, so that it is more likely that you are able to be approved for this type of finance. 

What is the Interest Rate on a Bridge Loan?

The interest rate on a bridge loan is generally between 1% and 1.5% per month. That being said, there are some lenders who have better rates than others. Because of this, it is always useful to shop around or use the services of brokers in order to get the best possible deal for your loan. 

How Much Can I Borrow for a Bridging Loan?

You are usually able to borrow from 80% – 100% of the property value purchase price with bridging loans. It is important to understand that all lenders are different and have different terms. If you are looking to borrow more, you may need to offer additional security in the form of an additional property or several other properties. 

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How Much Does a Bridging Loan Cost?

There are four main factors that will impact the cost of your loan and they are:

  • The term of your loan
  • The amount borrowed
  • The lenders agreed interest rate
  • Start up fees 

The general trend with bridging loans is that your costs will generally increase the longer your term is. This is also the case the larger your loan is. 

To minimise the cost of your loan, it will help your expenses if you compare the total cost of borrowing the funds, not simply the interest rate and arrangement fees on their own. 

There are many fees that are charged in addition to the interest and arrangement fee. Different lenders include their own fees. Here are some common fees charged in addition to your interest rates.

  • Exit fees
    These exit fees are payable on repayment of the loan. There are some lenders that do not charge an exit fee where some others charge from 1 to -1% month’s interest.
  • Valuation fees
    These fees are payable for surveyor’s costs in order to ensure your property is suitable security. Some lenders do not require a valuation.
  • Legal fees
    These fees are to pay lenders own legal costs while they are setting up the loan.
  • Admin fees
    These can also be labelled as asset management fees. These are costs that are payable to the lender as they handle the setup of your loan. 

Pros and cons of Bridging loans

Pros of Bridging Loans:

Bridging finance is quick to arrange. Applications can be completed and authorised quickly allowing you to obtain the funds you need quicker than you could with any other type of loan. Many property deals are highly dependent on factors that are rapidly changing within the business. Being able to obtain funds quickly can be a major attraction.

Bridging loans allow you to complete a property transaction that would otherwise not be possible.

You are able to get funds up to 100%. Usually the most you are able to borrow is 80%, however, provided the security put in place is sufficient, lenders will allow you to borrow up to 100%.

Often with bridging loans there are no monthly repayments, this allows the loan to raise capital for your business where cash flow is tight, while you have assets that can pay back the loan. 

Cons of Bridging Loans

Your home / property you put up as security is at risk if you do not keep up repayments on a bridging loan. 

There are usually several fees which you will have to pay which makes bridging loans more expensive than traditional mortgages. These fees include an arrangement fee, broker fees, valuations fees and sometimes even legal fees, before you are able to take out your loan. If you are borrowing for a long period of time, the interest charges are a lot more expensive than a standard loan.

As most loans are short term, if you have issues with your repayment method, you could potentially face major issues. Failure to repay your loan at the end of the term could have major repercussions. It could lead to your property being repossessed. 

When Would you Need a Bridging Loan?

When a buyer pulls out on an investment into your property, your finances on the offer of your next home and potential deposits could be put in jeopardy. A bridging loan will be able to tide you over until your home is back on the market and is under offer again. 

Bridging finance allows you to buy a second property before selling the first. 

As long as you can provide your lender a valid exit strategy, the money you obtain for a bridging loan can be used for a variety of business reasons from providing your business with working capital to covering cash flow issues. 

Auctions: Bridging loans allow you immediate funds when you are bidding for properties at an auction.

Bridging loans could also be used if you wanted to buy a property with a short lease. You could use the loan to buy the property, then add value by extending the lease. This would also provide a valid exit strategy. 

Refurbishment projects: You can use residential bridging loans for cash flow to refurbish a property before full capital is available.

What is a Commercial Bridging Loan?

Commercial bridging loans are similar to residential bridging loans, they are used when there is a gap in financing that needs to be filled quickly. 

For a commercial bridging loan, the overall use of the property has to be more than 40% commercial. This means that retail units with residential flats on top or at the back have to occupy more than 40% commercial space of the property.

The exit strategy for residential bridging loans usually include landlord or landlord companies to refinance the loan into a buy-to-let mortgage. This is usually done after the loan is used for renovations to make the property more attractive or suitable for rental.

For commercial units that are bought specifically by using a commercial bridging loan, the exit strategy usually involves selling or refinancing the property on to a conventional commercial mortgage after buying or refurbishing the property.  

What is a Bridge-to-let Loan?

This type of bridging loan is specifically aimed at the buy-to-let market. The loan is used to secure a property that is fully intended to rent out without having a basic mortgage organised. This loan would be based around your ability to obtain 100% rental income. This means that your potential rental income should equal your payments. 

You can use this type of bridge loan for both residential and commercial properties. The exit strategy would be to refinance the property on to a conventila buy-to-let mortgage and gaining capital by renting the property out either in part or fully. 

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Defaulting on your Bridging Loan

With all bridging finance, you have to put up security therefore, defaulting on your loan will not only affect your credit score, but will also put your asset at serious risk. Even though bridging loans are able to be authorised quickly, all lenders are very thorough with background checks and legal rights.

There are a variety of legal options your lender has at their disposal in order to compel you to pay what is owed to them. This not only includes the right to your security asset but could also include county court judgments, or statutory demand letters which would ultimately force your company into liquidation. 

Breaching the Terms of your Bridging Loan

Bridging loans have many terms and conditions that are different to standard mortgage loans.  A lot of lenders are at liberty to insert their own terms and conditions which is why it is imperative to read the fine print carefully before signing all contracts to understand the fees, repayments, charges and when they are all due. 

Click here to read our article on How to finance a healthcare business.

Business Loans for Healthcare Businesses

We’ve been helping to fund the future of British healthcare businesses for over 20 years and our team are made up of former bankers with decades of experience in the UK’s healthcare lending sector.

You can find out more about working with Samera and the financial services we offer by booking a free consultation with one of the Samera team at a time that suits you (including evenings) or by reading more about our financial services at the links below.

For more information on raising finance for your healthcare business, including more articles, videos and webinars check out our Learning Centre here, full of articles and webinars like our How to Guide on Financing a Dental Practice.

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

A Guide to Working Capital Finance

What is working capital

Working capital is the amount of available money a business has at its disposal for its day-to-day operations and expenses. Working capital is not the same as the overall value of your dental practice. It is not calculated by adding up everything the business owns.

Working capital is the cash or cash equivalents your dental practice has, or can raise in a year. Working capital is calculated by subtracting the value of the business’s liabilities from its assets. It is essentially the amount of money left over once a practice pays all its standing debts. 

If your dental practice is unable to meet its debts with your existing assets, you may need to apply for working capital finance.

Working capital reflects the short-term financial health of your dental practice, as well as its ability to conduct regular operations. Without adequate working capital, your practice will be unable to meet its everyday obligations. 

For instance, staffing costs, rent on the premises, marketing and taxes should all be covered by the business’s available cash – its working capital. Ant given business should not need to sell off long-term assets or borrow money to meet these responsibilities. Its ability to do so is dictated by the amount of working capital. 

Working capital represents the liquid cash which isn’t tied up in its long-term assets.

The most common definition is; the difference between the business’s current assets and its current liabilities.

Working capital vs cash flow 

Although they are similar, related concepts and are often confused, working capital and cash flow are not quite the same thing. 

Your dental practice’s cash flow is the amount of cash that moves through the business over any given period. It is the amount of money that your business can generate. Cash flow does not take into account your liabilities. Working capital, on the other hand, takes into account all your current liabilities, as well as current assets. 

A working capital ratio is a representation of the financial health of your dental practice as a business overall. It is a broad picture of your business’s ability to pay off debt in the short-term. Cash flow is more concerned with the cash that can be generated. This means you could have a weak working capital but a strong cash flow. Your business is generating a lot of money, you just owe nearly as much as you make.

Therefore, even with a strong cash flow, low working capital can make it difficult to pay your debts off on time. If this is the case, you may benefit from raising working capital finance.

How to Calculate Working Capital.

Working capital is the amount left over once your dental practice has met all of its financial obligations. Working capital can be calculated with one fairly simple equation. 

That equation is: current assets minus current liabilities equals working capital. 

The number left over is the amount of ready cash that a business could feasibly spend without having to sell off long-term assets or borrow money from a financial institution. It can often simply be the value of the entire inventory of your dental practice added to the current bank holdings. 

For example, lets say your business has £10,000 in a business bank account, a customer owes £1,000 and the business’s inventory totals £10,000. Your business has current assets totalling £21,000.

Let us also assume that the business owes £15,000 in total, spread across suppliers, debts and tax bills. 

Once the business has paid off its £15,000 current liabilities from its £21,000 in current assets, there is £6,000 left over as working capital. Although the business could raise more money by selling off more long-term assets, this £6,000 is the amount it can liquidise within a 12 month period. Therefore, the entire dental practice has a working capital worth £6,000.

Current Assets

Current Assets vs Fixed or Long-term Assets

Current assets are not to be confused with the long-term assets of a business. Long-term assets are the assets that your dental practice will expect to keep for longer than 12 months, which could include a lot of necessary dental equipment. They are essential parts of the business that cannot just be sold off to pay the tax bill. They also include assets that cannot be sold off for liquid cash in a year. 

They are sometimes known as fixed assets.

Although a piece of heavy machinery or a company car is an asset to the business, it is not included as a current asset in the working capital calculation as it cannot be quickly sold off for cash. It would also disrupt the day-to-day business operations to do so.  

Long term assets include items such as land & property, machinery & vehicles and intangible, soft assets such as copyrights and patents. Inventory will usually be included as a current asset, since it can often be expected to be sold in 12 months. However, heavier pieces of inventory may not be included and will have to be judged individually. 

Current assets, on the other hand, are the assets which can be, or will be expected to be, sold off or otherwise liquidised within a 12 month period. 

Examples of current assets include:  

Cash and bank balance 

Most businesses have some form of account with a bank or similar financial institution. Most also have some form of ready cash available. This could range from a small petty-cash stash in the office to a locked safe containing thousands of pounds. These are immediate, liquid cash which can be instantly used to fund business operations. 


Certain pieces of inventory are often considered current assets. Whether inventory items will be listed as a current asset or not depends on whether it can be sold off for liquid cash within a 12 month period (or before the end of the business cycle).

For instance, a warehouse full of food can be reasonably expected to be sold within a 12 month period. Therefore, it is a current asset, since within a year you know that your business will exchange those foodstuffs for liquid cash. 

However, the heavy machinery that the business used to process or harvest that food may not be expected to be sold off within that same 12 month period. Therefore, it would usually not be included as a current asset. Likewise, the property your business owns may be its most valuable long-term asset. However, you are not going to sell it off to pay a quick bill. Therefore, it is not considered a current asset. 

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Accounts Receivable 

Accounts receivable are the bills owed to your business (but not yet paid) for goods or services already rendered. For example, if you sell a customer a car and the deal includes them not having to pay any money for the first 6 months, you have an account receivable. This can often include long term dental services that can be billed at the end of a treatment.

Although you do not have the money in your business’s bank account at the moment, it is owed to your business. You may not be able to call it in earlier, but you know that it will be in your bank account in 6 months – unless the customer defaults! 

As long as accounts receivable are expected to be paid within a 12 month period, they are considered current assets. 

Marketable securities. 

Your dental business’s marketable securities are the debts and securities that you can expect to redeem or trade in with a 12 month period. If they are not redeemable within that 12 month period they are considered a fixed asset. They are financial instruments which can be easily liquidated into their market value in cash in one year.. 

Examples of marketable securities include things such as Government bonds and treasury bills, certificates of deposit and stock. 

Prepaid expenses 

Prepaid expenses are the expenses paid by the business before a good is received or a service is rendered. For example, leasing a piece of equipment or office space, or even insurance payments are considered prepaid expenses. 

Prepaid expenses are considered current assets if they are expected to be completed within 12 months. If your business leases a piece of equipment for less than 12 months, it is considered a current asset. If it is leased for longer than 12 months, it will be considered a fixed asset. 

Since the expense has already been paid, this means other working capital can be used for business operations. If you prepay £12,000 for 12 months rent at £1,000 a month, that £1,000 still shows up on the balance sheet. However, since you have already paid it, you essentially have £1,000 extra as working capital.

Current Liabilities 

Current liabilities are the financial obligations a business has that it is expected to pay back within a 12 month period. These are the debts that a business needs to pay back within a year, in other words, the business expenses. Debts that you are not expected to repay within that year are not considered current liabilities, they are known as long-term liabilities. 

Current liabilities are normally paid off using the current assets. Most businesses will have several current liabilities owed at the same time to suppliers and creditors. Most of the everyday costs of operating a business are paid monthly or as needed, and are therefore considered current liabilities. For instance, utility payments for the offices or warehouses, materials and supplies or business loan repayments. 

Examples of Current Liabilities 

Accounts payable

Accounts payable are the debts owed by your business for goods or services that have been already received or rendered. They are the outstanding invoices to your suppliers and vendors that are due to be repaid within 12 months. 

Any debt that is due within that period is considered a current liability. Debts that are not expected to be repaid in a year will not be listed on your balance sheet as current liabilities. 

Accounts payable will cover debts such as supplier invoices, utility bills and invoices from external companies such as legal and marketing services. 

Short term debt

Short-term debt, otherwise known as operating debt, are the short-term financial obligations your business has. Operating debt usually takes the form of short-term loans from a high street bank or another financial lender. They can also be issued as commercial paper. 

These debts are normally taken out to cover short-term operating costs of the business, such as supplies, bills and invoices. If the debt is expected to be paid within 12 months, it will be considered a current liability. 

If you have debt with a loan term of 10 years, that is considered a long-term debt. However, in that final year, it will appear on the balance sheet as a current liability since it is due within 12 months. 

Dividends payable

If your dental practice has shareholders who are paid dividends, they may be included are current liabilities on your balance sheet. Once it has been decided that a certain amount should be paid in dividends to the shareholders, they are considered current liabilities until they are paid. 

Accrued expenses

Accrued expenses are the expenses which the business knows will have to be paid within a year. They are listed as expenses on the balance sheet but have not yet been paid. Therefore, they are considered current liabilities. 

Accrued expenses can cover a range of different payments. For instance, accrued expenses could cover interest payments, including interest for long-term debts, payroll and tax.

Working capital ratio 

It is common for a dental business’s working capital to be expressed as a ratio, the working capital ratio. This is a numerical expression of the financial health of the business. A healthy working capital ratio would be between 1.2 and 2.0. 

Working capital ratios are calculated by dividing your business’s current assets by its current liabilities. For example, let’s say your business has current assets totalling £750,000 and your current liabilities come to £500,000. We divide the two and get a working capital ratio of  1.5. 

If the same business’s liabilities raise to £650,000, the working capital ratio changes to about 1.15. This business is approaching negative working capital, i.e. having more in liabilities than it does in assets.  This business may need to apply for working capital finance to pay its debts.

However, if the liabilities fall to £250,000, the working capital ratio is 3. Although it may appear at first sight that the higher the ratio the better, this is not necessarily the case. With £500,000 more in assets than it does in liabilities, this business has an excess of working capital that it should be using to grow the business. 

What can cause changes to working capital

A dental practice’s working capital is affected by a wide range of different factors. You can expect your working capital number or ratio to change almost daily. 

The most obvious are times when you makes large short-term purchases or sales for your practice. Purchasing new inventory or office supplies will cause your working capital to decrease by increasing the current liabilities. Likewise, selling off property or inventory will increase your working capital ratio by increasing current assets. 

The ratio will also change due to long-term assets and liabilities changing in status. For example, a 25 year mortgage is a long-term asset until the 24th year. In that final year the remainder is expected to be paid within a 12 month period, therefore making it a current liability.

There are also instances where customers default on their debts and you may not be able to bring in the accounts receivable that you had planned on. Changes to markets may also mean that your inventory is subsequently valued at less than you purchased it for. This reduces its value and creates a discrepancy with the balance sheet. 

If your practice is struggling to pay its debts, whether this be due to an increase in the liabilities or a decrease in the asserts, you may need working capital finance.

When you will need Working Capital Finance

Working capital finance loans are those loans taken out by any business including dental practices to cover short-term expenses. They are not taken out to cover purchases of long-term assets or investments such as property. Businesses apply for working capital finance loans when their current assets and cash flow cannot cover necessary short-term payments. 

For instance, a business may take out a short-term working capital loan to cover expenses such as payroll, tax payments, interest payments or inventory purchases. 

In a perfect world, all businesses and dental practices would use their own liquid cash or cash equivalents to cover these expenses. However, if a business has a weak cash flow or insufficient working capital in the form of current assets, they may choose to borrow the money to make payments in the form of working capital finance. 

Alternatively, businesses may not wish to relinquish any of their current assets to pay liabilities and may prefer to borrow money to do so. 

Businesses that experience a high degree of seasonality in their operations, for instance hospitality companies or businesses based in a tourist-centric region can often benefit from working capital finance. If they are unable to cover expenses in their off-season, a working capital loan can allow the business to make necessary purchases. 

Dental practices looking to grow quickly, or in the process of doing so, may also apply for working capital finance loans. 

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The term working capital loan is essentially an umbrella term for any short-term business support loan used to cover business expenses like payroll and tax.

As such, there are several different types of loans and methods of financing that can raise the working capital required to make important purchases and payments.

Options for raising working capital finance include: 

Commercial Loans 

Commercial loans are perhaps the most common form of working capital finance. These are simply commercial loans that have been received from a financial lender such as a high street bank.

Any loan that is intended to be used to make short-term purchases, as opposed to long-term investments, can be considered a working capital finance loan.

Equity Finance

Many dental practices choose to use equity financing to fund short-term payments. Equity finance is when a business sells part ownership of the business itself in the form of shares in exchange for capital. 

Although you can raise a lot of quick capital with equity financing, you will lose at least some control over the operations and strategy of the business. 

Equity finance can be raised in a number of ways. For instance, venture capital investors or business angels will purchase shares in exchange for capital. Similarly, you can float the business publically and offer shares out to the wider public. 

Mezzanine Finance

Mezzanine is a hybrid form of financing that acts as a middle ground between traditional commercial loans and equity finance. Mezzanine finance takes the form of a normal commercial loan that is guaranteed with business equity. 

In other words, you receive a loan in return for regular payments with interest. If you are unable to meet these payments, the lender has the right to receive payment in the form of equity. You will give up part ownership of your business to the lender if you are unable to repay in full. 


It can be possible to obtain a business overdraft from certain banks and sources of alternative lending.

Overdrafts of your dental practice are, in effect, a form of unsecured loan. However, being unsecured does limit how much you can borrow. You will need to demonstrate a strong credit history and ability to repay loans on time to be able to secure meaningful funding in this way. 

However, should you be able to do so, overdrafts can be a good way to quickly raise short-term capital. 

Revolving credit facilities 

Revolving credit facilities can be another way to raise short-term working capital finance for business growth and necessary payments and are similar to overdrafts. A revolving credit is essentially a line of credit offered to businesses from banks and other financial lenders. 

A certain limit of credit will be agreed upon between the business and the lender. The business in question, i.e. your dental practice can proceed to then borrow anything up to this limit at any time. Interest is charged on the outstanding debt until it is paid. 

Revolving credit facilities are ongoing agreements between creditor and debtor, they are not a fixed loan amount like a traditional commercial loan. 

Revolving credit facilities can be a great way to regularly and reliably raise short-term capital.

Invoice finance

Invoice financing is a way for dental businesses to free up working capital that is currently tied up as a current asset in the form of outstanding invoices. 

When businesses sell to customers, this is often done so on credit. This is especially true for larger businesses who do not expect customers to pay immediately or for big dental treatments that are paid in instalments or after the treatment has been completed to its end. Instead, the customer is issued an invoice and they pay on or by an agreed upon date.

However, since the goods or services have already been purchased, their value is now tied up in that invoice. Until the invoice is paid, that value is absent from the business. 

Invoice financing is a way to free up that working capital by selling the invoice to an invoice factoring company. These companies buy the invoice for a charged percentage. The owed business can then be paid the value of the invoice quicker than if they had waited for the customer to pay on the due date. 

This frees up working capital that would otherwise be tied up as a current asset.

Asset Refinancing

Asset refinancing is a way for dental businesses to free up working capital that is currently tied up in their long-term assets which many dental practices usually have in spades. Through asset refinancing, your business can gain access to some of the cash value of the asset without having to sell it off. 

Refinancing allows you to borrow money against equity in the asset. This means that you can borrow money against assets you do not fully own. Your loan will be valued against the value of your equity. 

When you refinance an asset, you transfer ownership of it to the lender. However, you still maintain the use of it and the lender does not take it away. Once the loan has been fully repaid, full ownership of the asset is returned to you or at least your portion of equity is returned to you. 

If you are unable to repay the debt, the lender takes full control of the equity you laid against the loan. 

Asset refinancing can be a great way to gain access to value currently tied up in your fixed assets, whilst still keeping them in the business. 

Merchant cash advances

Merchant cash advances are a relatively new method of accessing working capital finance. Merchant cash advances allow businesses to borrow money valued against their average monthly profits. The loan is then repaid as a percentage of revenue each month. 

If a business makes lots of transactions using a credit card, merchant cash advances allow lenders to forward money based on the monthly credit card takings. This makes them a great option for retail businesses that have a good cash flow but not that much in the way of valuable assets. 

If your business made £10,000 last month, lenders will usually agree to lend you the same amount. You usually cannot borrow more than you make in an average month as you will be less able to pay the loan. 

Once the money has been advanced, the balance is paid back each month as a percentage of revenue.

Government support

In certain cases and in certain healthcare industries (including dentistry), you may be able to apply for government support to help cover working capital finance for your dental practice.

Many local councils offer financial support and advice to local businesses. It is worth contacting your local council to find out what support and signposting services they offer. You may qualify for a grant or loan directly from them. In other cases, they may direct you to external organisation who may be able to help.

The UK Government is also currently offering help with working capital finance to exporting businesses. The Export Working Capital Scheme aims to help businesses who are operating in the UK but exporting goods outside of the nation by assisting access to working capital finance.

The UK Government will guarantee up to 80% of risk to the lender to help fund pre and post shipment costs.

Click here to read our blog on How to finance a healthcare business.

Business Loans for Healthcare Businesses

We’ve been helping to fund the future of British healthcare businesses for over 20 years and our team are made up of former bankers with decades of experience in the UK’s healthcare lending sector.

You can find out more about working with Samera and the financial services we offer by booking a free consultation with one of the Samera team at a time that suits you (including evenings) or by reading more about our financial services at the links below.

For more information on raising finance for your healthcare business, including more articles, videos and webinars check out our Learning Centre here, full of articles and webinars like our How to Guide on Financing a Dental Practice.

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

Why Was My Business Loan Denied?

How to make sure a business loan application is successful

Why was your business loan application denied?

If you have recently applied for a business loan and your application was declined, it may feel insulting or demeaning, but the first thing you need to understand is that it is nothing personal. There are several potential reasons for having a business loan denied. 

It is important to note that there are many lenders out there with different lending conditions which means that if you get rejected for a certain reason by one lender, you may get accepted elsewhere because a different lender has different loaning options. There are various options that are available to you in order to improve your chances of getting approved the next time you apply. 

There are many reasons as to why you may have had a business loan denied, the good part is that it is not at a lender’s discretion to explain why. Usually, you will receive what’s called an adverse action letter from the lender explaining the reasons why you were rejected for a business loan. 

There are usually two main factors that lead to lenders denying business loan applications, these are predominantly problems with credit and problems with income. 

Here are some of the reasons you might have had a business loan denied.

Poor credit history

Lenders primarily look at your borrowing history which is reflected through your credit scores. This is because lenders want to know if you are able to pay back the loan, seeing a solid history of borrowing and repaying will put the lenders at ease to know that their loan will be repaid back to them.

However, if you have not borrowed much in the past, your lack of credit history may lead to your loan being declined or if you have experienced complications with repaying loans in the past.

Brief credit history

The length of your credit history is important to show your creditworthiness to lenders. They need to be able to see that you have an established history with credit products. No history does not reflect a good history. No history means nothing to base the fact that you will be a responsible borrower.

If you keep up responsible habits such as consistently paying off your bills with a credit card or any other form of credit, in time your score will reach its full potential. This can help reduce the chances of having a business loan denied.


Bankruptcy will affect your credit rating therefore making it quite difficult for you to get a loan from many lenders. It is also against the law to borrow more than £500 from any lender without telling them that you are bankrupt until you are discharged from your bankruptcy.

Insufficient/unverified income

Lenders look at your work, investments, and other sources of income in order to assure them that you will be able to repay the loan. With some loans, lenders are required by law to calculate your ability to repay the loan through your income.

Even if you have a good credit history, if the numbers do not add up in the end, lenders may decline your loan for that reason. Either because you don’t earn enough to repay the loan or your income cannot be verified with the information you have provided.

Debt-to-income ratio

This ratio is the comparison of how much you owe each month to how much you earn. Most lenders use your own debt-to-income ratio in order to determine whether you will be able to handle the repayments after the approval of your loan.  You may see your business loan denied if the numbers add up and it looks like your business will not be able to handle any new debts.


With some loans, you are able to personally guarantee the loan with your lender by essentially pledging a personal asset as collateral that is valued at the same amount of the loan. If you have a poor or brief credit history as well as no collateral, the chances of getting approved for a loan are much lower.

Contact us to find out more

Too many credit inquiries

You may think that applying for several loans at once with different companies may increase your chances of getting approved, but think again. When you apply for more than one loan or credit within a short period of time, it negatively impacts your credit rating. There is no limit or rule to determine how much credit you can apply for or the number of applications you wish to make however, there are consequences to your credit rating if you are making multiple applications for credit.

Making multiple loan applications also makes it seem like you are desperate for money which does not sit right with a lot of lenders, the argument is that, if you look like you need the loan so badly, you may struggle to repay it. As this will also reflect badly on your credit rating, it will make it difficult for you to receive credit or loans in the future as with any loan that you apply for, the lender will complete a credit check.

Change in income

The figure on your pay check every month does not affect your credit score. But lenders look at your income to determine whether that income will be sufficient enough to repay the loan. Therefore, affecting your eligibility for certain new credit accounts.

Recent late payments

You may be very responsible when it comes to paying your monthly credit card bills and you may have done it for years, slowly building up your credit score, but you had an off month and out of nowhere you accidentally miss a few payments. Unfortunately this can affect you pretty badly. The higher the score, the harder it falls when something occurs to hurt your credit rating. This, in some cases, can hurt your loan application more than consumers who had poor credit to begin with.


Usually, for conventional borrowers, there is a waiting period of typically seven years after a foreclosure for the borrower to be eligible for another loan. For mortgage loans, the waiting period is a minimum of three years until you will be able to apply for a mortgage, this is three years from the time that the foreclosure case has completely ended.

Other issues

In some instances, you can have a business loan denied for less obvious reasons. This could include mistakes such as submitting an incomplete application, or perhaps a problem with your business model.

Action Points

  • Credit Challenges: Issues with poor credit history, brief credit history, or bankruptcy can lead to loan application denial. Lenders assess your borrowing and repayment history to gauge reliability.
  • Income Verification Problems: Insufficient or unverifiable income may result in loan rejection. Lenders need to ensure your income is adequate for loan repayment.
  • High Debt-to-Income Ratio: If your monthly debt obligations compared to your income are too high, lenders may doubt your ability to manage additional loan payments.
  • Lack of Collateral: For loans requiring collateral, not having sufficient assets to secure the loan can lead to denial.
  • Excessive Credit Inquiries: Applying for multiple loans in a short period can negatively impact your credit rating and make you appear desperate for credit, which is a red flag for lenders.
  • Income Stability Concerns: Any recent changes in income or employment can affect loan eligibility, as lenders look for stable income for repayment assurance.
  • Recent Payment Delinquencies: Late payments, especially recent ones, can significantly impact your credit score and loan application, regardless of a previously good credit standing.
  • Foreclosure History: A recent foreclosure can impose a waiting period before you’re eligible for certain types of loans, affecting your loan application.
  • Application Errors or Business Model Concerns: Incomplete applications or issues with your business plan can also be reasons for loan denial.

I’ve had a business loan denied – What do I do next? 

Having a business loan denied can be disappointing and frustrating but the good news is there are some steps that you can take to get your application reconsidered.

Find out why you were rejected

You need to find out why you were rejected in the first place and also have a lawful right to know. Most lenders will be more than happy to explain why you were rejected and what is required from you to be reconsidered. You have the right to ask the reason behind the rejection within 30-60 days and the lender will be required to inform you the reasons. It is important to note that failure to meet “minimum standards” is not an accepted reason, it has to be a more specific, concrete reason.

It may be a bit soul-crushing reading through a list of why you did not meet a lender’s requirements, but more often than not, it is all about the numbers. The rejection is not personal. You can view the specifics and amend them or change aspects of your lifestyle or business to ensure that next time you will get approved.

Look for errors in your application

You need to thoroughly check through your application, double-check that you have not forgotten to report any source of income or accidentally embellished an additional zero to any numbers.

Review your own credit score

It does not harm your credit score for you to check your own credit. It is a good idea to check in periodically on your credit score to see what is affecting it in a positive or negative way. You are entitled by law to get a free credit report, that way you can see what the banks can see.

Request reconsideration

If you have noticed an error in your application that can be corrected or suspect that you just barely missed the mark to qualify for the loan, it is worth calling the lender to discuss your case. This conversation should be a formal discussion, not you begging to be approved for the loan. How you act affects your image with lenders, go through all the points clearly that you have to get your loan reconsidered and accept whatever their response may be.

In conclusion, these steps might help you convince a lender to reverse their decision as well as improve your application. Unfortunately there is no guarantee however, there are other options out there for you. 

If you have had your business loan denied or you have concerns over your application, contact us today, Our team can help make sure your loan application has the greatest chance of success. We can also advise you on the best alternative funding options for your business if you cannot secure a bank loan.

Action Plan

  • Identify Rejection Reason: Request the specific reason for your loan denial from the lender, as understanding this can guide improvements.
  • Review and Correct Application: Double-check your application for accuracy and completeness.
  • Assess Your Credit: Check your credit report for errors or areas of improvement.
  • Seek Reconsideration: If an error is found or circumstances have changed, formally request a loan reconsideration with the lender.
  • Consider Alternatives: If still unsuccessful, explore other funding options suitable for your business needs.

click here to read our articles samera learning centre.

Business Loans for Dentists

We’ve been helping to fund the future of the UK’s dentists for 20 years and our team are made up of former bankers with decades of experience and contacts in the UK’s healthcare lending sector.

You can find out more about working with Samera Finance and the financial services we offer by booking a free consultation with one of the Samera team at a time that suits you (including evenings) or by reading more about our financial services at the links below.

Dental Practice Finance: Further Information

For more information on raising finance for your dental practice, including more articles, videos and webinars check out our Learning Centre here, full of articles an webinars like our How to Guide on Financing a Dental Practice.

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.