The Challenge: Primary Funding and the Capital Gap

For Faheem, there were two key financial challenges.

The first was securing primary funding through a bank. The second was bridging the remaining capital gap — the shortfall between  the bank lending and the balance required to complete the acquisition.

As he explains:

“I believe the biggest challenge for the first time buyer is the capital gap.”

In his experience, the banks were supportive, but their lending criteria created limitations.

“Banks have certain criteria which sometimes can be very difficult to meet, like the loan to value ratio.”

In Faheem’s case, the transaction required more capital than a standard pharmacy acquisition because it included both the business and the property.

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“Our main lender was a high-street bank, who were providing seventy-five percent of the total aquisition amount. But buying the pharmacy business plus the property, created a more significant capital gap, than a typical acquisition.”

That meant a larger upfront investment and more equity required - which fell to Faheem to source.

Beyond the headline purchase price, there were also additional acquisition costs that further stretched available capital.

“Obviously there is the pharmacy cost, but then there are legal costs, and other charges, which can prove to be very difficult to fund, especially for first-time buyers.”

Faheem also acknowledged the psychological pressure that comes with taking the leap into ownership.

“Making the decision to purchase a pharmacy business is daunting for a number of reasons. Obviously, there is the challenge of finding the initial capital, but this is only one of the steps along the way.”

For many first-time buyers, it is not just about funding — it is about confidence.