Acceleration Clauses in Idaho Pharmacy Business Loans and Commercial Leases

By Brad MacLiver
Authorship and profile at Google


A provision of many ID pharmacy business loans and commercial leases is an acceleration clause. The acceleration clause in the loan/lease agreements allows the lender to accelerate their collection of payments contingent on an event occurring. These events may include lack of payment by the borrower, failure to keep the property adequately insured, failing to pay tax assessments, not maintaining the property, selling the property/asset, etc.
                  
Lenders view the acceleration clause as an important tool in their business loan and commercial lease programs. Loan and lease documents might not specifically address the foreclosure of a property, or repossession of an asset, but this is where the acceleration clause comes into effect. Without the clause the lender would only be able to foreclose on one missed payment at a time. With the acceleration clause, despite whatever event kicks the clause into gear, the lender can demand immediate and full payment of all remaining balances and fees.

The Idaho pharmacy business loan or lease documents provided to the independent drug store owner will describe the rights, conditions, and obligations relevant to the acceleration clause. In the event that pharmacy owner in Idaho (the borrower) cannot meet their obligations, the loan or lease goes into default. A default can be caused by a payment that is even one day late, which means commercial and pharmacy business loans lease documents should be read and thoroughly understood before signing.

Tips Regarding Acceleration Clauses: 1. If slowing cash flow of a pharmacy is going to cause a business loan default but the Idaho pharmacy owner has additional unencumbered assets, they might be able to negotiate with the lender by offering additional collateral.

2. If its possible for the ID pharmacy to catch up on their payments, they can reinstate the business loan before the acceleration starts.

3. Different states have different rules requiring notification of an acceleration clause being exercised. Pharmacy owners should be aware of the laws in their state where they operate because lack of knowledge is not an excuse.
                                 
4. When an acceleration clause is exercised on a commercial lease, there is the possibility the landlord cannot collect rent from both the defaulting tenant and a new tenant at the same time. To save themselves some money, Idaho pharmacy owners should help the process by assisting the landlord re-lease the property. However, please note, should the ID pharmacy be in the process of being sold and the files and inventory moved to a competitor’s location, the pharmacy buyer will require restrictions in the Purchase and Sale Agreement  that the new tenant cannot be another pharmacy.

5. Lenders prefer not to have to go through the foreclosure process, so if your ID pharmacy is headed in that direction start talking with the lender about finding a solution. Communication with the lender is a good thing.

6. Some pharmacy business loans and commercial leases require a “personal” guarantee from the business owner. This means that the business owner’s personal assets and credit will become involved in the event of a default. The “corporate” status of the business will not keep the lender from seizing the personal assets.

When considering financing a pharmacy in ID for acquisition, or expansion, due diligence and understanding of all aspects of the transaction should be considered. Using the services of a pharmacy industry expert to guide a pharmacy owner through the maze of details will benefit the Idaho pharmacy owner in making the best business decision.

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Estate Planning for Idaho Pharmacy Owners

By Brad MacLiver
Authorship and profile at Google


With the current market many Idaho pharmacy owners are experiencing lower profit margins, and have considered selling. A pharmacy industry roll-up has been going for years, consolidating the pharmacy seller's customer traffic into fewer drug store locations. There are however a number of pharmacies that are not in a geographical location with other nearby pharmacies, such consolidation can not take place. Some Idoho pharmacy and drug store owners, despite their location or what is happening in the industry, has taken a stand and will not consider selling. But like paying taxes, an exit of the company is ultimately inevitable.

Estate Planning is a subject that many people, in all industries, timid. The pharmacy owner who works 6 days a week, taking very few vacations, fill scripts all day, then mops the floor and makes the books at night, it usually is not much time to consider additional things like estate planning. But, knowing that it will be a transfer of business, it is crucial for Idaho pharmacy owners to consider a proper succession plan for the pharmacy business.

Develop a plan to transfer operations will be time consuming, but done correctly allows the company to be successfully transferred in an acceptable manner. An estate plan for a pharmacy owner need not be immutable process. Fine-tuning, updating, and changes recommended by government regulation, economic conditions and personal expectations change.

Estate planning allows an Idaho drug store owner to anticipate and provide for the transfer of the store. The plan will be formatted in an attempt to eliminate uncertainty, to assist the transfer by trimming costs and cutting taxes.

Process may involve Trusts, wills, living wills, Power of Attorney, Medical Power of Attorney, Business Valuation, Life Insurance, a charitable remainder Trusts, Buy-Sell Agreements and other legal documents. All aspects of estate planning for the pharmacy owners coordinated guidelines.

If there are non-family members as partners in the Idaho drug store business, it is crucial that estate planning include a Purchase-Sale Agreement. A buy-sell agreement, governs the transfer of business between the pharmacy partners. The agreement may also be known as a partner buyout agreement, or a company wants. To protect the family in the event of death of a partner, buy-sell agreement funded with life insurance.

Estate planning, buy-sell agreements, and transfer of the pharmacy to a pharmacy valuation completed by a third party expertise in the pharmaceutical industry to take a large number of pharmaceutical companies perform annual appraisals, and the current industry data as a basis for conclusions. Using simple accounting formulas, multipliers, and valuator inexperienced in pharmacies will not provide an accurate business valuation.

Most Idaho pharmacy owners spend a large part of their lives to build the business. The effort should not disappear because the pharmacy owner refuses to accept their mortality, and plan accordingly. The only pharmacist in a small town may be the pharmacy's owner. If the script can not be filled by a licensed pharmacist since the law the client files must be transferred to another pharmacy. Because of this, a pharmacy business value can fall to a negligible figure in just a few days after the death of the owner. Contingencies outlined in an estate plan should address this issue. Unfortunately, due to not having an effective plan in place, each year a number of pharmacy owners die and their families are left with an asset with very little value.

Tips:

1. When the family pharmacy is the only means of income for many families it becomes more crucial to have a set plan in place.

2. To avoid disputes should estate plans should be developed with clear directives.

3. Minimize tax liabilities is an crucial goal for most people to complete an estate plan should be an expert tax advice should be sought.

4 Many online documents and books are available that provide advice and documents to develop an estate plan. When you go to self-help route, it is advisable to have a paid expert review the completed documentation to ensure that it can be legally respected when the time comes.

5. While developing the farm plan, it is crucial to talk with children and other family members of the pharmacy market owner especially if there are any family members who work in business and others do not.