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Updated: Mar 23, 2017
Everyone knows the phrase it takes money to make money — but if your business had some extra cash on hand, would you know exactly how to put it to work to earn additional profit?
Peter Koshland did. He used a term loan from Funding Circle to save his business tens of thousands of dollars over the course of a single year. Here’s how he did it.
Peter Koshland is the founder of Koshland Pharm Custom Compounding Pharmacy in San Francisco. Since 2009, Peter’s compounding pharmacy has created custom prescription medications for individuals who need a unique dosage or a particular mix of medicines to stay healthy or to treat chronic illnesses. Doctors might reach out to Peter and his team of pharmacists, for example, if they have a patient who is allergic to the coating on the pills that large pharmaceutical corporations sell through CVS and Walgreens.
Doctors and their patients come to Koshland Pharm for the customized medicine, but they return time and time again because of the exceptional personal attention and customer service they receive every step of the way.
Like many small businesses, Koshland Pharm has a primary supplier that sells Peter the raw materials and basic tools his business uses every day. And like many suppliers, the one Peter works with increases the prices of their products every year, like clockwork.
“We knew some of our major suppliers were going to raise their prices, and we could predict which supplies we would need, but we didn’t have cash to pre-purchase in anticipation of those increases.”
“At the end of the year we have a very clear idea of what we will need for the following year, but if we don’t have enough cash on hand, we have to purchase items after the price increases — and that’s a big hit to our bottom line,” Peter explains. In short, if the compounding pharmacy had a little more cash upfront, they could save a whole lot more money over the course of the year.
So how does a business like Koshland Pharm get their hands on extra capital? Peter and his wife bootstrapped the launch of their pharmacy back in 2009 with their own savings. “There weren’t a lot of lending options at that time, so we actually mortgaged our house and took out as much cash as we could to pour into the business — until it ran out,” Peter recalls.
Some small business owners ask their banks about a business loan, but Peter didn’t want to spend weeks doing paperwork and jumping through hoops. “That kind of lending is painful,” Peter says. Besides, the deadline for the price increase was just around the corner and time was running out if he wanted to take advantage of the business opportunity.
That’s when Peter found Funding Circle.
“Funding Circle, by far, impressed me more than any other lender I spoke to. They were immediately responsive and the process was so streamlined — it was a great experience.”
Peter began an application online and received a call the following day from his personal Account Manager, who explained how simple and straightforward the Funding Circle application is to complete. Peter uploaded a few financial documents over the weekend and had $150,000 transferred into his business’ bank account just nine days later.
Koshland Pharm turned around and purchased a majority of the supplies they would need for the year. Not only did they beat the pricing surge, they also saved money by purchasing in bulk. “The timing was perfect,” Peter says with a smile, “With drug prices going up exponentially, we estimate that loan from Funding Circle saved us $20,000 – $30,000 over the course of this year…even with the interest we paid on the loan.”
Funding Circle’s interest rates are always competitive with the average borrower getting approved for rates in the low teens.
Access to affordable capital is an essential nutrient for a growing business. Whether you’re planning a big inventory purchase or launching a new product, let Funding Circle help you get exactly what the doctor ordered. Check your eligibility in 60 seconds and get a decision in as little as 24 hours.
Paige Smith is a Content Marketing Writer and Senior Contributing Writer at Funding Circle. She has a bachelor's degree in English Literature from Cal Poly San Luis Obispo, and specializes in writing about the intersection of business, finance, and tech. Paige has written for a number of B2B industry leaders, including fintech companies, small business lenders, and business credit resource sites.