Answers - Finance

Bulldozer Financing

Ok, you’re ready to go out on your own. You’re tired of working for the man. You have been grading and clearing land for years and know what it takes. You have great contacts that have plenty of wo

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

rk for you but you don’t own your own dozer. And you certainly don’t have $100K or $60K or even $30K to buy something decent that will keep working for you.

So what are your options? Borrow money from a friend? We all wish we had frie

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

nds with this kind of money ready to hand out. How about a loan from the bank. Well, it might be worth a try. But banks are not usually interested in lending to new businesses and would likely require excellent credit and a huge down payment. Even

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

if you were able to convince them to take a closer look they would probably require a rock solid business plan and financial covenants to oversee your progress.

There is another option. Equipment Leasing. Getting a lease for the bulldozer

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

you need may be easier that you think. If you have decent credit you could be making money with that bulldozer next week.

What is Equipment Leasing?

Equipment leasing is essentially a long-term rental agreement with a buyout cla

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

se. The equipment is owned by the leasing company during the lease while the business has possession of and continual use of the equipment. Since the lender owns the equipment, the equipment itself is usually the only collateral. The buyout clause

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

determines the business’s options at the end of the lease. Typically, buyout options are based upon a percentage of the original sale price (e.g. 10% or 20% buyout) or a fair market value (FMV).

Why would you want an equipment leas

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

e instead of a loan?

Easier to qualify. Banks usually require financial history of at least 2 or 3 years. Some leasing companies will finance equipment for start-ups with a simple credit applicatio

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

Improve your cash flow. A new or growing business needs to control cash expenditures. Equipment leases rarely require a down payment. -- if anything, only a few payments in advance. Loans require a signif

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

icant down payment of up to 25% or more.

Tax advantages. Leases are frequently 100% tax deductible. If you are shopping the cost of a loan vs a lease, this is a very important factor that can make the lease

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

a significantly better financial solution.

More for your money. Since the initial cash outlay is lower you can get more or higher quality equipment.

Other advantages. There ar

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

e some other advantages depending upon specific situations including balance sheet impacts, seasonal payment options, protection from equipment obsolescence, to name a few. Who provides equipment leases?

Man

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

y large institutions and small companies provide leases. Some of these lenders are focused on credit (good or bad), a specific type of equipment (e.g. bulldoze

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

financing or medical equipment), large or small ticket equipment, or leaseback financing.

Many lenders specialize to be more competitive. If they are working with clients who have less than perfect credit they need to effectively manage any

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

defaults. If a typical bank were to give out a loan on a bulldozer and the business defaults, the bank would likely loose a lot of value when trying to sell it. To offset this risk, banks usually require a significant down payment. A specialized l

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

asing company can minimize this default loss and can therefore provide better terms.

How do you find an appropriate lender?

A good small business loan broker will have access to many funding sources and will be best able to find

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

the right lender for a client. These brokers are similar in function to a mortgage broker where they select the lender and process the paperwork to facilitate the entire lending process.

Back to your Bulldozer.

So, looking for

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

some bulldozer financing? You may want to talk to a business loan broker regarding the advantages of leasing your bulldozer. A lease may help you get started sooner, get a better dozer, and save more of your cash. And it might ju

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

t save you a lot of money in the long run.

Tim Lawless is President of Unionwide Financial Services. Unionwide provides small businesses nationwide wi

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

th financing options including: equipment leasing, SBA loans, and accounts receivable financing. One area of specialty for Unionwide is Bulldozer Financing

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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Answers - Financing for Your Bulldozer

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