Answers - Finance

Traditional banks serve a very important role in the U.S. economy. Nevertheless, when it comes to a business loan, there are over a dozen reasons to consider a source other than a traditional bank for a business loan. For most small business ow

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

ners, five or more of these reasons are likely to be applicable. With many business loan borrowers, banks have already declined their loan application. That particular compelling reason to use a source other than a traditional bank (being decli

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

Examples of combination products may in

ned by a traditional bank) is not included in the list below.

Here are 14 reasons a business owner might not go to a traditional bank for a commercial real estate loan.

Reason # 1: Minimum commercial real estate loan for man

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

y banks is $250,000 or more. With non-bank business lenders, the typical minimum commercial loan amount is $100,000.

Reason # 2: Most banks charge an up-front commitment fee. Most non-bank business lenders do not charge an up

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

front commitment fee for a commercial mortgage.

Reason # 3: Most banks will severely limit the amount of cash a business borrower can get when refinancing a commercial mortgage. When a borrower is refinancing their business p

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

Combination pro

roperty with non-bank business lenders, they can typically get up to $1,000,000 in cash.

Reason # 4: Most banks are reducing their commercial real estate loan interest in properties such as bars/restaurants, auto service busi

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

nesses and funeral homes. Non-bank business lenders are very interested in these business categories (and many other special purpose properties) for a commercial mortgage.

Reason # 5: Most banks will require business plans fo

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

r a commercial mortgage. The cost to provide this is usually several thousand dollars. Non-bank business lenders typically do not require business plans as part of their underwriting process for a commercial real estate loan.

Reason #

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

: Most banks will require tax returns for a commercial mortgage. Non-bank business lenders do not require tax returns or any income verification for a Stated Income commercial real estate loan. Many banks not requesting tax returns wi

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

ll ask borrowers to sign IRS Form 4506 (which authorizes the lender to obtain tax returns directly from the IRS). Non-bank business lenders typically do not request borrowers to sign this form.

Reason # 7: Most banks will req

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

uire cross collateralization of personal property for a commercial real estate loan. Most non-bank business lenders do not require cross collateralization of personal property for a commercial mortgage.

Reason # 8: Most banks

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

Following aspects would a

will require balloon payments or the loan will be subject to recall after periods as short as 3-5 years for a commercial mortgage. With a commercial real estate loan via typical non-bank business lenders, all properties are eligible for 25-yea

dd to the challenges in developing combination products:

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

loans and some up to 40 years.

Reason # 9: Most banks will not permit seller seconds or secondary financing for a commercial real estate loan. With many non-bank business lenders, if the business borrower uses a seller secon

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

d or other secondary financing for a commercial mortgage, the business borrower can obtain a loan with a CLTV up to 95% of the property value.

Reason # 10: Most banks require income verification or audits even after the comme

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

rcial real estate loan closes. Non-bank business lenders do not verify income either before or after a commercial loan closes with a Stated Income Business Loan Program.

Reason # 11: Most banks have strict guidelines for "sou

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

rcing" or "seasoning" of assets or ownership to qualify for a commercial mortgage. Most non-bank business lenders do not have any requirements or limitations involving sourcing/seasoning of funds or seasoning of ownership.

Reason # 12:

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

Professional from academic institutions, pharmaceutical industries, health care indust

Very few banks offer an assumable commercial real estate loan. Typical non-bank business lenders have an Assumable Commercial Loan Program which includes loan amounts up to $1 million.

Reason # 13: With most banks,

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

a typical commercial real estate loan will require 3 to 9 months to close. At typical non-bank business lenders, most commercial mortgage loans close in 45 to 55 days.

Reason # 14: Very few banks use Stated Income (no tax ret

.

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

urns, no income verification) for a commercial real estate loan. Non-bank business lenders use the Stated Income Approach for commercial mortgage loans in their Stated Income Business Loan Programs (most commercial mortgages up to $2-3 million

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

Companies that provide selfless information through particip

qualify for these programs). This especially benefits self-employed business borrowers who frequently have income that is erratic and difficult to document properly.

Copyright 2005-2006 AEX Commercial Financing Group, LLC. All Rights Reserved

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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Words are electric; they should be chosen for the emotional voltage they carry. – Roy H. Williams It's a skill everyone learns as a child, so it's seldom given the slightest thought. Taken for granted as a means of communication, its power to inspire, influence, and convince is often overlooked. In reality, this great, undervalued force - the human voice - is a miraculous mechanism. Behind the right words, the human voice can become a tool of mass persuasion. This article references the sales counter inside a wholesale distributor but the information is applicable to any sales setting.

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