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Financing your Dump Truck You’re looking to buy a dump truck. Maybe you’ve been in business for a while or have just decided to start your own business. There are obviously many things to consider. Let’s focus

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

on one of them. How will you pay for the truck?

Most people, including many bankers, only know of two options. Pay for the truck in cash or get a loan. Paying in cash is usually not an option for most people. Not

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

Examples of combination products may in

too many of us have $50,000 or more in cash ready to spend. Even if they do, paying in cash may not be the best use of that money. That aside, let’s talk about a third option and compare it to a loan.

Equipment leasing i

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

s the third option but that certainly doesn’t mean it is third best. In fact it is commonly a better financial decision than a loan and is generally a lot easer to get an approval.

What is Equipment Leasing? B

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

efore we discuss why it may be a better option, describing what equipment leasing is and how it works is in order. Equipment leasing is essentially a long-term rental agreement with a buyout clause. The equipment is owned by the

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

Combination pro

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 determines th

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

e business’s options at the end of the lease. Some typical buyout examples 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 Le

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

ase 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 appl

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

ication.

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 requi

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

re a significant 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

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

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

Following aspects would a
rong>. There are some other advantages depending upon specific situations including balance sheet impacts, seasonal payment options, protection from equipment obsolescence, to name a few.

Who provides Equipmen

dd to the challenges in developing combination products:

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

t Leases? Many 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. dump truck financing or medical equipment), large or s

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

mall ticket, 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 defaults. If a typical bank were to give o

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

ut a loan on a dump truck 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 leasing company can min

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

imize 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 t

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

Professional from academic institutions, pharmaceutical industries, health care indust

he 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 cycle.

Back to your Dump Truck.

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

So you may want to talk to a business loan broker regarding the advantages of leasing your dump truck. A lease may help you get started sooner, get a better truck, and save more of your cash. And it might just save you a lot of

.

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

money in the long run.

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

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

Companies that provide selfless information through particip

financing options including: equipment leasing, SBA loans, and accounts receivable financing. One area of specialty is Dump Truck 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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