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COMMERCIAL LOAN DIFFICULTY: RISKY LOANS?

There are many businesses falling into the auto services category, and they generally involve activities that include automobile body repairing and painting.

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

These properties are viewed as riskier loans by most traditional lenders. As a prime example of how non-traditional commercial lenders look at difficult commercial loan situations differently, auto services properties

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

Examples of combination products may in

have been moved to a less risky underwriting category by several of these lenders. Because of this, it will usually be beneficial for owners of auto services businesses to work with a non-traditional lender because of

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

the better commercial financing terms.

COMMERCIAL LOAN DIFFICULTY: ENVIRONMENTAL DIFFICULTIES?

There are unique environmental issues for auto services properties that frequently produce difficultie

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

in obtaining a commercial real estate loan from a traditional commercial lender. Properties involving environmental issues will often be politely declined by a traditional commercial lender. Auto services and related

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

Combination pro

businesses are frequently mistreated in this manner. If such commercial mortgages are not declined outright, then typically a Phase I/II environmental report will be required (which can easily add $15,000 to $20,000

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

r more to the cost of the loan if a Phase II report is needed). The commercial borrower could end up paying this entire cost even if the report produces findings that result in commercial loan disapproval. If the cost

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

for a Phase I/II environmental report wasn't already a sufficiently negative issue, this requirement also adds substantial time to the commercial loan process. As a practical time-saving and cost reduction strategy f

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

r addressing this unique but solvable problem, an environmental insurance fee can be used to meet the special commercial loan needs of environmentally-sensitive properties (thus frequently avoiding the need for Phase

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

I/II environmental reports). Using this strategy, a non-traditional lender can usually get an environmental approval in 5-7 days.

COMMERCIAL LOAN DIFFICULTY: SHORT-TERM FINANCING?

One of the primary

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

underlying reasons for a high failure rate among many auto services businesses is directly due to the commercial borrower being forced into short-term commercial financing when long-term commercial financing is essent

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

Following aspects would a

ial to the health of the business investment. Businesses should not be financed with short-term funds. It is essential to obtain long-term commercial financing of at least 15-20 years (and longer is even better). For

dd to the challenges in developing combination products:

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

ost auto services businesses, long-term commercial financing is likely to be available only from a non-traditional commercial lender.

COMMERCIAL LOAN DIFFICULTY: BUSINESS CASH ADVANCES FOR IMMEDIATE WORKING C

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

APITAL?

As noted above, traditional lenders are frequently reluctant to provide long-term commercial financing to an auto services business. However, some financing needs can be handled effectively with shor

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

er-term commercial financing strategies. A retail auto services business will usually benefit from using credit card receivables to convert future cash flow into immediate working capital (usually up to $300,000). Thi

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

s solution should be actively evaluated by owners and prospective owners of auto services businesses.

COMMERCIAL LOAN SOLUTIONS FOR AUTO SERVICE PROPERTIES

For an auto service business borrower faci

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

Professional from academic institutions, pharmaceutical industries, health care indust

g any or all of the situations described above, the highest priority should be to locate a non-traditional commercial lender that:

(1) Openly welcomes auto service properties and routinely finances such properties.

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

(2) Does not add special requirements to the business loan for auto service commercial properties.

(3) Has a history of making loans for the specific type of property under consideration.

(4) Can accommodate both sm

.

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

ll and large commercial loans for auto service properties.

(5) Can accommodate environmental issues with such practical solutions as environmental insurance.

(6) Can routinely provide 15-25 year financing for auto s

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

Companies that provide selfless information through particip

ervice businesses.

(7) Is capable of providing immediate working capital via a business cash advance based on future credit card receipts.

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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