Advice You - Business

Financing is one of the most confusing, and often frustrating, aspects of opening a franchise. Some franchisees pay cash, others take out home equity loans or tap into their retirem

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

ent savings.

In this article, we look at one of the most popular methods of franchise financing: the SBA Loan. SBA Loans are loans made by traditional lenders such as banks that ar

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

Examples of combination products may in

guaranteed by the federal government’s Small Business Administration.

Banks prefer to lend money to franchise concepts which they have a positive track record, so the best place t

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

o start is with your franchisor. The franchisor should be able to provide you with a list of lenders that are familiar with its concept, have made SBA loans to other franchisees and

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

have a positive track record underwriting the concept. Some franchisors have a dedicated outreach program to educate lenders about their concepts. The majority of major franchisors

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

Combination pro

lso participate in the SBA Registry program. To appear in the registry, franchises must meet certain eligibility requirements and pay an annual registration fee. Franchisees of syst

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

ems listed on the registry receive expedited loan processing when applying for SBA loans.

If you need help putting together a loan package, your franchisor should be able to assist

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

you. While the franchisor won’t complete the package for you, they should be able to provide a template as well as suggestions on where you can find the information you need. The ma

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

n aspect of the loan package will be a loan proposal or business plan. The loan proposal should provide a description of the business, profiles of management, the purpose of the loa

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

n and plans for repayment. The loan package will also need to include: a one year projection of income and expenses, a list and cost of equipment to be acquired with the loan, a per

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

onal financial statement and copies of tax returns.

Your franchisor should also be able to give you an honest appraisal of how likely it is that you will be able to obtain financin

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

Following aspects would a

. Lenders look at several characteristics when determining whether or not they are going to approve a loan. The underlining principles of obtaining financing are known as “The Four

dd to the challenges in developing combination products:

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

Cs”

Character – Lenders will look at your credit track record. Do you pay your bills on time? Have you had any loans before? Did you repay them? The easiest way to get a handle on

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

our Credit “Character” is to get a copy of your credit report. In today’s era of computer automation, this is the most important C. You will have a very difficult time getting appro

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

ed for a loan unless you have a strong credit history.

Collateral – Lenders require you to pledge assets to secure the loan. These assets may be forfeited if you default on the loa

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

n. SBA loans require the assets of the business to be pledged as collateral. Many SBA loans also require additional collateral such as home equity or a certificate of deposit.

Capi

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

Professional from academic institutions, pharmaceutical industries, health care indust

al – Lenders’ willingness to approve a loan increases as you put more capital into the business. That is, you are more likely to get approved for a loan for 60% of the franchise cos

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

than a loan for 90% of the franchise cost. Lenders also look for additional capital that you can use as a cushion after you start your franchise.

Capacity – Lenders also examine t

.

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

he ability of your franchise to repay the loan. Obviously, if you anticipate your franchise will only generate $1,500 of net income each month, a bank is unlikely to make a loan tha

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

Companies that provide selfless information through particip

requires you to repay $2,000 a month.

In part two of our look at SBA Loans, we examine the specific provisions of SBA loans such as the interest rate, term and amount of 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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Well, we are into the New Year and everyone is making resolutions on how to improve in 07. It's time to think about your product and it's packaging too. Just like we do with our mental, emotional and physical aspects of our lives, think about improving and updating your packaging. You want it to mesh with consumer wants and needs. Consumers are a moving target and what worked last year may not work in the years to come.

Do you often have the thought that your business would operate so much better without customers and all their demands? They want this, that and the other – all of which interrupts your day! But customer expectations are what drives your business and keeps them coming back. In this article we are going to look at expectations and how it’s important for you and your business to know what they are.

Have you ever wondered why some people seem to turn everything they touch to gold while you end up with a handful of lead? Do you comfort yourself by saying that they succeed because they were born with money, great looks, and a better education? Even as you do this, do you push away the knowledge that people like Zig Ziglar, Dave Thomas, and Ogg Mandino were born dirt poor and that Dave Thomas made a fortune without graduating from high school?

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Advice You - Financing Your Franchise: SBA Loans

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