A LINE OF CREDIT FOR THE BUSINESS

Articles In This Section:

· Form of business and financing

· BUSINESS ADVANTAGES OF OPERATING AS A SOLE PROPRIETOR

· BUSINESS DISADVANTAGES OF OPERATING AS A SOLE PROPRIETOR

· BUSINESS FINANCING

· WHAT TYPES OF BUSINESS LOANS

· LOANS FOR THE BUSINESS

· A LINE OF CREDIT FOR THE BUSINESS

· How a Sole Proprietorship is Taxed

· BUSINESS ADVANTAGES OF THE PARTNERSHIP FORM

· BUSINESS DISADVANTAGES OF THE PARTNERSHIP FORM

· THREE RULES AS BUSINESS PARTNERS

· BUSINESS TAXATION

· BUSINESS CORPORATION

· BUSINESS DISADVANTAGES OF THE CORPORATE FORM

· BUSINESS CORPORATE FINANCING

· BUSINESS STOCKHOLDER ELECTION TO REPORT CORPORATE INCOME

· MAKING THE BUSINESS ELECTION

· HOW THE BUSINESS ELECTION IS LOST

· BUSINESS ADVANTAGES AND DISADVANTAGES OF STOCKHOLDER REPORTING OFCORPORATE INCOME

Establishing a Credit Line. You will find as you venture into the business world that your most important asset is your credit. You should work and work hard to establish a sound credit standing. Here are some points as to what you can do to improve your credit position:

Make a personal contact with a credit officer of your local bank.

Open a business regular checking account.

It is only on the basis of the activity of a regular checking account that a bank will give credit information to your suppliers, customers, etc. Special checking accounts and savings accounts while important in their own right do not furnish you with a credit standing.

It might be advisable to make frequent small loans even when you don't need them—and repay them on or before the due date. Do this with reasonable discretion so as not to incur heavy interest costs. You will find that over a period of years you will have gained a fine reputation for reliability with the lending institution. In addition, all interest charges that you pay on business or personal loans are tax deductible.

Be careful how you use equity and mortgage financing. To secure a bank loan when a good part of your assets are tied up under long-term mortgages or liens is extremely difficult, regardless of how favorable your financial statements look.

Pay your bills on time. Credit agencies and lending institutions have access to much information concerning your daily business operation. Falling behind in your bill payments and being involved in collection actions do not enhance your credit standing.

Carry adequate insurance protection. Before someone makes a loan to you on the strength of your fixed assets as collateral, the lender would be interested in knowing that his collateral would be protected, and that he would be repaid in case of disaster.