Still Need Money?

Depending on the type of business you are in and depending on what you have for collateral and depending on how good your credit is, there may be other choices besides the bank. Also, if you want an unsecured (signature only, no collateral) loan, that is also available but probably not from your bank. If you think your bank's interest is high, just wait until you see how much an unsecured loan or line of credit is. Let's pursue that a little.

1. If you have a long standing banking relationship and have always paid as agreed or in advance of the terms and never bounce a check, I would ask the bank for a signature only loan especially if the all you need is a relativelsmall amount of money. The same is true with a line of credit. You probably already know this, but an "bank line", as it is referred to, is a loan that you use as you need it. Let's say you have a $100,000 bank line and you are buyig something for $25,000. When you spend the $25,000 you have $75,000 left on your line of credit. Typically, you just call the bank when you need some of the money and they deposit it in your account.

2. Another type of credit line is associated with your credit card or a credit company associated with a bank like Wells Fargo Credit, Barclays Credit, CitiGroup Credit, etc. Sometimes they have names like Barclays Business Credit or BankAmerica Business Credit. Usually these are unsecured loans for a very credit worthy company and it is expensive. However, some of these credit companies take a larger risk than your bank might entertain, but it will cost you.American Express has a business line of credit. I talked to them for a client who had an AmEx credit card for his business and they gave him a $10,000 line in a couple of days unsecured. He had a pretty good credit history and, like most AmEx card holders until lately, was seldom late. My client only needed about half of that to make sure he had payroll covered from time to time and it worked find for him. AmEx charged a $99 annual fee and the interest began the moment you wrote a check on the line. AmEx provided the checks and made it very convenient. It was not cheap!

3. If you have your own personal resources, you should consider borrowing from yourself. BUT, you should set it up just like any other loan with a Promissory Note and regular payment terms. Obviously, if it gets difficult to make the payments, you won't get mad at the company if they are late and your can write the note so that late payments may be allowed periodically. Also, if times get tough and you need to not pay yourself, pay your employees first and if you have money left, make a payment to yourself on the loan. Becareful to document the loan from you to your company because if it is undocumented the IRS will consider it a sham. Also, if the company goes under or is bought out at a loss, undocumented loans are very difficult to write off especially if you have never made a payment.