Lewiston, Idaho Business Funding FAQ: Debt, Collateral, Credit Lines and Buyouts

Yes, if the grinder came through a loan or an equipment finance agreement. A tree and lawn crew that finances a stump grinder owes the remaining payments, and the finance company holds a security interest in the grinder until the last one. A partner reviewing a later request may count those payments.

A lease is different on paper, because the leasing company owns the equipment, but the crew is still bound to the payments for the term. How a loan or lease is shown on the financial statements is a question for the accountant.

Yes, a business purchase or a co-owner's share can be requested as a term loan. What it can cover is the business side: equipment, customer contracts, stock, the name and working cash. If the deal includes the building or land, that part needs real estate financing, which is outside this site.

A partner may ask for the purchase or buyout agreement, the basis for the price and tax returns for the business. Startups without revenue are outside this site. The commercial term loans page works through buyout payments.

The question is really about the interest. When a child care center draws on a credit line to meet payroll, the draw is borrowed money, and paying it back returns that money; the interest and any line fees are the cost.

Whether and how that interest or those fees can be deducted depends on tax rules this site does not advise on. The center tax preparer decides how they apply.

As long as its agreement says. Some lines have a maturity date, when the balance is due or the line comes up for renewal; others stay open until the partner reviews them. A line can also be reduced or closed under the terms of the agreement, for example if payments are missed.

A landscaping crew that draws on a line for crew payroll can put the renewal date on the calendar and keep recent statements ready for that review. A line that is drawn and paid down on time builds the record a renewal review can look at.

Not always. With an equipment loan or inventory financing, the items bought can serve as the security. A loan or line backed by no specific item can carry a lien on business assets instead, or be unsecured; for an unsecured one, a partner may want the owner to sign a personal guarantee.

Whether collateral is needed, and which kind, is set by the funding partner in any offer. Read what the lien covers before signing. Each option is described on the business financing options page, and the how a request works page follows a request step by step. Other questions can go through the contact page.