Access to Capital

Obligations

Your business has obligations to lenders and other companies or individuals in the form of orders placed, services received, or other transactions. Any money, merchandise, or service owed to someone else is an obligation.

Blanket Lien

You can secure a loan for your small business by accepting a blanket lien from a lender. A blanket lien gives lenders the right to seize almost all your business assets if you default on your small business loan. In the event of default, lenders can only take what is needed to settle your outstanding debt.

Bankruptcy

In order to claim bankruptcy for your business, you must file with a federal district court and demonstrate that you cannot meet your debt obligations and require either reorganization of your business debts or liquidation of the business assets.

Bad Debts

Money your business is owed by another person or company that is considered "uncollectable," creating a bad debt. A debt becomes uncollectable when there is no longer any chance the amount owed will be paid. You must show tax agents and lenders that you have taken reasonable steps to collect the money, but were unable to do so. An example of a bad debt is if you loan money to a supplier or distributor for a business purpose, and they are unable to pay you back.

Assumptions

Financial assumptions and projections are a part of the business plan. Lenders and investors will review the research and calculations you make about projected profitability and your customer base. Be prepared to show how you made these calculations and assumptions.

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