Reedview Credit answers six groups of questions from New Bedford, Massachusetts business owners: LLCs and who signs, paying a business loan off early, using loan money to pay the owner, the documents list, how long approval takes and where the time goes, and whether equipment financing is a loan or a lease.
Can an LLC Get a Business Loan in New Bedford, MA, and Who Signs for It?
An LLC can take a loan in its own name as the borrower. The loan agreement is signed by a member or manager with authority under the operating agreement, and partners may ask the owners to sign a personal guarantee as well, especially when the LLC is young or small. A partner may ask for the certificate of organization, the operating agreement and the EIN letter.
Can You Pay Off a Business Loan Early? Prepayment Clauses to Look For
A business loan may allow an early payoff, but the cost of doing so varies. Some charge interest only for the time the money was out, so an early payoff saves interest. Others charge a prepayment fee, or calculate the cost up front so that paying early saves little or nothing. Advances and some short-term products work that way.
Ask before signing: what does it cost to pay this off in month six, and in month eighteen?
Can I Use a Business Loan to Pay Myself? Owner Draws and Loan Purposes
Loan proceeds go to the purpose stated in the agreement. If the purpose is working capital, wages, including the owner's wages for work done, may fall within it; using loan money for an owner's personal spending generally does not. Read the use-of-proceeds clause, and ask the partner if anything is unclear.
Working capital loans covers payroll gaps in more detail.
Business Loan Required Documents List for a Bristol County, MA Owner
- Business bank statements for recent months.
- Business tax returns, and personal returns for the main owners.
- A year-to-date income statement and balance sheet.
- A schedule of existing debt.
- The quote, invoice or purchase agreement behind the amount.
- Formation and ownership documents, including any Massachusetts business certificate.
Partners name the items they want; this is the full set to keep within reach.
How Long Does a Business Loan Take to Get Approved? Where Time Goes in a Request
Time depends on the product, the amount and how quickly records reach the partner. A small equipment request with a complete file has less to read than an acquisition with three years of seller records. The waits come from gathering documents, the partner's review, any appraisal or inspection, and the closing paperwork.
Reedview does not quote approval times. How a request moves describes each step.
Is Equipment Financing a Loan? Loans, Leases and Who Holds Title
Equipment financing covers both. An equipment loan is a loan: the business owns the item and the partner holds a lien until it is paid off. An equipment lease is not a loan in form: the lessor owns the item and the business pays to use it, with an option to buy at the end in some leases. The agreement states which one it is.
Equipment financing and leasing compares them, and the merchant cash advance page covers a product that is not a loan at all.
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