Five longer answers and three short ones, written around IT, consulting, architecture and catering businesses in and near Newark, DE.
When a Business Line of Credit Expires, and What a New Castle County, DE Consulting Firm May Be Asked Then
A business line of credit may be set up for a fixed period, after which the partner reviews it. At that point the line may be extended, resized or closed. A consulting firm may be asked again about the same things that opened the line:
- Recent bank statements and the current balance on the line
- Whether payments were made on time while the line was open
- Revenue since the line opened, and any change in the largest clients
- Updated financial statements if the partner asks for them
The business line of credit page covers how draws and pay-downs work while the line is open.
Equipment Financing on the Balance Sheet: Whether a Newark, DE IT Firm's Financed Storage Array Counts as Debt
An equipment loan is debt: the firm owns the storage array and owes the balance. How a loan, a $1 buyout lease or a fair market value lease is recorded is a question for the firm's accountant.
For a partner reviewing a later request, every monthly payment counts against the cash flow available for a new one, whatever the agreement is called.
One Large Client, Most of the Revenue: How a Newark, DE Architecture Practice's Request May Be Read
A professional firm can earn most of its revenue from a few clients. A partner reading an architecture practice's request may ask what share the largest client makes up, how long that relationship has run, and whether contracts are signed for the coming months.
- Signed contracts with end dates can offset some of the concentration risk
- A smaller amount or a shorter term may be offered instead of a decline
- Steady deposits from several clients may read better than one large payment a quarter
County figures show how common small professional firms are: 70.5% of the 2,857 professional, scientific and technical services establishments in New Castle County, DE had fewer than five employees in 2023 (County Business Patterns). The count covers all of New Castle County, DE, not only Newark, DE.
Business Line Interest and the Tax Return: a Question for a Newark, DE Software Consultancy's Accountant
How the line's interest is treated at tax time is a question for the firm's accountant.
What helps the accountant: the line's statements showing interest charged each month, and a note of what each draw paid for. Keeping personal costs off the line keeps that note short.
Vans, Equipment or a General Lien: What May Back a Business Loan for a Newark, DE Catering Company
Collateral depends on the product. A catering company might see any of these:
- A titled catering van financed on its own term loan, with a lien on the van
- Kitchen equipment that backs an equipment loan or lease
- A general lien on business assets for a working capital loan or line
- A personal guarantee from the owner, which a partner may ask for even without named collateral
Some smaller working capital loans carry no named collateral, though a partner may then weigh bank statements and credit more heavily. The six funding types page compares secured and unsecured options.
By Truecrest Business Loans ยท Updated