Welcome to Chez Cliff!

For my corporate checking account, my next step is to get a line of credit.

Up until this point, the financing for my venture has come on my credit cards.  The costs were spread out over time, allowing me to pay down the balances to the point where another item could be purchased or financed.

Now we are gearing up for a big release of our software and, of course, that involves financing.  In setting up the corporate account, my goal is to shift the debt load from myself and onto the corporation.  That way I can use the proceeds to finance the corporate debt and I can focus on getting rid of my own personal debt.

The Small Business Assocation (SBA) only does loans for a minimum of $25,000 and a good portion of that must be collateralized by the stock holders.  First off, I don’t need $25,000.  If I did get one, I’d have to collateralize at least 80% (or $17,000) before I could get the loan.  Well shoot, if I had the $17,000 then I’d go ahead and do this project myself with taking out a loan!

No, the trick is to get the business to finance it’s own debt.

Wells Fargo has micro-loans, starting at $5,000 and those don’t require collateral.  If the entire $5,000 was taken out, the monthly payment would be $100 per month.  So the business has to make at least $100 per month to carry the debt.  Fortunately the business is doing much better than that.

By opening a loan, the business begins to build it’s credit.  Much like any person building their credit score, businesses operate on the basis of good credit.  As we exercise good judgement in controlling our expenses, building our sales and utilizing the credit wisely then we can start getting access to bigger funds.

Then we can do some cool things.  Hehe.

To get Banker on board, I sent her a free copy of our software.  It never hurts to grease the wheels.