Article Abstract:
A business owner can have an effective dealing with a specific lender depending on the corporation's present balance sheet, historical and current income statements, collateral and the amount that is needed in financing. Since the specific capital source has its own terms and conditions, business owners are advised to follow some negotiating tips that can benefit them and what to prevent. The terms and conditions to prevent include pledge of stock, restrictions on payments to owners and prepayment of the loan.
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Article Abstract:
Business owners must follow certain guidelines when getting loans. They must not pledge their stock in the company as collateral, secure their right to pay off the loan without penalty if the negative covenants limit the management prerogatives in important areas, avail of 'exception periods' and trade off a debt-to-net worth test for another test. Business owners must also maintain a basic net working capital level and define what 'substantial' means in the contract.
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Article Abstract:
Business owners can use discounts to lower the value of their business stocks so that they will pay lower taxes. Discounts are given because ownership is illiquid, carries no dividend, can be restricted from sale, has greater risks compared to other stocks and may present a minority position. A $1 million business with an 80% ownership position could be discounted by as much as $240,000 at a 30% discount.
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