Revolving Line Of Credit Agreements – Coffee With Carl EP-2 (NEW Series)


(rock music) – Good morning, hello, good evening, whatever time you’re watching this. And welcome to anther Coffee with Carl. Got my coffee today, too. I’m coming at you today
remote from McCarran airport, I’m actually in the American
Airlines interior lounge. Excuse me, the American
Express interior lounge here. And so, I wanted to make
sure I still got out this video to you ’cause I want to discuss today
revolving lines of credit. So lot’s of questions out there, especially from our Platinum clients, on the Platinum portal. “What’s a good way to
loan my business money?” So there’s lots of ways you can do it, ultimately when we’re talking about loans we are talking about the same thing we touched on yesterday, a little bit with the promissory note. And you can either secure
them or not secure them. And I’m going to go through a way where you can make multiple
loans to your business, without having to do a
promissory note multiple times. This is the real benefit
of the revolving line of credit agreement. And the easiest or the most
simple way I can describe a revolving line of credit
agreement is its like you being your company’s credit card. Meaning that you actually set a limit, you don’t have to put that
entire limit into the business but you can borrow over
a longer course of time, without having to do a promissory
note every, single time. So we really like these revolving
line of credit agreements. And I actually pulled one up today, just so we could kind of look at it. This is one I’m editing for a client so there’s some specific drafting in here, however of course no
client names will appear. It’s just sort of an example
on some of the changes we can make. So initially this is first
page and first few pages, is going to be the actual
client of credit agreement We normally set the
line of credit agreement just at a default of $150 000. Like I said, you don’t have to put that $150 000 in initially, but it allows you to lend up to that amount just like a
credit line or any of your credit cards are used to. So say I had a $50 000 credit line on the American Express lounge. Let’s call it an online American Express. And I spend $50 000,
now my card’s maxed out that limit has stopped. But say I make a payment of $30 000 on it, now I’ve got $30 000 to spend again. So it works the same type of way. American Express just because
I have a $50 000 limit, doesn’t cut me a $50 000 cheque, it just says I can
spend up to that amount. So same thing here. So this first page here you will see, that the revolving line
of credit agreement. As I mentioned that $150 000 right there. And it can either be secured or unsecured. So from the first video we
talked about secured notes versus unsecured. You don’t have to secure this
note, if you don’t want to. Ultimately you represent both
sides of the transaction. So its dealers choice. If you have a lot of assets
in your business it may benefit you to secure it though. Simply because you can file a lean on any properties you’d like as well as any personal
property, meaning like equipment and things like that to
secure this line of credit. And it does make you less
attractive to potential plaintiff attorneys. So kind of dealers choice,
but I would suggest, especially for our Platinum
clients, speaking with one of the attorneys or speaking
with your Anderson advisor to advise you on which is
probably the best route for you in that case. So, just moving through here, there’s lots of comments on this one. There was some different
things this client was doing individually. So you see lots of
comments, lots of red lines. Now, the second piece of this agreement is actually the promissory note. So when we look at the promissory note, as I mentioned in video one,
there is a promissory note, that comes with a loan, except instead of, as heard mentioned earlier in this video, you don’t have to do
this every single time you put money in or out. There’s one promissory note, you’ll see that $150 000 limit again. And that note will take care of, anything that goes in
and out of the business for the term of five years or more. It also has the ability to automatically renew, since
its within your own business. So we just said initial
term but it can go farther than that as well if you’d like. But this one promissory note,
basically takes care of your lending needs within your business. Meaning if you’ve got
to move cash in or out, it’ll help you with that. And without having to do multiple notes, multiple payoffs, things like that. So the final piece of this revolving line of credit agreement, which is available to all of our Platinum clients on the Platinum portal on our document section
or our form section, is the authorization allowing
for the, in this case, a corporation to borrow that money. So we need to go through
and make sure that all the boxes are checked
and that there’s some kind of agreement or some kind of ratification of an action to borrow money on behalf
of the corporation. So this is taking care of the
internal documentation side, which will help if say you
were to get sued, showing that you were observing the
corporate formalities on this as well. So this is that final piece
to that length of agreement, as well as for the term of that loan. So with these three pieces, you can set up your own revolving line
of credit agreement. We’re happy to help you. I would encourage you as
well, thank you for joining me for Coffee with Carl, but we also got a ton of
free content out there. Whether it be our other YouTube videos, Toby’s Tax Tuesday which is awesome. There’s always a ton of tax questions. He always says its going to go an hour but always plan for a little extra. Can’t help himself and we love it. We actually in the office
all watch it as well, because it’s amazing free
information at your fingertips. If you’d like to get a comprehensive idea of what all we do, we offer three day asset
protection classes, as well and that’s really
where you’re going to get a bootcamp on kind of the how
and why of what Anderson does. So I’m going to continue with these. I hope you enjoyed our Coffee with Carl and I think my time is up here for you. So I will catch you on the next episode. Thanks for coming. ( pleasant music) ( pleasant music) ( pleasant music) ( pleasant music) ( pleasant music)

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