To: BarbaraT who wrote (5022 ) 1/15/1999 12:25:00 PM From: gary g Read Replies (1) | Respond to
I will try to address your and JMT's statements. JMT, I have never heard of nor do I know what "negative pledge assets" means. Barbara, in establishing a line of credit does not mean "taking out a loan". Nor does it have anything to do with debt. JMT, you ask what terms I would place on the line, with a small company like this without debt I would take receivable equal to the debt draw down, knowing that the line of credit was established for marketing reasons, and doing so I would be building a relationship between the Company and my bank, with out having the bank exposing itself to any losses. I would further offset the cost of the line with an agreement to have the company maintaining a cash deposit balance. Thus no cost to the bank or the company.Over the years I have found the largest misunderstanding of how banks make money, is that banks make money on lending money, when in reality banks make money from deposits, this has changed in today's market because of the service charges that banks are charging, along with the use and cost of credit cards. Sorry about the length of my response, my wife always says if you ask him a yes or no question expect a book.
