Issue link: http://read.dmtmag.com/i/51841
MANAGEMENT she describes her firm – which uses equipment as collateral for its loans – as a "story-teller lender" and makes agri-loans for as low as $5,000. "We'll consider your story if there are unique circumstanc- es involved," she said. Minority- owned and "green" operations can be more apt to get a loan. A credit line can help meet oper- ating capital shortfalls. Usually pro- vided by a bank, the borrower can annually take, at their own discre- tion and in predetermined incre- ments, a certain amount of capital. Credit lines are often for less than $200,000 and based on accounts receivable and current inventory. It's not advisable to rely on one for long-term investments or major purchases because line-of-credit interest rates and late fees can rap- idly compound. Thinking of staking your home as collateral? While banks are more comfortable once they can attach real estate to a loan, the borrower takes significant risk. The funds made available from a home-equity loan can be used for nearly anything – from taking a vacation to expand- ing a business. Despite the prom- ises of safety and access to cash, there can be more than meets the eye with this type of deal. Borrow- ing against one's home is almost never advisable. THE FOUR C'S While the process may have evolved on some fronts, lenders still rely on the "four C's" before deciding whether to grant a loan: Cash – how much you've got. Col- lateral – any hard assets i.e., real estate or equipment. Credit – your bill-paying history; do you make your mortgage, taxes and other payments on time? Character – are you a worthy risk? This is where personal referenc- es come into play. If a potential bor- rower can satisfy three of the four C's, chances of obtaining a loan are good. If you're new to the industry or have a poor credit history, it can pay to speak with a credit-repair specialist about fixing it before sub- mitting a loan application. The bet- ter one's credit profile, the better the rate. If you can't get a lender to work with you with terms you can afford and understand, and you're con- sidering tapping family or friends, it usually pays to formalize any agreement by having it drafted by an objective financial professional. Putting it in writing helps each party understand their responsibilities, and it can help resolve future mis- understandings and remove emo- tion from the transaction. Many small businesses, especially during the start-up phase, have gone this route. Getting it in writing can only help. Joseph Finora is a financial writer based in Laurel, N.Y. Comments? Please e-mail us at feedback@vwm-online.com. ALL ASPECTS OF WINEMAKING AMERICAN TARTARIC PRODUCTS SERVING YOUR NEEDS IN - Enzymes - Clarifiers - Fermentation Products - Tannins - Specialty Products - Cleaners - Cellar Chemicals - Filtration Supplies - Rotary Vacuum Filtration - Cross-flow Filtration - Filtration Consulting VISIT OUR WEBSITE FOR MORE INFORMATION www.americantartaric.com WWW.VWM-ONLINE.COM - Lab Equipment - Micro Oxygenation - Crush Pad - Filtration/Separation - Desulfurization - Pasteurization - Thermovinification - Bottling/Packaging - Refrigeration - Stabilization WEST COAST SALES 1230 Shiloh Road Windsor, CA 95492 Tel +1 707 836 6840 Fax +1 707 836 6843 atp@americantartaric.com EAST COAST SALES 1865 Palmer Avenue Larchmont, NY 10538 Tel +1 914 834 1881 Fax +1 914 834 4611 atp@americantartaric.com JAN - FEB 2012 VINEYARD & WINERY MANAGEMENT 119