Page 105 - Winning The Credit Game Bundle (CK Patrick)

bank be allowed to review your business’s financial performance
and require changes as a condition of obtaining the loan. This is
generally not a bad thing as the bank’s only interest when
lending money is the profitability of your business, and that’s
your interest too. Banks generally will not try to micromanage
your business because their only concern is that you pay them
back with interest.
Investors, on the other hand, are less restrained in what they
can require of your business. This is why obtaining investors is
generally recommended as the last step in your business
financing journey, and some business owners choose to forego
investors altogether.

SECURITY

Credit lines come in both “secured” and “unsecured” varieties.
“Secured” lines of credit are those in which your lender
“secures” their loan by having you sign legal paperwork stating
that you will forfeit certain assets to them, or that they will be
able to take certain types of action against you if you don’t pay
them back.
Be sure you understand what you are signing up to forfeit if
you choose to pursue secured lines of credit. Are you willing to
lose whatever you are promising if you can’t pay this credit line
back?
Secured credit lines can have advantages over some unse-
cured credit lines, such as sometimes having lower interest rates
(the lenders’ logic is that since they cannot really force borrowers
to pay them back, they will charge all of their borrowers’ higher
interest rates to make up for the money they might lose from
some through nonpayment). But there may be times when unse-
cured lines are better.
You may be beginning to see more examples of why it is so
important to understand business credit strategy. New business
owners who take on investors without realizing they are losing
some control of their business, or who offer their home as an

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