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Debt Financing

In: Business and Management

Submitted By nicfar53
Words 898
Pages 4
Nicolas Farrant

ACC/543

Debt Financing

Week 4

10/15/2012

Negotiable instruments are basically promises to pay, you are basically saying you need the funds right now and will promise to pay the money back in a determined period of time. Business and banks use this type of payment all the time because they may not have the funds on hand at the given time. This is exactly what is going on in the case of our company. We need the funds up front and will promise to pay the loan back when we have set up our other locations and have the funds to do so. The bank in which we have chosen for our line of credit have some simulations to our proposed idea, so we must break them down to understand exactly what we are getting ourselves into. In this case we will be getting a line of credit or a loan from the bank to be paid back over the course of the next few years. During which time we will be externally audited by the bank and must adhere to their policies while going through the loaning process and payback period. The company will be named as the policy holder and will be liable for the full amount loaned. The elements involved in negotiable instruments are certificates of deposits, notes, checks and drafts. The Uniform Commercial Code governors over negotiable instruments and defines who is liable, both primary and secondary. The primary holder of the loan is liable for the loan, it is their duty to pay and their name on the papers. A secondary liability holder comes in to play when the primary has failed to pay the loan amount. Primary holder are the people who actually sign for the loan in the first place. From there it may go through different chains until the instrument is in play. If I were to write a check and give it to you, and you sign the check and give it to the…...

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