Acc/543 Wk 4- Debt Financing

Topics: Debt, Money, Promissory note Pages: 3 (1195 words) Published: April 28, 2013

Debt Financing
Home security systems are a growing industry in the current century because of what is happening in the news today. The security system helps the people feel a sense of ease knowing they are safe and secure in their own homes. The company is looking to upgrade the technology infrastructures for the opening new locations in five different locations to sell home security systems. The company does not have the up front cash and needs to do debt financing to upgrade the growing business. There are negotiable instruments, components of secured transactions, rights, responsibilities, and dissecting the banks requirements. The debt financing within the company is looking to take the working capital by selling of notes, bills, or bonds to another individual or institution to obtain financing and terms of repayment to the lender. The bank willing to lend the money put up the restrictions to pass the restrictions of the annual audits and no changing in the credit policies for the customers. The restrictions with 80% of accounts receivables, UCC-1 filing, 120 days-old determines the line of credit, and payments submitted in a lockbox determined by the bank (Cheeseman, 2007). The rights of the company to follow the regulations of the bank to get the line of credit needed to finance the upgrade to the company. The regulations are straightforward with what is aquired to fullfill the line of credit. The company must be able to keep all their records up-to-date and follow audit specifications to pass audits subject by the bank. For example, if the bank states in the contract the company must have and pass one audit per quarter to make sure the company is still able to follow the terms and able to repay the debt (Cheeseman, 2007). The company must also follow the accounts receivables guidelines of acquiring the loan amount be 80% of the...
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