Once established, the owner may use the credit line anytime as long as the terms of the underlying loan agreement are met. Requesting advances may save time by telephone, facsimile requests or e-mail and the bank loan officer usually deposits the advance immediately. Financing from a financial institution will normally require a set of materials and information for the banker's review. A current business plan that includes the business strategy, key personnel, market niche and a reasonable explanation of business success are essential elements of such material. A strong set of internal controls is a must for operations.
Financial statements are another key element of the materials to be provided to the bank.
Audited statements are not always required but compilation statements and review statements for the past two years are normally requested. The family business owner should be prepared to answer questions and explain losses, if any, and the plan to eliminate them. A cash flow basis financial plan will provide the bank with a comfort level that the family business owner knows its business and can satisfactorily handle any development that may arise. The family business owner should be prepared to consider a personal guaranty and a pledge of collateral of the business and possibly personal assets to secure any bank financing. The collateral security often determines the amount of financing available.