Ask the Business Coach Joyce K. Reynolds is an expert Business Coach who works with CEOs, Sr. Execs, entrepreneurs and countless others providing knowledge, solutions, motivation and support that assist her clientele in successfully meeting workplace challenges. Find out more about Joyce's coaching practice. Lines of Credit Question: My husband and I started two businesses together, 2 years ago. One a retail store which he operates and two websites which I created and manage. We are in the process of a divorce and are splitting the companies. Because we are a new business, we have debt that is still owed. Yet, my name is only on one of the loans, which is our second mortgage. We are going to sell our home to pay off the debt, which will leave me debt free but without a job. I would like to continue with one of the online businesses. The new I created has only been up for three months and is already turning a profit but I need advertising dollars and money for some inventory. Three magazines have contacted me about our products and one news station. But, the profit is not enough for me to live on. So, I am moving in with my parents until I can afford to live on my own. After the house is sold I will have no debt or expenses other than insurance and gas. Do you think I should apply for a loan now or wait until the divorce is settled and if you think I will be able to get a loan to keep the businesses going? Any advice would be appreciated. Daphyne Answer: There are a number of ways that small businesses are financed including through lines of credit, investment capital and loans with banks providing the major source of capital for startup firms. If you need money for startup and want to approach a bank, be sure that the institution you want to use has a program for small businesses or that they are Small Business Administration lenders. These banks generally finance between $50,000 and $100,000 and rely on the credit worthiness and reputation of the borrower. (You'll also want to inquire about special business loan programs for women.) Before you talk to a bank, be sure you are thoroughly prepared with a good business plan including thorough historical and proforma financial data. Find a way to include supporting successful background from your other two, more mature companies. Give your paperwork the best chance for success by consulting a guide on how to write a good loan proposal and understand how your loan request will be reviewed. You will also want to find out what the potential lender is looking for so you can craft your documents to their needs. This will also speed the loan processing. Basically, you will need to be specific about the entity under which you are borrowing the money (corporation, partnership, sole proprietorship); how much you will need; how you intend to use the loan (it would be rare for a bank to loan startup money for advertising); your repayment plan; and the assets you can pledge to secure the loan. If your financial needs are not large enough to interest a bank or your do not have sufficient credit history or collateral to qualify for financing, you will want to look into U.S. Government programs or consult the Small Business Administration. Credit remains an important avenue for financing smaller firms so you might also consider establishing a credit line to help you build your inventory or develop new lines of merchandise for expansion. Whichever direction you chose for securing your financing, it would be smart to wait for your divorce to finalize so that your credit history is entirely clear of your husband's. Then, present your case in the best possible light and you'll have the best chance of getting the financing you need. Good luck! Also see: • Ask Joyce your workplace questions • More questions • One-on-one business coaching Disclaimer: The information in this column is intended to provide the reader with general ideas or concepts to be used as part of a broader base of knowledge they collect to determine their own best course of action and solutions most suitable for solving their workplace challenges. The information in this column is not guaranteed to be the appropriate solution for each individual.