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Question
Hello and thank you in advance for answering my question. I am currently looking at purchasing land off a main highway that would likely be in a rural area and I hope to open a small store on the lot.

If things work out for me, I hope to have enough money to purchase it but if not, then I may need assistance.  

Currently, I have a small business account but it's only used for part time work that I do in addition to my full time job and it's a small amount of money every month.

I was wondering if I were to start putting my other income in to that account to sort of "fund it" and increase the monthly volume of money so to speak, if that would help me when the time came to ask for a loan?

This business account was not originally intended for my new business venture but I was wondering if it would help me at all when the time came to ask for money?

Even though I would have to show financials and income I was thinking it might look better if I had a little more money and activity in that account and it may show as good history?

I hope that makes sense?

Any thoughts would be greatly appreciated.

Answer
I believe you are asking will your request for a new loan have stronger merit if your bank account has greater activity within the account.  If this is your business account and it reflects greater sales and a stronger cash flow I would tell you that yes this would have an impact.  However, if you are just running transactions through the account just to show activity and the net income of the business is not any greater this would have no impact.  From a lender's view point we are more interested in the net income of the business than we are just activity.  Net income is one of the items of most importance based on what you have told me.  The only other item that may be greater than the net income would be the cash reserves (equity)of your own money that you have established to put into the business initially.  How much skin do you have in the game?  So based on your question I would say the activity in an account would have minimal impact while the cash you set aside to put into this start up would be much more important in addition to the net income of the small business you are running at the present time.  Best of luck to you in your endeavors.

Financing -- Loans

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JT Holt

Expertise

Questions regarding the financing or land values of farm, ranch, and recreational properties. Large working ranches to the small hunting property.

Experience

Currently CEO of LandLoanSpecialists.com with 10 years of previous experience in the Farm Credit System as a VP of Credit. Experience as an appraiser of farm, ranch, and recreational properties.

Education/Credentials
Bachelors of Agricultural Economics from Oklahoma State University. Continuing education courses in ag finance and appraisals.

Awards and Honors
Top volume lender for the last 5 years in previous position.

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