Creative Financing Secrets

Suit, and if he has a reasonable excess of liquid assets over current liabilities. The assumption is, that under such circumstances an amount equivalent to that of the loan will be taken out of the borrower's liquid assets and applied to commercial purposes, whatever disposal may be made of the actual or immediate proceeds of his note. The Federal Reserve bank must be satisfied of the responsibility of the borrower, as well as of the purposes for which the proceeds of the note are intended, and may require a financial statement, but it is authorized to waive the requirement of a statement in the following circumstances: if the note is secured by a warehouse or similar receipt; or if the aggregate of the obligations of the borrower rediscounted and offered for rediscount at the reserve bank is less than a sum equal to 10 per cent of the paid-in capital of the member bank and does not exceed $5,000. By statute it is provided that "The aggregate of notes, drafts, and bills bearing the signature or indorsement of any one borrower, whether a person, company, firm or corporation rediscounted for any one member bank shall at no time exceed 10 per cent of the unimpaired capital and surplus of such bank; but this restriction shall not apply to the discount of bills of exchange drawn in good faith against actually existing values' Promissory notes, accordingly, come within this restriction, without exception....