Cash vs. Credit?

[nocompanyguy]

I want to open a business here in Sunny Florida and the state has some fairly strict requirements for insuring financial stability of certain new businesses. The State wants documentation that I have enough capital to cover projected liabilities for the first 12 months before I can get my license. Problem is on their worksheets, they only list places for 'cash' and other specific assets. Well, I have a good amount of credit available if I need it but I certainly don't want to use it and pay interest until I actually do need it. Any suggestions about how to show the State I have the credit available in place of cash?

[Steve B]

I'm guessing this won't satisfy the state's questions, or they would have included it on the form. Perhaps a call to the correct authority at the state office will clarify.

Good luck and welcome to the forum. I'm sure you'll get quite a few other comments and ideas shortly.

[phanio]

Only thing I could think of is to draw the funds from your credit – post that as cash on the forms – then pay back the credit once license is received.

Might sound dishonest but I know (and have funded) many public or large private companies that do this all the time. They draw their credit at quarter-end just to show cash on the books. First day of the next quarter, they pay it all back.

May be problems though:

1) Expensive.
2) The state may look at your bank statements to see how long you have had the funds.
3) State may also pull your credit history and have trouble with you being overextended.

Might also think about a partner with the money you need. Could be a temporary situation to get the license or a long-term financier.

Cold even look at getting a license in another state with lower requirements. Does FL have different criteria for foreign companies or they may relax some of those requirements to license in FL as you are already licensed in another state.

Just my thoughts –good luck

[billbenson]

I set up a DBA in FL and didn't have cash or credit at the time. Only thing I needed to do was get a federal tax ID and fill out an easy form. $20. That was in 2000 or there abouts. Hard to believe they have changed that much or are you trying to incorporate?

[Evan]

Withdrawing cash from your credit and posting it as "cash" would be dishonest. Plus if it shows a balance sheet, showing $20,000 cash and $20,000 in liabilities cancels out any "equity" you may have.