Contract Basics

Contract Basics

Most business owners enter into contracts more frequently than they may realize. Any time you or your company agree to take some action or make a payment in exchange for anything of value, a legal contract has been created — even if the agreement doesn’t seem like a formal contract. For example, most bills of sale, purchase orders, employment agreements, and other common business transactions are legally enforceable contracts. The following is a discussion to help you understand the basics of contracts.

What is a contract?

A contract is a legally enforceable agreement between two or more parties that creates an obligation to do or not do particular things. The term “party” can mean an individual person, company, or other legal entity. No matter who the parties are, contracts almost always contain the following essential elements:

  • Parties who are competent to enter into a contract. For example, a mentally disabled person could not enter into a contract. Minors can enter into contracts, but can void them in most cases before they reach majority age.
  • Mutual agreement by all the parties. In other words, all parties have a meeting of the minds on a specific subject. Each party either promises to perform an act that the party is not legally required to perform, or promises to abstain from performing an act that it is legally entitled to perform.

Why should I use a written contract?

To be enforceable, some agreements must be in writing. The situations in which an agreement must be in writing can differ from state to state, but usually include transfers of real estate, sales of goods valued at over $500, and contracts that require more than a year to perform.

Whether or not it’s required, a written agreement becomes your proof of what was agreed upon and prevents someone from forgetting or changing the story later. Writing the contract down also makes the parties focus on the essential points, and come to a definite agreement.

Can and should I write my own business contracts?

Yes, you can write your own business contracts. If there is much at stake or if the matter is complex, you may want to use a lawyer. Your best money may be spent up front in preventing any potential legal problems, rather than battling it out in a lawsuit later. If the amount at stake in your business contract is moderate or the terms simple, you may use a legal form that both sides understand.

What laws govern contracts?

Contracts are usually governed and enforced by the laws of the state where the agreement was made. Depending upon the subject matter of the agreement (i.e. sale of goods, property lease), a contract may be governed by one of two types of state law. The majority of contracts (i.e. employment agreements, leases, general business agreements) are controlled by the state’s common law — a tradition-based but constantly evolving set of laws that is mostly judge-made, from court decisions over the years.

The common law does not control contracts that are primarily for the sale of goods, however. Such contracts are instead governed by the Uniform Commercial Code (UCC), a standardized collection of guidelines governing the law of commerce. Most states have adopted the UCC in whole or in part, making the UCC’s provisions part of the state’s codified laws pertaining to the sale of goods. If the contact is international; then, you’re looking at the CISG. More information about that is found here.

What is “breaching” a contract?

In the business world, disputes can arise over contracts, and one party (or both) may accuse the other of breaking his or her obligations under the agreement. In legal terms, a party’s failure to fulfill an end of the bargain under a contract is known as “breaching” the contract. When a breach of contract happens (or at least when a breach is alleged) one or both of the parties may wish to have the contract “enforced” on its terms, or may try to recover for any financial harm caused by the alleged breach.

How are contracts enforced?

The most common method used to resolve business contract disputes and enforce contracts (if informal resolution methods fail) is through lawsuits and the court system. If the amount at issue is below a certain dollar figure (usually $1,000 to $10,000 depending on the state), the parties may be able to use “small claims” court to resolve the issue.

But formal lawsuits are not the only option. The parties also may agree to have a mediator review a contract dispute. The parties are not bound by a mediator’s decision, but may be convinced to avoid a costly court battle by how the mediator rules. The parties can also agree to binding arbitration of a contract dispute, whereby a neutral party listens to the arguments from both sides and issues a binding decision.

When attempting to enforce a contract, an individual or business should always consider the effect any dispute will have on any long-term business relationship between the parties involved.

Free Consultation with a Utah Contract Attorney

If you are here, you probably have a contract issue you need help with. If you do, call Ascent Law for your free contract law consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

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What to Do When Your Custody Plan No Longer Works

What to Do When Your Custody Plan No Longer Works

To foster stability for children, courts favor custody plans that are designed to be fairly permanent. But the law also recognizes that things change. Circumstances beyond the control of the parents can render a plan unworkable. In the worst cases, a vindictive parent actively undermines the child custody plan, forcing the other parent to seek relief from the court.

After your custody plan is in place, there are two common scenarios in which you could end up back in court:

  • Modification — When a substantial change in circumstances occurs, the court will hear a petition from either parent to modify custody. If the parents agree to a modification, the court must approve it, based on whether it is in the best interests of the child. If the parents cannot agree, litigation ensues. 
  • Enforcement — When a parent fails to abide by the terms of the custody order, the other parent should seek redress in court. The aggrieved parent shouldn’t engage in self-help. The fact that the custodial parent is withholding visitation does not justify a withholding of support payments by the noncustodial parent. Likewise, the fact that the noncustodial parent is not paying support does not give the custodial parent the right to withhold visitation.

Relocating Your Child Out of State After a Divorce

When divorces occur, it’s somewhat common for one parent to relocate out of the state. However, it’s also important to consider how such a relocation could affect the children in the relationship.

Moving out of state with children after a divorce has an impact on more than just the parent who wants to relocate. The children and the non-custodial parent are also affected. Sometimes a decision can be reached amicably, but other times one of the parents will not consent to this move and the parents will seek intervention from the court to decide.

As always, Utah law favors the best interests of the children above all else. Following the best interest standard, a court will consider how the move might impact the child to determine whether it should grant the custodial parent permission to relocate. The court may look at the relationship the child has with each of his or her parents and how the move might affect that. If the child does not regularly see the other parent, this might weigh in favor of the relocation.

However, apart from the respective parent’s relationship with the child, courts also look to other effects of the move. A court may consider how the relocation will impact schoolwork, social relationships and other elements of a child’s life. If a custodial parent can show that the move will have a positive impact on the life of the child, this may weigh in that parent’s favor.

‘Birdnesting’ Gains Popularity Among Divorced Couples

A recent feature story in the Utah Post outlines a practice that is gaining popularity among some divorced couples in Utah and New Jersey — and is likely to spread to other areas in the country.

It’s called “birdnesting” or “nesting” and it’s an arrangement in which the children stay in one home and it’s the adults who move around. The idea behind such an arrangement is that it reduces the amount of turbulence the kids would otherwise experience by moving from house to house every few days.

According to the article, lawyers throughout Utah City say more couples are asking for more information on the concept and whether it could actually be a legitimate option.

A concept with drawbacks

Although the primary benefit is that it makes the transition into divorced life easier for the children than a typical arrangement, it can make things a lot harder on the parents. If the arrangement has not been planned well, the parents could each end up feeling “homeless” in a sense, as they never spend more than a few days at a time in each location and do not truly get to settle into a place of their own.

Parents must also determine how they will split costs. They will likely have to be able to pay for an apartment or studio of their own, in addition to their share of the home they already own together. This means the concept is likely not an option for people who are not fairly well off financially.

Still, it is at least an interesting take on divorce that could make co-parenting easier if the two parents have at least somewhat of an amicable relationship. It will be interesting to see if the trend remains in vogue for long — or if it’s more of a passing fad.

Free Consultation with Child Custody Lawyer

If you have a question about child custody question or if you need to collect back child support, please call Ascent Law at (801) 676-5506. We will fight for you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

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Small Business Tax Deductions


Small Business Tax Deductions

Small Business Tax Deductions

If you own a small business, you probably already know about how your small business gets taxed at the end of the year. Just how much you are able to deduct as a “cost of doing business” is part of how much you will get taxed. Remember that whatever you are left with (your profit) after making your small business tax deductions is what you will get taxed on.

So, in order to minimize your taxes on your small business, it is always best to maximize your small business tax deductions. By doing so, you will lower your small business profit and minimize your taxes. In addition, by maximizing your tax deductions, you could get some personal benefits as well — perhaps a new business car, a business trip/vacation, or even a retirement plan. However, you must always be careful to play by the rules that the Internal Revenue Service (IRS) has set out. You could land in hot water if you don’t!

Internal Revenue Code Section 162 – The “Ordinary and Necessary” Expenses of Doing Business

In general, it is painful to read the actual tax code. However, section 162 is so important when it comes to figuring out a small business’ tax deductions that it is worth putting in here (at least a portion of it).

Internal Revenue Code Section 162 – In general – There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business…

Section 162 goes on for quite some time listing examples (and exceptions) of what are considered “ordinary and necessary” business expenses. However, what you should take away from this is that any expenses you deduct from your small business profits must be ordinary and necessary.

What exactly is ordinary and necessary, though? Many of the best legal minds often struggle with this question. What is important for you is that many of the things that you would call ordinary and necessary (such as a business computer, or a desk) are also defined as ordinary and necessary by the IRS.

Publications and Regulations

— There are other expenses that are in a grey area, however. For example, travel expenses may not always be “ordinary and necessary.” However, in many such grey areas, the IRS provides some guidance through publications (“pubs”) and regulations (“regs”).

Courts Have Made Decisions on Tax Deductions

— In addition to the guidance that the IRS provides through publications and regulations, courts also sometimes weigh in on what is considered an ordinary and necessary business expense. Generally, courts apply the notion that “ordinary and necessary” refers to the purpose for which the expense was made.

As an example, renting office space for your business is an ordinary and necessary business for a business that actually uses the office as an office. However, if a business rents an office just for the purpose of spending money and it does not use the office in its business, then it is not an ordinary and necessary business expense and cannot be deducted. The courts have generally found that “ordinary” means “normal, common, accepted under the circumstances by the business community,” and “necessary” means “appropriate and helpful to the business.”

As you can clearly see, the courts have left a lot of wiggle room for businesses to try to sneak in “ordinary and necessary” business expense deductions. On the other side, the IRS pushes to try to contain what is “ordinary and necessary.” When something falls outside of what the IRS has defined, it often finds its way into court.

For example, suppose that John is a self-employed accountant. One year, the IRS notices that Frank has a big deduction listed on his taxes. Taking a closer look, the IRS sees that John has decided to deduct his speed boat as an ordinary and necessary business expense. John says that the boat is ordinary and necessary because he places his business cards on other boats and cars when he takes the boat out for a ride. If this situation were to go to court, the court would probably find that the speed boat was not an ordinary and necessary business expense for an accountant. Right?!?

The “laugh” test

— One way that you can weed out many expenses as not being ordinary and necessary to your business is to employ the laugh test. Basically, if you can put down the expense as an ordinary and necessary deduction on you tax return without laughing, then it passes the laugh test. The hot air balloon above would not pass the laugh test.

Enlarged Expenses Can Hurt You

The people that work at the IRS are pretty smart, despite what you may mutter under your breath when filling out your tax return. They know that, by and large, people try their best not to overpay for anything. Because of this, the amount of a business expense is not generally questioned. However, there are occasions when the IRS will look more closely into very large business expenses (ones that are deemed unreasonably large).

Although the tax code itself does not contain any term relating to a business expense that is “too large,” the courts have generally ruled that Section 162 contains an inherent size exception. For example, while it may be ordinary and necessary for an executive of a multi-national company to rent a private jet to fly to meetings, it is ordinary and necessary for the owner of a start-up homemade crouton business to rent the same jet.

Personal Expenses are a No-No

Out of all of the concerns that the IRS has when it comes to Section 162 business expense deductions, there are none larger than the IRS’s concerns over personal expenses that are claimed as business expenses. As an example, you cannot deduct the cost of commuting to and from work as a business expense (the tax code specifically defines this as a personal expense). The same rules apply to situations where a business credit card is used on a personal vacation. Trying to claim personal expenses as business deductions happens more that you may think. Because of this, the IRS auditors are always checking.

However, there are certain arrangements that can be put in place that allows you to get personal benefits from your business expenses. You should ask your accountant about this if you are interested.

Stay Away From Relatives

You should always be careful when your business deals directly with your family. There have been many situations in the past where a small business owner would “pay” a family member, or a business that a family member has an ownership interest in. Although these transactions could be honest, there are other times when the payments are being made to hide business profits and use them for personal use. As an example, if you have your father-in-law on your business’ payroll at $20,000 a year as a consultant, it would be fine if he was your actual consultant. However, if your father-in-law has been in a coma for the past 10 years, the IRS is going to come down on you hard.

Free Consultation with a Utah Small Business Lawyer

If you are here, you probably have a business law issue you need help with, call Ascent Law for your free small business law consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Paternity Lawsuit FAQs

Paternity Lawsuit FAQs

When the presumed father of a child denies parentage, the mother may choose to file a paternity suit. The filing of the suit typically compels the individual to submit to a DNA test in order to make that determination and also lays the groundwork for child support and, depending on the circumstances, visitation rights. The presumptive father also may file suit if he would like to establish paternity that has been denied by the mother, as can a child, although these are much less common. Below are answers to some of the most frequently asked questions about paternity suits.

How is the father of a child legally determined?

Assuming that there is no agreement between the parents, either the mother, alleged father, or even in some cases the child, can bring a paternity suit to identify the father of the child. Most paternity suits are filed to establish financial or moral responsibility, gain visitation rights or settle other issues in controversy between the parents.

If the circumstances warrant, a judge in a paternity suit will order a blood test from which DNA testing can conclusively determine whether the alleged father is the biological father of the child. After a determination is made, the judge can make a ruling on the issues outlined above or the parties can come to a private agreement.

Is the biological father the only person who can be legally recognized as the father?

The short answer is no, a man other than the biological father may be legally designated as the father of the child. But determining legal paternity can be a complicated problem which attempts to find clarity in circumstances which range from the straightforward to byzantine. Making this determination in a paternity suit often involves heated arguments on both sides and the legal standard for paternity varies from state to state. While we’ll cover the basics below, you should investigate your state’s laws in order to make an informed determination about your situation.

There are several legal classifications of fathers, and once established, paternity is difficult to change and unless there is a private agreement between the father and mother to the contrary, fathers are obligated to pay child support.

Acknowledged Father

The most straight forward of the bunch, it’s exactly what it sounds like. An acknowledged father is the biological father of a child born to unmarried parents who admits that he is the father. Acknowledged fathers are obligated to pay child support.

Presumed Father

Generally the most contested categorization of fathers, there are four circumstances in which a man is presumed to be the father of the child:

  1. He was married to the mother when the child was either born or conceived.
  2. He attempted to marry the mother when the child was either born or conceived.
  3. He married the mother after the birth of the child and agreed to have his name put on the birth certificate or agreed to support the child.
  4. He welcomed the child into his home after birth and openly holds the child out as his own.

Equitable Father

A father who is not the biological or adoptive father, but who has a close relationship with the child or where the relationship is encouraged by the biological parents. This legal claim is generally made by non-biological fathers during divorce proceedings.

The doctrine of the equitable parent derives from the understanding that a child and a non-biological parent may have such a close parent/child relationship that the court will grant the equitable parent custody rights. It seeks to take into account the love and support of a man serving as the true, day-to-day father of a minor child.

The three requirements to be recognized as an equitable father are:

  1. the father and child mutually acknowledge a relationship as father and child;
  2. the father desires to have the rights afforded to a parent; and
  3. the husband is willing to take on the responsibility of paying child support.

Not all states recognize equitable fathers, so be sure to investigate your state’s laws and/or contact an attorney in your state.

Unwed Father

A man who impregnates a woman but does not marry her. Historically, unwed fathers have enjoyed fewer rights with respect to their children. If an unwed father wishes to retain rights with a minimum of court intervention, he should acknowledge his paternity and if possible come to an agreement with the mother confirming his status. If another man becomes the presumed father, retaining full rights for the unwed father becomes difficult. Assuming that there is not another man who seeks to be named the child’s father, the unwed father can retain visitation rights and seek custody of the child.

If I legally establish that a man is my child’s father, is he responsible for child support and how do I get it from him?

If paternity is established by one of the methods above, the father is required to provide child support for the child. The father also gets visitation rights and can seek custody of the child.

Once paternity is established, if the father refuses to pay child support, or does not provide enough, he will be subject to enforcement measures. All states have child support or child welfare agencies which can track down “deadbeat dads” through a variety of methods, including social security numbers, employment records, DMV searches, etc. Courts can place liens on property, garnish wages and even imprison fathers who don’t pay child support. You should explore all options through state and city agencies, or by contacting an attorney in your state who can do this as well as file a motion in court to compel the father to pay.

What if I can’t afford to file a paternity suit?

Fees required to bring a paternity suit can be costly, although there is generally a small fee for the paternity test itself. In almost all states there are mechanisms which allow paternity suits to be filed by the state at no cost to the mother seeking to establish paternity. State child support agencies will file the paternity suit on your behalf. Many of these agencies are funded by the federal Temporary Aid to Needy Families (TANF) program.

Free Initial Consultation with a Paternity Lawyer

When you need a Paternity Lawyer, call Ascent Law for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Creating a Business Plan

Creating a Business Plan

Every successful business needs a business plan, which maps out your company’s goals and plan of execution. The business plan not only helps keep everyone in the organization on the same page, but also serves as your company’s resume and can help with funding efforts. This section covers the reasons for writing a business plan and how to write one, including sample plans and related resources.

Breakeven Analysis

A person starting a new business often asks, “At what level of sales will my company make a profit?” Breakeven analysis is used to determine when your business will be able to cover all its expenses and begin to make a profit. It is important to identify your startup costs, which will help you determine your sales revenue needed to pay ongoing business expenses.

Writing a Business Plan

Business planning is essential for the success of any business. A business plan provides direction, keeps you on track and is usually a requirement when you seek finance. Before writing a plan, always do your research. You will need to make quite a few decisions about your business including structure, marketing strategies and finances before you can complete your plan. By having the right information to hand you also can be more accurate in your forecasts and analysis.

Effective Marketing Strategy for Your Business

While developing an effective content marketing strategy isn’t easy, becoming familiar with its core components is the first step for moving in the right direction. For instance, the key to effective content marketing is to be sharply focused. It’s virtually impossible to successfully market to everyone all at once, so instead you may find it easier if you concentrate your efforts where you think you can move the needle most.

Using Your Business Plan

A business plan does not guarantee the success of your venture, but it does increase the odds of success–if you properly use the plan as a comprehensive strategic tool. You can employ your business plan to sell your business idea to potential investors. Include in your business plan all the marketing, financial, background, and strategic information an investor would need to become as excited about your business venture as you are.

Including Logistics in Your Business Plan

No matter how finely tuned your business plan may be, over the lifetime of any business, things will go wrong. From natural disasters to worker strikes, the best way to survive a business disaster is with a logistics contingency plan. Logistics is all about details, and the long-term success of any business has a great deal to do with well-planned logistics. Focusing on these details continuously in your business plan will increase your company’s chance of success from the get-go and for the long run.

Hiring a Business Attorney

A business lawyer at Ascent Law can help in many business scenarios, from helping with the incorporation process, drawing up contracts and, if necessary, representing you in litigation. Each business is unique, and a free initial consultation with a lawyer from our office can help you determine the complexity of your own needs and how to proceed on many of these issues.

While you can often take care of the formation of a legal business entity such as an LLC or business partnership without legal help, forming a corporation with shareholders and a board is a more complex process. Articles of incorporation can be filed without lawyers, but the administrative side of managing the complex tax and legal requirements often requires the services of a corporate attorney from Ascent Law.

Free Consultation with a Utah Business Lawyer

If you are here, you probably have a business law issue you need help with, call Ascent Law for your free business law consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

How Imputed Income Factors into a Divorce

How Imputed Income Factors into a Divorce

When a couple divorces, each spouse must make a full financial disclosure for the purposes of property division, alimony and child support. Often, a supporting spouse attempts to under report income to reduce alimony and child support obligations. Here are a few ways a supporting spouse could go into a divorce with lower-than-actual reported income:

  • Turn down a promotion or raise — An employee who is cozy with the boss could request that a promotion or raise be postponed until the divorce is over.
  • Accrue commissions — A sales professional could ask an employer to delay commissions “for tax purposes” when that really means “after the divorce.”
  • Neglect to invoice clients — A business that isn’t billing isn’t earning.
  • Create phony expenses — If a supporting spouse owns a business, it’s easy to list invalid expenses to drive down reported profits.

But when a party to divorce reports income that is lower than in previous years, the court tends to notice. Spouses also tend to notice when a long-anticipated promotion doesn’t come through, yet it’s treated as if it’s no big deal. A court can examine a long list of clues that leads to the inescapable conclusion that this breadwinner is trimming the crust.

It’s then that the court can impute income, treating the spouse’s reported income as if it is not telling the whole story. The court may inflate the reported income and use the higher figure in calculations for child support and alimony.

What Are the Steps of an Uncontested Divorce in Utah?

When a couple refers to an uncontested divorce, they are discussing a divorce that does not go to trial. In an uncontested divorce, there is no cause for a trial because issues are discussed and decided upon with the help of attorneys outside of the courtroom. This process includes the following steps:

  • Filing for divorce. Your divorce case begins in the eyes of the state when you or your partner file a no-fault divorce through a Summons and Complaint or Summons with Notice, and pay a filing fee. If you already have a settlement in place, you may file it at the same time that you file for divorce. If not, negotiations must take place and you and your spouse must reach a settlement agreement.
  • Serving your spouse. The spouse who did not file must be personally served with papers notifying them that you filed for divorce. This is completed by someone other than the person who filed for divorce who is over the age of 18. Once the papers have been served to your spouse, he or she will sign an Affidavit of Service to formally recognize that they received the divorce papers, and that they agree to a no-fault divorce. At this time, the divorce is considered uncontested.
  • Calendar your divorce for review. After you and your spouse have negotiated and reached a settlement on your divorce, your case will be presented to the court and calendared for review. This means that a judge will be provided with your divorce papers and will look over your case.
  • Judgement of divorce. If a judge approves of your settlement, he or she will sign a Judgement of Divorce ending your marriage. Both spouses will receive a copy of the judgement, and the spouse who did not file for divorce will need to sign a final Affidavit of Service noting that the divorce is finalized.

Free Consultation with Divorce Lawyer in Utah

If you have a question about divorce law or if you need to start or defend against a divorce case in Utah call Ascent Law at (801) 676-5506. We will help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ten Ways to Fund Your Business

Ten Ways to Fund Your Business

Making the decision to start your own business can be both exciting and daunting. There are many things to think about: picking a business name, choosing a business structure, getting the required licenses and permits, and creating a business plan. You will also need to figure out how to fund your business, since most people don’t have the money to finance it themselves. So, a Business Lawyer would suggest these ways, but keep in mind, if you are going to ask friends and family for money to start a business, you need to provide disclosures and have your paperwork done by a Utah securities lawyer or you could run afoul of civil and criminal law in Utah.

Others may have enough money, but don’t want to have their life savings wrapped up in a business when there are no guarantees that it will succeed. This article provides a list and brief description of ten suggestions for how to fund your business.

  1. The U.S. Small Business Administration (SBA) has four basic loan programs:
    a. 7(a) Loan Program: this is the SBA’s most common program. The eligibility requirements vary depending on the specific aspects of the business.
    b. Certified Development Company/504 Loan Program: this program has specific eligibility requirements and provides financing for major fixed assets such as real estate or equipment.

    c. Disaster Loans: these low-interest loans can be used to replace or repair various items that have been destroyed or damaged in a disaster.
    d. Microloan Program: The SBA’s microloan program assists certain intermediary lenders in making loans to small businesses and certain not-for-profit childcare centers. This program provides loans of up to $50,000.

  2. United States Department of Agriculture (USDA) Rural Development: The Rural Development division provides loan guarantees for the purchase and expansion of land, buildings, equipment and working capital for cooperatives, nurseries, tourist and recreational facilities, hotels, motels, community projects, housing development sites and apartment buildings. These loan guarantees are provided only to businesses that save or create jobs in rural areas.
  3. State Financing Programs: Although state financing programs vary widely from state to state, all states offer financing programs. Funds originate from the federally-funded Small Cities Development Program and from state investment fund appropriations. Contact your state’s department of trade and economic development to find out what’s available.
  4. Local Financing Programs: Various governmental units provide forms of financing assistance to small businesses. The assistance may be in the form of the planning or business services unit of the county or municipality in which you operate (or intend to operate) your business.
  5. Commercial Banks and Savings and Loan Associations: If you can demonstrate a sound business plan and an operating history of two to three years, you may be able to obtain a loan from a commercial bank with favorable terms. Loans may take the form of lines of credit, inventory loans, accounts receivable financing, factoring (where the lender purchases receivables for a percentage of their face value), and conventional loans repaid over time. For newer businesses, a personal guarantee of the owner of the business will most likely be required. Savings and loan associations can also provide you with a business loan if you have appropriate collateral.
  6. Credit Unions: If you belong to a credit union, you may be able to borrow funds for your business. The procedure is generally simpler than borrowing funds from a commercial bank.
  7. Mortgage Companies: Some mortgage companies allow people to establish lines of credit on the equity they have in their homes, which can then be used to finance a business venture. Please be aware, however, that by doing this, you are putting your home at risk.
  8. Credit Card Companies: Although risky and costly, using credit cards to finance a business venture, particularly in the short-term, can be effective.
  9. Friends and Relatives: You may be able to obtain some funds from friends and relatives. However, it is important to pay back these loans on time to avoid making friends into enemies and relatives into estranged relatives.
  10. Life Insurance Policies: You can often borrow most of a life insurance policy’s cash surrender value for your business. However, make sure you understand the terms of the insurance plan first to avoid voiding the policy or reducing the death benefits.

These are just some of the loan programs available for those looking to finance their business. Be sure to check the loan programs in your area before committing to a particular loan program on this list. And remember, while this list is helpful in providing basic information about various loan options, only you can know which type of loan will best fit your needs.

Free Consultation with a Utah Business Lawyer

If you are here, you probably have a business law issue you need help with, call Ascent Law for your free business law consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506