The Importance of Keeping Your Business’ Governance Documents Up to Date
Oftentimes, when you (business owner) set up your business, you set up Articles of Incorporation with the state along with Bylaws of how the company will be managed and run. Owners of an LLC (called “members”) draft an Operating Agreement which details who can make decisions for the business. As most states don’t restrict ownership, there is no maximum number of members and “single-member” LLCs (those having only one owner) are permitted. Depending on how the Operating Agreement is written, usually the person running the company has signing authority.
Once these governance documents are set up, the issue becomes one of keeping them up to date. These documents should not be a one and done situation as you’ll find out when looking to finance or refinance your business. Lenders require that governance documents are correct and up to date. If they’re not, the financing process will be delayed.
Many businesses now have equity investors or other ownership arrangements, so it’s not as cut and dry as a single-owner business. Remembering to keep your basic governance documents current will help to avoid delays in your financing requests down the line.
About Celtic Capital
Companies looking for working capital to cover operating expenses, fund growth, increase buying power and take advantage of vendor discounts and rebates turn to Celtic Capital. With an appetite for the more complex transactions, Celtic Capital has a history of success in crafting creative, flexible asset based financing solutions from $500,000 to $5 million with no financial covenants.
As an independent lender, working with companies nationwide, Celtic Capital is willing and able to alter price and deal structure and expand lines of credit to handle its clients’ increased revenues; and when cash flow is an issue, will look toward providing an inventory facility to help offset lost cash flow.