Tuesday, June 8, 2010

The Musician's Favorite Topic: Banking and Loans

Banking and Loan Issues for Musicians

1. Choose a reputable bank. Check out their background and reputation in your area.

2. Types of banks and their customer base:
a. The large national bank (B of A etc)
b. The regional bank (are there any anymore?)
c. The local bank...too small for your needs?

3. Are there advantages/disadvantages of dealing with each of the above?
Think it out.

4. Do any of these banks give loans to musicians and/or bands?

5. Entities that loan money and their pros and cons:
a. Loan Companies: No pros-stay away from them!
b. Investors-out of reach for most new artists and music is high risk business
c. Rich uncles or ‘sugar-daddies’-don’t take their money…they don’t know the biz.

6. Interest. How it is calculated. What to watch out for. Hidden or Late charges?

7. Types of credit:
a. Consumer credit (cards)
b. Secured long term (secured loans vs. unsecured and also guarantors)
c. Secured short term loans( might work-what can you put up?)
d. Un-secured loans (forget about it)
e. Secured lines of credit: (good way to go)
f. Unsecured lines of credit: (not unless you have had success galore)

8. How do you get money to "start" your music business if you can’t do any of the above?
a. Sell personal items of value
b. Do benefit concerts
c. Save money from live show revenues and/or merchandise sales

9. Still want a Loan? Learn your way around loan application procedures:
create a balance sheet and Profit and Loss Statement

10. What happens when you can't pay? You better look into this!

11. Establish good credit. Pay bills on time-over time-be professional in all
your money dealings.

12. How do you "fix" bad credit: Don’t get into that position to begin with-
work with creditors.

13. Maintain a good banking/investor relationship. Keep them posted on how you are
doing.

14. Don't be afraid of dealing with bankers or any financial institutions.
They can be a musicians best friend.

15. There are no shortcuts to running your business, and your music IS your
business, so approach your business and run it with heart and a good cash flow.

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