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CalAttorney2, Attorney
Category: Business Law
Satisfied Customers: 10244
Experience:  I am a businesses law attorney, with experience advising and representing owners and investors.
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We have a product that many clients are asking if we have

Customer Question

Hello. We have a product that many clients are asking if we have financing for it. We'd like to offer financing whereas they give us a 50% deposit and then we finance the rest. What do we need in order to offer this (legally), what do we need to do in
order to be able to run their credit, and what do we need to automatically draft their bank account each month for the payment due (and/or automatically charge their credit card for the amount due). We will have local clients (ie. Maryland) who would pickup
the product as well as clients through the United States whereas we'd ship the product to them. Thank you!
Submitted: 2 years ago.
Category: Business Law
Expert:  CalAttorney2 replied 2 years ago.

Dear Customer, the mechanics of setting up a financing department for a business are outside the scope of a $10.00 informational chat. You would need to both become familiar with the Maryland state lending laws, banking laws, and privacy laws (prevention of identity theft), and be prepared to act as a debt collector far more often than you do when running your business on an advance payment plan.

If you do decide to pursue this, you need to speak with a local attorney to help you set up your financing department properly (this is not something that is done over the internet).

My best advice to small businesses is to contract financing out to a bank, or credit union. (If you have a business bank already they can help you with this, although there are many options out there - trade groups can give you feedback on their individual experience with finance companies, as can business contacts through your Chamber of Commerce). By having your customers finance through a bank or credit card company, you ensure that you get paid upfront, the bank takes the risk of loss, and the bank will deal with all of the credit check, income verification, and loan servicing that accompanies financing a sale.