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    4 Replies Latest reply on Aug 29, 2008 6:11 PM by ALL_SQUARE

    Line of Credit with Vendor

    HappyMe Newbie
      I'm new to this, but I'm filling out an application for a line of credit with a vendor we have. I need someone to please explain this to me in plain English. The end of the application reads, "The applicant, through execution of this docuent, grants JoeVendor and it's/or subsidiaries, a purchase money security interest in all inventory/product identified as "JoeVendor" and in all proceeds thereof.

      Then it has a fill in the blank section:

      "The applicant by way of execution of this document provides JoeVendor with a blanket resale certificate for the below named company with Resale Certificate #________________ recorded in the State of_____________Date Recorded___________Exp Date___________"

      In summary, these are my big questions:

      1. what is their disclaimer really saying
      2. What is a certificate number and where do I find it?

      Thanks for all your help!
        • Re: Line of Credit with Vendor
          LUCKIEST Guide
          Line of Credit with Vendor

          HappyMe, Welcome.. Do you have a Lawyer??

          If this was my business I would check with my Lawyer before signing.

          Good luck, LUCKIEST
          • Re: Line of Credit with Vendor
            Lighthouse24 Ranger

            This is a PMSI -- vendors use it with new or struggling businesses rather than just turning them down for a line of credit. What these say, in essence, is that you are agreeing to use the proceeds from the sale of any of their products to pay them before you use that money to pay other creditors -- and that if you default on payment to them, go into bankruptcy, etc. that you are agreeing to let them come in and repossess their products out of your inventory.

            If you were in Texas, the resale certificate number they're looking for would be your business' Sales Tax and Use Certificate number. It's probably something similar in your state. (It's just a way to authenticate that your business actually agreed to the PMSI terms.)

            Does that all make sense? I'm not an attorney, but the language and terms you cited seem typical for this type of agreement.

            Hope that helps. Best wishes.
            • Re: Line of Credit with Vendor
              HappyMe Newbie
              Yes, we do have a legal consultant, and I could send this in for review if necessary. I just figured it must be a standard thing on a line of credit application. What do you guys think?

              Now on the Resale Certificate #, we are a non profit and tax exempt.................so would I put our tax ID number or some other number from our 501(c)3 paperwork or other paperwork?

              I'm not the owner, I'm just a really trusted do-everything, teach-myself-everything, accounting person. ;) So I'm trying to get my ducks in a row before I start dialing important phone numbers.

              Thank you for your amazing help!
              • Re: Line of Credit with Vendor
                ALL_SQUARE Newbie
                it's good to ask questinos.