Loan Disbursement Account Details

Summary

When a bank approves a loan, the funds are held in a disbursement account before being transferred. These funds are reserved for the borrower and cannot be spent at their request. They can be used to buy a business directly without reaching the borrowers personal account. A silent partner invests capital but does not manage the business, and they can invest with real estate instead of cash. Opening title refers to creating a new property title during a sale or refinance, ensuring no issues prevent the transfer.

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Can the funds be transferred to buy a business?
Yes, loan funds can typically be used to buy a business, provided that the purpose of the loan was stated as such when the loan was approved by the bank. The bank will usually transfer the funds according to the loan agreement.
So the funds never have to reach my bank?
Correct, the funds do not necessarily have to reach your personal bank account first. The bank can directly transfer the loan funds to the seller of the business on your behalf, in accordance with your loan agreement.
Explain silent partner
A silent partner is an individual who invests capital into a business but does not participate in its day-to-day operations or management decisions. They share in profit and losses, but their liability is typically limited to the amount invested.
Can they invest with real estate instead of cash?
Yes, a silent partner can invest with real estate instead of cash. It is called a property investment. However, it's crucial to have a clear agreement outlining the details of this arrangement. The property's value and how it will affect profit and loss sharing should be clearly defined.
what does 'opening title" mean?
The term "opening title" typically refers to the process of creating a new title for a property. This process is initiated when a property is sold or refinanced. It involves reviewing public records to ensure there are no issues that might prevent the transfer of the property.