Account Management: Linking Business Accounts With Overdraft Protection

Assuming that your version of "overdraft protection" is a line of credit, all covered accounts would normally belong to the entity that signed the agreement, but they need not necessarily be titled exactly the same way.

For example, if John Smith operates five sole proprietorships, each with unique names, a line of credit signed by Mr. Smith could back up all the accounts. If an LLC has "General," "Payroll," and "Accounts Payable" accounts then a line of credit established by the LLC could back up all of them.

You could pose a specific fact situation where it is possible that a line of credit from entity #1 could back up an account for entity #2 the above is only a general answer.

First published on BankersOnline.com 05/5/03