Cash may not come in a brown paper bag, but it's as much a retail commodity as eggs and oranges. Thinking of money lenders- savings and loans, banks- as retailers is a first right step for any potential borrower to take. Besides finding the best place to borrow money, sensible shopping entails determining the best possible package for the borrower. In the following case study, published first in The Consultants' Digest, principals have been disguised. What it reveals is the need for a borrower to improve his money management, borrowing only what and when he needs. Garco Construction Inc. was born with the equity funding of its owner, Ron Garmon, who put up $20,000 of his personal savings and negotiated a second mortgage on his home to open for business. Then, to secure debt financing for the time and at the rate he could afford. Ron worked hard to establish and maintain a good relationship with his banker. During the 12 years since its beginning, Garco's line of credit has grown form $10,000 to $40,000. Its equipment needs have been financed either by lease or 36- to 60- month installment loan contracts. During Garco's next busy season, the firm incurred as much as $400,000 in short term notes ranging from 30 to 180 days. A 180 day not of $200,000 carried with it interest charges of $10,000 [($200,000 times .10) divided by 2]. When Ron sat down to calculate the total costs of the use of that $#200,000, he discovered he was paying more than 10 percent. First, the banker had discounted the interest by deducting the $10,000, depositing $190,000 to Garco's account and completing a not for $200,00-. Thus, Garco had only $190,000 for use, making the effective rate 5.26 percent for 180 days or 10.52 percent per year. Ron resolved his high-cost short-term financing problem by negotiating a revolving loan program for up to 10 months per year. The interest is calculated on a "daily rate," which is added to the loan balance. The ceiling, placed at $400,000 and reviewed annually, has an actual APR of prime plus 3- a true net cost of 11 percent on a prime rate of 8 percent. Ron concluded that 11 is cheaper than 10 in some cases, and he's right.