Bank Credit

Bank Credit

Bank credit is the total amount of borrowing capacity a business can obtain from the banking system. Banks have their own internal way of scoring and rating businesses credit worthiness.They do this through a system called bank ratings, which rates the credit worthiness of a business from the bank’s perspective. A business can secure more business credit quickly as long as it has a minimum of one bank reference and an average daily account balance of at least $10,000 for the past three months. What lenders REALLY want to see is that a business has this $10,000 average balance.When a business has this, it yields a “Bank Rating” of Low-5, meaning the business has an average-daily-balance of $5,000 to $30,000. A business that has a balance of $7,000 to $9,999 will net the business a lower rating such as a High-4, which will make it harder for a business to get approved for bank financing. Here is the actual bank rating scale, so you can see where you business might rank: ● High 5, account balance of $70,000-99,999 ● Mid 5, account balance of $40,000-69,999 ● Low 5, balance of $10,000-39,000 ● High 4, 7,000-9,999 ● Mid 4, 4,000-6,999 ● Low 4, 1,000-3,999 There are other factors outside of average bank account balances that affect this rating.A business will be scored higher if it has the average balance of $10,000 for 3 months,so it’s crucial that the money be in the account, and stay in the account for 3 months to maximize the bank rating. Overdrawing the account and obtaining non-sufficient-funds charges is one big way any business can...