The 4 Cs of Business Lending

The 4 Cs of Business Lending

If you are looking for money for your business than you will be happy to know you only need one “C” to qualify. In lending when we look to see if a client is fundable we are looking for one of the 4“C”s. You don’t have to have all of the 4 Cs, only 1 to secure funding. The first C is Cash Flow. When you have an existing business with good cash flow you can qualify for business funding. If you do have verifiable cash flow this substantial increases your chances of being approved for funding. There are many funding programs you might qualify for including Business Revenue Lending. If you don’t have cash flow your business still might have Collateral, the second C.Collateral for your business is really your business assets. Many things can be used as collateral including equipment, purchase orders, even account receivables. Having Collateral greatly increases your chances of being approved. If you don’t have cash flow or collateral, don’t worry you still can qualify for business funding. Lenders also look at your business Credit to qualify you. Business Credit is our third C. Lenders will lend you money with no personal guarantee based on your business credit profile and score. If you have a good business credit profile you can use that as security to obtain funding. If you don’t have business credit built now, call me so I can help you quickly build an excellent business credit score and profile. Maybe you are just starting a new business, and you have no business credit, cash flow, or collateral. In this case you...
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...
Funding Sources

Funding Sources

There are many sources who offer business funding today. Knowing the different sources will help you find the best funding options for your business. Business Charge and Credit Cards are a fast and easy way to access cash for business.You can use the money for any purpose, and you can be approved for business credit with no personal guaranty or credit check. Many merchants will approve you for individual credit cards of $10,000 or higher. Angel investors have been responsible for funding over 30,000 small businesses each and every year. With over 250,000 active angels in the country you may want to consider an angel investor network to simplify your search. These investors are a great source of funding when banks won’t approve you, and perfect for projects where you need a lot of money. Asset Based Funding is perfect if your company has collateral such as accounts receivable, inventory, equipment, purchase orders, or real estate. These assets can be used to secure the financing you need, and you can secure asset based funding even if your credit isn’t very good. Bank Loans are still available, although they have become harder to get approved for. Many large banks tend to be much more conservative in lending so you may want to consider a community bank or credit union for a SBA loan. Equipment Leasing helps when you want to lease expensive equipment, and some equipment leasing and financing also works for you to borrower against existing equipment you already own. Factoring is perfect if you have high amounts of account receivables. You can obtain funding up to 25 million...
3 Big Differences between Personal Credit Scores and Business Credit Scores

3 Big Differences between Personal Credit Scores and Business Credit Scores

There are many differences between personal and business credit scores. One fundamental difference between consumer and business scores is the time frame the scores gauge someone’s risk of default over. A business credit score is a mathematical model that is used to depict a business’s risk of going 90 days late on an account within the next 12 months. A consumer credit score is a mathematical model that is used to depict a consumer’s risk of going 90 days late on an account within the next 24 months. Another big difference between consumer and business credit scores is what the score actually represents. A consumer credit score reflects an individual’s likelihood of defaulting on an obligation.A business credit score reflects the business’s likelihood of defaulting on an obligation, not the business owner’s. The business credit score is based on how the business obligations are being paid, not how the business owners pays their personal obligations.Another major difference between business and consumer credit scores is the score range. Consumer FICO scores range from 350-850 with 850 being the best score you can obtain. Business credit scores typically range from 0-100 with 100 being the best score you can obtain. There are three of many major differences between consumer and business credit...
Business Credit Benefits

Business Credit Benefits

Imagine having the ability to access $50,000, $100,000, even $250,000 for your business. Now imagine doing this with NO personal credit check and NO personal guarantee.Your success in business will be determined based on your business credit profile and score. With a good business credit profile you will have near unlimited borrowing power. Without having a good business credit profile it will be a difficult path to success without having access to working capital and funding. This is why almost all Fortune 500 companies use their business credit to secure funding. It’s not that they need the money to operate. Successful companies use funding as leverage to grow their business. Business Credit is the best kept secret in business.Over 90% of all business owners know nothing about business credit or business credit scores.But when you do discover the power of what business credit can do for you and your business you will be floored at how easy it is to get money and grow your business.One of the many benefits of business credit is that you can obtain funding with no personal credit check.With a strong business credit profile lenders will lend you money based on your business credit, not your personal credit.This is excellent if you have personal credit issues as you can still qualify for funding. Even with exceptional personal credit, business credit gives you DOUBLE the borrowing power.You can get approved for much higher funding amounts using your business credit than you would if you used your personal credit to qualify.Another great benefit of business credit is there is no personal guarantee required for much of...
The 5 Cs of Business Credit

The 5 Cs of Business Credit

The 5 Cs of business credit are: 1. Character 2. Capital 3. Capacity 4. Collateral 5. Conditions Character is all about you. It’s about your personal history, your stability, and how reliable you are. This variable is more subjective than the others, and is one of several reasons it is beneficial to do business with a bank where you have built relationships with the people who work there. In determining your character, the lender may look at your education, your work history, your personal income, and personal credit history. Again, it’s important to remember that this is one area of business credit where relationships do matter! Capital is about how much you have invested in your business. Whether you are seeking a bank loan or a loan from a private investor, the lender will want to see that you are heavily invested in your own business. Generally speaking, the more of your personal money that you’ve invested in your business, the better it will look to a potential lender. (After all, if you’re not confident enough to invest in your business, why should they be?) Capacity is about your ability to repay a loan according to the terms. Things like cash flow, payment history, and the assets and resources of any person providing a personal guarantee will play a part in determining your capacity to pay back a loan.Collateral is something offered up as security for a loan. Anything from equipment to inventory to a home you own can be considered collateral. It may be easier to get approved for loans with collateral, and many loans will require it....