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 can still qualify for funding. But lenders will use your personal Credit to qualify you.

Personal Credit is the fourth and final C that lenders will look at to approve you for funding. You can secure credit lines, through me, up to $250,000 with as low as a 650 credit score.

These types of unsecured credit lines do not look at revenue or financials. Your credit is all that is used to qualify you for funding.

All you need is 1 of the 4 “C”s to qualify for much of the business financing that is available to you today.

About the Author

Ken Simmons is currently the CEO of wiseventuregroup.com 

At wiseventuregroup.com  he specializes in helping business owners establish excellent business credit scores and then leverage those scores to access cash and credit for their businesses.

Ken Simmons is also the mastermind behind the release of the exclusive Business Funding Suite. The Business Credit and Funding Suite is the leading business cash and credit access system in the world today.

For more information on business credit scoring, business credit, visit) wiseventuregroup.com 

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 severely hurt it’s bank rating.

For the best rating, a business should insure their bank statements reflect a positive cash flow. Positive free cash flow is the amount of revenue left over after the company has paid all its expenses

When the account shows a positive cash flow it indicates that the business is generating more revenue than is used to run the company, increasing the bank rating.

The bank rating is also improved when the business has a consistent amount of regular deposits. 

Other factors can also affect the rating including age of the bank account, other bank products that the business uses, and how many investment and savings accounts the business has. 

Having a good bank rating is essential with securing bank financing. 

To maximize your bank rating insure you keep your bank balance average over 3 months as high as you can, preferably over $10,000 and that your account doesn’t go negative.

Take advantage of and use other services your bank offers such as CDs, savings accounts, and other investment accounts and open your bank account when your corporation starts, and leave it open as this longevity will help your bank rating.

Make consistent deposits on a regular basis into your business bank account and insure each month you have good cash flow through your account by regularly putting into the account more money than you take out.

Taking these steps will insure you have an exceptional bank rating and can get approved for the greatest amount of bank financing.

About the Author

Ken Simmons is currently the CEO of wiseventuregroup.com 

At wiseventuregroup.com  he specializes in helping business owners establish excellent business credit scores and then leverage those scores to access cash and credit for their businesses. 

Ken Simmons is also the mastermind behind the release of the exclusive Business Funding Suite. The Business Credit and Funding Suite is the leading business cash and credit access system in the world today

For more information on business credit scoring, business credit, visit wiseventuregroup.com 

 

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 and you can receive your advance within 24-48 hours in most cases. With factoring, you sell your company’s accounts receivables to a company (known as a factor) at a discount, in order to free up your cash. The company that purchases the receivables then assumes the responsibility for collecting them.  This is a great option as they absolutely don’t care about your own personal credit.

Grants are a great way to get money for your business, especially government grants. Depending on your business types and intended use of funds, there are many options available for you to receive grant money that doesn’t need to be paid back.

Lines of Credit are perfect sources of working capital. A line of credit works like a revolving credit card but with much lower interest rates and higher available credit limits. You can get credit lines over $150,000 and write checks from the account or use a debit card to withdrawal funds or use for purchases.

Merchant Cash Advances and Merchant Lines of Credit are perfect for businesses who process credit card payments. This type of financing will advance you money against future credit card transactions. You can even get a debit card to use the funds you secure.

Microfinance Loans are less difficult and time intensive to qualify for with loan amounts ranging from $500 to $35k. Many businesses use several micro loans to get money for their business versus applying for one larger loan due to the easier qualifying criteria.

SBA backed Loans are still one of the most popular financing options available today. SBA backs, or insures about 80% of the loan while the lender lending the money takes on about 20% or so of the risk. Due to the lower risk to the bank, many major banks are more apt to lend money using SBA backed loans than regular loans.

Venture capital is neither easy nor fast to be able to tap into but can be a viable source of funding. This is a great source when you need higher loan amounts, and don’t mind giving up a potential stake in your company. Plus you don’t have some of the headaches that come with conventional funding.

It’s always easiest to obtain financing when you know what you are looking for. Now you have a great understanding of some of the many financing options available to small business owners today.

About the Author

Ken Simmons is currently the CEO of  wiseventuregroup.com


At wiseventuregroup.com he specializes in helping business owners establish excellent business credit scores and then leverage those scores to access cash and credit for their businesses.

Ken Simmons  is also the mastermind behind the release of the exclusive Business Funding Suite. The Business Credit and Funding Suite is the leading business cash and credit access system in the world today.

For more information on business credit scoring, business credit, visit)  wiseventuregroup.com

The Dun and Bradstreet Paydex Business Credit Score

The main credit score used in the business world is known as a Paydex score provided by Dun and Bradstreet.

This number assess a business’s lending risk much the same as a consumer credit score reflects a consumer’s individual credit risk.

Paydex is essentially the business equivalent of your personal credit score.

The exact definition from Dunn & Bradstreet, or D&B is: The D&B PAYDEX® Score is D&B’s unique dollar-weighted numerical indicator of how a firm paid its bills over the past year, based on trade experiences reported to D&B by various vendors.

There are many BIG differences from a business Paydex credit score and an individual FICO consumer credit score.

Consumer FICO credit scores range from 350-850. The Paydex Score ranges from 0-100 with 100 being the highest score you can obtain.

Individual credit scores are calculated based on a number of factors.

The Paydex score is calculated based on only one single factor; whether a business makes prompt payments to its suppliers and creditors within the agreed upon terms of payment.

Most lenders and suppliers are looking for a score of 70 and higher. Having a score of 80 and above is very good.

Here is a breakdown of how the Paydex credit score is calculated:

Payment Expectation
Expect payment may come early                                                                               100
Payments generally come within early payment discount period                              90
Payment is prompt                                                                                                      80
Payment comes 14 days beyond terms                                                                       70
Payment comes 21 days beyond terms                                                                       60
Payment comes 30 days beyond terms                                                                       50
Payment comes 60 days beyond terms                                                                       40
Payment comes 90 days beyond terms                                                                       30
Payment comes 120 days beyond terms                                                                     20
Unavailable                                                                                                                 UN

If you own a business, your Paydex score is essential in establishing new credit and continuing to build credit limits exceeding $100,000.

It only takes 60 days to establish a positive Paydex credit score. To start you will first want to apply for a DUNS Number, a nine digit business identifying number, with Dun and Bradstreet.

Once your DUNS number is established you will next want to find a merchant who will extend you credit and then report that credit to Dun and Bradstreet.

Once you have positive business credit report to Dun and Bradstreet you will have a positive Paydex score established.

You will want to then apply for more business credit and use it regularly. Make sure you pay all payments back early to raise your scores to 80 or higher.

You can easily and quickly establish a positive Paydex credit score.

As you continue to pay your bills timely your scores will continue to raise giving you the ability to qualify for credit in your business name.


 About the Author

Ken Simmons is currently the CEO of wiseventuregroup.com

At  wiseventuregroup.com  he specializes in helping business owners establish excellent business credit scores and then leverage those scores to access cash and credit for their businesses.

Ken Simmons is also the mastermind behind the release of the exclusive Business Funding Suite. The Business Credit and Funding Suite is the leading business cash and credit access system in the world today.

For more information on business credit scoring, business credit  wiseventuregroup.com
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