Key Success Element #4 - Become Bankable

Becoming Bankable Is A Table With Four Legs

When your business becomes bankable that means you have separated personal credit from business credit and established a business entity that can stand on its’ own for financing.

1. 1. Leg One – Lender Compliance – The Algorithm Gatekeeper
      Lender compliance is a series of small items that a lender’s underwriting computer is going to immediately check when you apply for a business loan. Lenders are simply looking to see if your business falls into known higher rates of default. Until Lender Compliance is completed, your business will be considered high risk. Most lenders sell their loan portfolios to secondary market investors. Those investors prefer to buy low risk loan packages.

1. 1. Leg Two – Business Credit History – AKA Comparable Credit
      If you look at your business credit reports and you do not see at least 10 reporting tradelines, then you have too little business credit history to be considered bankable. Also if you only have $300 to $500 reporting tradelines then you do not have “Comparable Credit”. Lenders want to see that you have tradeline credit history of a comparable size to what you are asking them to approve.

1. 1. Leg Three – Business Credit Scores – Maintain 70+
      You are well aware of how important it is to have 700 or higher personal credit scores. For your business to become bankable it must have business credit scores of 70 or above which are just like having 700 scores personally.  Unlike personal credit, there is no 30 day grace period with business credit. Business credit tradelines report “to the day”. This means if you pay even 10 days late you will be reported as “late”.

1. 1. Leg Four – Business Bank Rating – Maintain Low 5+
      Lenders want to see that your business has the ability to debt service or cover the monthly payment for the loan amount you are requesting. For this they are going to look at your business bank rating that will tell them if you have the money to make their payment or if it is more likely that you will default. Banking rating is based on your average daily balance in your business general ledger bank account for the prior 90 days.  Having at least a “Low 5” Bank Rating is critical to becoming bankable.

Loan underwriting approvals are done by computer algorithms. Via APIs they can instantly check if your business is bankable or not. Less than ten percent (10%) of small businesses have taken the time to become bankable before applying for financing. By completing the free Business Success Scan you will see where your business stands right now in becoming bankable and you will know exactly what to do to become bankable in the very near future.