Barbara Weltman’s Books
- The Complete Idiot’s Guide To Starting an eBay® Business
- Bottom Line’s Very Shrewd Money Book
- The Complete Idiot’s Guide to Starting a Home-Based Business
- J.K. Lasser’s 1001 Deductions & Tax Breaks
- J.K. Lasser’s Small Business Taxes
- The Rational Guide to Building Small Business Credit
- Small Business Survival Book
Other books by Barbara Weltman:
- J.K. Lasser’s Online Taxes
- J.K. Lasser’s Finance and Tax for Your Family Business
- The Big Idea Book for New Business Owners
- J.K. Lasser’s New Tax Law Simplified 2004
- Your Parent’s Financial Security
- The Complete Idiot’s Guide to Raising Money-Smart Kids
- The Complete Idiot’s Guide to Making Money After You Retire
The Rational Guide to Building Small Business Credit
As Vicki Raeburn of Dun & Bradstreet notes in the forward, "...the successful creation of credit by small business has a significant effect on one of the most important business drivers, namely cash flow. ...[This book has] the information needed to understand and build business credit."
The 5 C's of Credit Analysis
Lenders want to lend out their money; it's the way in which they make more money. But they only want to lend it to a borrower who can repay the funds in full and on time. When small businesses seek commercial financing over certain limits (usually over $50,000 or $100,000, depending on the lenders criteria), the Five C's of credit analysis-capacity, capital, collateral, conditions, and character-are used to determine whether the borrower is a good risk.
Capacity: This is an assessment of your ability to repay the funds. It is based on your cash flow, payment history, and access to other resources for repaying a loan.
Capital: Your own funds must be invested in your company before a commercial lender will make a loan. Rule of thumb: At least 25% of funds needed must come from the owner's pocket.
Collateral: Solid assets, such as heavy machinery or stocks and bonds (but not computers, telephone equipment and office furniture) are property that can be sold by a lender to satisfy a loan if you fail to repay it.
Conditions: This entails a comprehensive assessment of the circumstances surrounding the loan, including general economic and market conditions and the purpose of the loan.
Character: This highly subjective factor is all about your personal background and ability to impress the lender as a dependable person who is likely to repay any loan.
|
|