The definition of fundable is the capability of being funded or being bankable. Your company’s fundability is crucial to obtaining the necessary funds needed to operate, develop, and grow your business.
Unfortunately, the most common mistake business owners make is applying for financing before their company is even ready.
Wouldn’t it be better to know if you qualify for funding before you actually apply?
Instead of relying on your personal credit why not establish a fundable company that can get the financing it needs based on its own creditworthiness.
There are several different areas that contribute to how fundable your business will be for short-term or long-term financing. The three main areas that impact your company’s fundability include:
- Compliance – Lenders have specific guidelines that credit applicants must adhere to as part of the underwriting process. Meeting these standards is mandatory if you expect to qualify for credit. This includes, but is not limited to, the following: corporate structure, business listing, commercial address, state filings, licenses, etc.
- Business Credit Reports – Getting listed with the major business credit agencies such as Dun and Bradstreet, Experian, and Small Business Equifax, allows lenders to review your company’s credit profiles. Creditors rely on these particular agencies to assess the credit worthiness of a company. If you apply for credit with a lender or supplier and your company is not listed then may get denied credit or be required to allow a personal credit check and/or personal guarantee.
- Business Bank Account – Another factor is your company’s bank business account history. Bank credit consists of three main components which you should familiarize yourself with prior to applying for funding. This includes, but is not limited to, account age, account history, balance rating, etc. In some instances a lender may contact your bank references so maintaining a positive banking relationship is vital to your company’s fundability.
- Company Assets – Turning paper into cash is not a new strategy but it is definitely an option worth considering if you have access to the types of paper that can be converted. This includes, but is not limited to, letters of credit, financial contracts, accounts receivable, inventory, real estate, promissory notes, etc.
All of these factors play an integral part in determining how fundable your business is. Lenders also take the age of your business and the type of industry you’re involved in into consideration.
These are just a few of the items that are regularly used by lenders, credit providers, and even insurers, to approve or decline your application. Now is the time to find out where your business stands.
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About the author
Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for AllBusiness, a subsidiary of Dun and Bradstreet and author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in the SBA Community, American Express Small Business, Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain.