9. Bank References
Your business entity must have a minimum of one bank reference. It would be great if your business bank account was at least two years old, but more importantly to place your business in a good lending position it should have an average daily balance of at least $7,000 for the last three months.
Your business banking reflects how you manage your cash flow. Funding sources want to know that your cash flow is capable of handling the business debt and expenses on a consistent basis. Accounts that show NSF returned checks can be deal breakers!
If a funding request amount requires a $2,000 a month payment, funding sources will want to see at least a "Low 5" bank rating. Your "Bank Rating" is based on your average daily minimum balance over the last 3 months.
Here is how "Bank Rating" works. It is based on your average daily balance over the past three (3) months, so your rating would be:
|Bank Rating||Average Bank Balance|
|Low 4||$1,000 – $3,999|
|Mid 4||$4,000 – $6,999|
|High 4||$7,000 – $9,999|
|Low 5||$10,000 – $39,999|
|Mid 5||$40,000 – $69,999|
|High 5||$70,000 – $99,999|
|Low 6||$100,000 – $399,999|
| . . . etc., I hope you see the pattern here.
Having the $7,000 balance gets you rated at a "High 4". Not having it will not stop the process of building a favorable business credit profile, but it will slow it down. If you don’t have the $7,000, borrow it from family or friends and don’t use it, just let it act as your base line in the business account so that your balance never drops below that amount. Even better if it is $10,000, because your rating would be a "Low 5" and that really changes things.
Make sure that your business bank account is reported exactly as your legal business entity name and at the same physical address as your business, not a Mail or P.O. Box.
10. Credit Reporting Agencies
Dun & Bradstreet (D&B) is the leading "business credit" reporting agency in the United States, Experian is the other. D&B provides businesses with a separate credit file number that is used to track and rate your business credit profile. This is called a "D&B number" or "DUNS number".
Obtaining a Dun and Bradstreet number (D-U-N-S #) begins the process of building your business credit history (profile). Getting your "number" is FREE. All we are doing here is getting your D-U-N-S "number". This number is how lenders access your business credit profile and it is used to determine the creditworthiness of your business as a stand alone entity.
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