Getting any business started is no easy task. The old adage, “it takes money to make money,” is a vital truth when starting a business – especially if you’re operating the smallest of smallest business – what we call today as micro businesses.
You know it, banks won’t finance what they deem as highly risky ventures and in the recent years, they shifted their eyes to bigger and potentially less risky and more profitable businesses.
When applying for a business loan, most small business lenders will look at four C’s – the factors that your banker or loaning provider wants to know about you and your business:
Character. The way bankers and providers judge your character probably has a lot to do with your score. Traci Flynn, a community banker, considers character an important part of how she assesses potential borrowers. “If they have an effective management team and they have some of these other factors in place, I can make a case to the lending board that the particular business is a good candidate for a loan.”
Credit Score. Well, alright, this should be listed as number one. This factor is pretty much a go-no-go measure for most lenders, and although some are willing to work with borrowers with low credit scores, they all have score thresholds they won’t go below. However, some lenders understand that there are several reasons why someone’s credit score is low. Depending on the reason, may still be willing to accept your loan request.
Capacity. Most lenders won’t be interested in giving a loan to someone who has virtually no way to repay it. Furthermore, even if you have a good credit and are in an early-stage or idea-stage, it might not be the best idea to go looking for financing.
Capital. Lenders will need to know that you have a bit of skin in the game. You need to have some cash in hand for day-to-day cash flow and some more for a rainy day. This tells the lender that the business loan you want isn’t just a last-ditch effort to keep your company from going down over the few coming months.
What if I’m the lender?
Now if you’re in a credit lending business, it helps to properly assess your clients through personal properties securities register (PPSR) before approving any loan request. You don’t want to lend to anyone with a bad credit score, right?
What’s with PPSR again?
The PPSR is a national online register that can provide information to help limit your risk when buying personal property. The key features of any PPSR search include:
- PPSR bulk order functionality with auto verification of ACN, ABN & Name.
- Auto settings to group orders into a single email.
- Auto issue email of specific PPSR results eg. Summary, Certificates and Attachments, or selected results.
- Flexible delivery options from home page of PPSR results list – Summary, Certificates, Excel options.
- Re-issue results options anytime at no extra cost– Certificates, Summary, Excel.
- Verification and auto match of Name/ACN/ABN.
- Ability to export your PPSR Search to excel format to sort and manage results.
- Search three PPSR criteria at once including ASIC Company Search.