Increase the likelihood that you will be
paid for your valuable products or services by knowing your
customers. Cash flow problems often stem from companies'
lack of due diligence in knowing their potential customer's
ability to make payments.REMEMBER
High Falls Funding can perform several funding solutions
simultaneously for each of our clients. Credit analysis is
part of our factoring product. As such, we can offer our
expertise in this area as a separate service.
High Falls Funding considers these
five areas when analyzing credit worthiness.
Capability
to repay is the most critical of the five factors. The prospective
lender will want to know exactly how you intend to repay the loan.
The lender will consider the cash flow from the business, the
timing of the repayment, and the probability of successful
repayment of the loan. Payment history on existing credit
relationships -- personal or commercial -- is considered an
indicator of future payment performance. Prospective lenders also
will want to know about your contingent sources of repayment.
Capital
is the money you personally have invested in the business and
is an indication of how much you have at risk should the business
fail. Prospective lenders and investors will expect you to have
contributed from your own assets and to have undertaken personal
financial risk to establish the business before asking them to
commit any funding.
Collateral
or guarantees are additional forms of security you can provide the
lender. Giving a lender collateral means that you pledge an asset
you own, such as your home, to the lender with the agreement that
it will be the repayment source in case you can't repay the loan.
A guarantee, on the other hand, is just that -- someone else signs
a guarantee document promising to repay the loan if you can't.
Some lenders may require such a guarantee in addition to
collateral as security for a loan.
Conditions
focus on the intended purpose of the loan. Will the money be used
for working capital, additional equipment, or inventory? The
lender also will consider the local economic climate and
conditions both within your industry and in other industries that
could affect your business.
Character
is the general impression you make on the potential lender or
investor. The lender will form a subjective opinion as to whether
or not you are sufficiently trustworthy to repay the loan or
generate a return on funds invested in your company. Your
educational background and experience in business and in your
industry will be reviewed. The quality of your references and the
background and experience levels of your employees also will be
taken into consideration.
Contact
us to arrange a credit analysis consultation.
