5Cs of Credit Deck
- 1. Accessing Capital: 5Cs of Credit Richard Gianni Market President, Houston Regional President, East Texas Region 888.215.2373 houston@liftfund.com LiftFund.com
- 2. AGENDA – Who we Are – What We Offer – Who We Serve – Our Clients – Preparing for a Business Loan: Preparing, Lender’s View, and Financial Hurdles – 5Cs of Credit – Our Process – Our Commitment
- 4. WHATWEOFFER • $500to$250,000forbusinessloans • Terms:6to120monthterms • 7.25%to18%fixedrates • Nopre‐paymentpenalty • Onlinebusinesseducation • Financial&businessmanagementconsultations
- 5. OURVALUE • WefundSTARTUPS • LOWERRATESthancreditcardsandpaydaylenders • WeworkwithLOWERCREDITSCORES • Wehavea20yearPROVEN trackrecordofworkingwithsmall businessclients • WeareFLEXIBLE oncollateralrequirements • WeconnectclientstoOTHERSMALLBUSINESSRESOURCESavailable inourcommunity • WehaveONLINE BusinessResources
- 6. OURCLIENTS Our clients reflect the diverse communities we serve
- 8. • Weask “Howwilltheloanbepaidback?” Fromthebusinessorpersonalincome? Whatwillsecuretheloan? Unsecuredlendingispracticallyextinct! Whatistherisk? Willthebusinesssucceed? AreyouagoodBorrower? Whatisyourcontribution? Would you Lend to Yourself?
- 9. 5C’SOFCREDIT
- 11. CreditScoreFactors • PaymentHistory • LengthofCreditHistory • NewAccountsThatHaveBeenOpened • NumberofRecentCreditChecks • HowManyAccountsYouHaveinUse *LowCreditwillnotpreventyoufromaccessingcapital,but potentiallycouldcostmoreintheformofhigherinterestrates. Character(Credit)
- 13. • Thisistheborrower’sdebtdividedbythe borrower’sincome. PersonalDTIor DebttoIncome Ratio • TotalCapacity(personalsurplusand businesssurplus)dividedbyproposeddebt GlobalDebt CoverageRatio • Comparisonofhistoricaltrendstopredict futuretrends.Basedongrossincome,costs, andprofit/loss. CashFlowTrends CashFlowIndicators Capacity
- 14. HowdoesalendermeasureCapacity? Existing Business •TaxReturns (personaland business) • (P&B)Bank Statements •Profitand LossStatement •Business/ ExpansionPlan Startup Business • PersonalTax Returns • Bank Statements • Projections • BusinessPlan • Lease agreement Capacity
- 17. TypesofCollateral • TangibleBusinessAssets • TobePurchasedBusinessAssets(WithLoan Proceeds) • Vehicles • RealEstate • Contracts • Stocks&Bonds • Cash • CashValueonaLifeInsurancePolicy Collateral
- 19. StillNeedHelp?
- 20. WEHAVERESOURCES…ONLINE • TakeourIndextoknowwhereyouare • Visitouronlinelibrarythathas: – businessplantemplates – startupbudget – ourloanapplicationbudgets – projections – personalfinancialstatement • Visitourblog • VisitusonFacebookfortipsandarticles • Visitourwebsite,wehavelivechatanda businesscenter@liftfund.org emailsoateammembercan supportyou.
- 21. DETERMINEWHATTHELOANISFOR • What Type of Funding Do You Need? Be Specific! Equipment Working Capital Start Up Expansion Inventory Asset Purchases Improvements • What Is Your Contribution? Business loans are leveraged with equity and owner’s capital. Be prepared to put your own money into your business.
- 22. PREPAREYOURSELF Knowhowmuchyouneed Personalandbusinesstaxreturns(2‐3years) Currentbusinessandpersonalfinancialstatements Bankstatements(3months) Reviewyourcreditreport (www.annualcreditreport.com) DBAorCorporationDocuments Businessplanwithfinancialprojections
- 23. START‐UPSARESPECIAL • 10‐20%PersonalInvestment • BusinessPlan&FinancialProjections • SecondarySourceofIncome* *ifnot,wedohavespecialloanprograms
- 24. FINANCIALHURDLES • Inordertobetterserveyou,itsimportantthat youknowthestatusofthefollowingissues: – Bankruptcies – Write‐offsandcollectionsissues – RecentSlowpayments – Civiljudgmentsandtaxliens – Taxesowed(stateandfederal) • Wemaynotbeabletoprovidecapitalatthistime duetoyourcapacity,butwe’llconnectyouto resourcestogetyourfinancialsinorder.
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