Seven Tips For Credit-Enhancing Your Business Loan
What are the avenues available to businesses with weak credit profiles or to companies pursuing credit transactions that are perceived as too risky by credit providers? Many companies apply for credit at banks, finance companies or equipment leasing firms and are routinely rejected due to the high degree of perceived credit risks. When approaching a credit provider, it is helpful to understand what can be done to reduce the risk of a credit transaction in the eyes of the provider. Never accept a credit rejection without considering credit enhancements. Here are a few tips on credit enhancement to help guide you in approaching the credit process:
1. Credit enhancements are modifications to credit transactions that improve the risk-reward relationship for credit providers. Enhancements can be real or merely perceived by the receiving party. Also, they can be tangible things like real estate and equipment or they can be intangibles like future rights or options.
2. Use credit enhancements to strengthen credit transactions and to improve pricing or terms. They may be used to entice credit providers to approve credit transactions that would otherwise be unacceptable because of the perceived risks. They can also encourage credit providers to make transaction approvals faster.
3. Credit enhancements usually fall within one of these general categories: improvement in credit terms favoring the credit provider; additional collateral; guarantees, insurance or third party assurances; increased pricing, compensation or upside gain potential; or granting of specific rights or options.
4. Some specific enhancements include: granting a security interest in additional equipment, real estate, inventory, accounts receivable, intellectual property rights or other company assets; pledging cash; pledging securities; third party guarantees; surety bonds; letters of credit; pledging cash value of insurance; increase in transaction rate; additional fees or other transaction compensation; shortening the term of certain transactions; granting first refusal rights on future transactions; permitting call options; obtaining re-marketing guarantees or agreements.
5. When considering using credit enhancements to improve your transactions, use these guidelines: try to get a fair and objective assessment of your credit profile and the inherent transaction risks from a knowledgeable credit person; take inventory of the possible credit enhancements your firm can provide; evaluate the cost of possible enhancements to decide whether using them will be worthwhile; if there is time and opportunity for a second chance to present your transaction to the credit provider, present it first without the credit enhancement or with the minimum enhancement you think acceptable; of the credit enhancements available to your firm, decide which ones will be effective and the degree of enhancement necessary to achieve your objectives.
6. It helps to develop a credit enhancement strategy in the planning stage of your transaction. Start by understanding the transaction's credit strengths and weaknesses. Decide which enhancements available to your firm will help strengthen the risk profile of the transaction. Try to assess the credit provider's sensitivity to various types and degrees of credit enhancement. Later, if the credit provider turns down your transaction or proposes unacceptable terms, ask the provider to suggest enhancements that will make a difference in the decision. You may be able to negotiate further, once you have this information.
7. All credit enhancements have a cost. In many instances the cost is the opportunity cost of not having the credit enhancement available for future use. Before offering or providing a credit enhancement, do a thorough cost-benefit analysis to make sure the potential benefit is worth the cost to your firm.
Though it is not always possible to enhance a credit to the satisfaction of credit providers, you should understand the value of credit enhancements and know when they may be useful. By carefully considering potential credit enhancements, you can often improve the pricing and terms of your firm's credit transactions. If your firm has a weak credit profile, use of a credit enhancement might make the difference between obtaining financing or being rejected.
George Parker is a Director and Executive Vice President of Leasing Technologies International, Inc. ("LTI"), responsible for LTI's marketing and financing efforts. A co-founder of LTI, Mr. Parker has been involved in secured lending and equipment financing for over twenty years. Mr. Parker is an industry leader, frequent panelist and author of several articles pertaining to equipment financing.
Headquartered in Wilton, CT, LTI is a leasing firm specializing nationally in direct equipment financing and vendor leasing programs for emerging growth and later-stage, venture capital backed companies. More information about LTI is available at: http://www.ltileasing.com.
This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news
Car Loans After Bankruptcy - How Poor Credit or a Recent Bankruptcy Can Affect Your Loan Approval
If you have poor credit or a recent bankruptcy, you can still get approved for an auto loan through sub prime lenders. Sub prime lenders specialize in financing auto loans to people with adverse credit.
User Guide to Payday Loan Terminologies
Are you approaching towards a payday loan cash advance? Is this your first loan borrowing? Are you acquainted with all the terminologies or facts that you will be facing when you approach for the loan? Need not to worry. We have assembled a brief payday loan glossaries and definitions to make you understand about payday loan borrowing.
A Look at the Origins of Online Lending
You might find yourself wondering about the origins of online lending, and how it has become the major industry that it has evolved into during recent years.The origins of online lending have evolved from standard lending practices combined with the increased ease and convenience of using the internet for a variety of purposes.
A Look at Getting a Bad Credit Personal Loan
Trying to get a bad credit personal loan can be frustrating. It may be that you don't know where to turn to find the loan that you're looking for, or that you don't know the correct procedure for getting a bad credit personal loan.
How To Easily Find A Military Loan
Military members the price for serving your country and defending freedom is difficult, fortunately finding the right loan to fit your situation doesn't have to be when you know where to look. Finding a loan provider that understands the pressures and time constraints that many military members are currently going through can be difficult and downright depressing.
Debunking the FAFSA Myth
With the plethora of big-business entities jockeying for the money of students on the path to becoming well-to-do responsible consumers with a house, car, and 1.5 children, it's often missed that the US Government is the first place to start when planning student finances.
Bad Credit Personal Loan - A Pay Day Loan May Be Your Best Option, No Credit Check
If you have bad credit, have an emergency and need some fast cash, an instant pay day loan online could be a quick solution for you. With online pay day loans, the lender does not pull your credit, so it doesn't matter how poor your credit history is.
Poor Credit Car Loan - Get Approved Online
Poor credit doesn't have to stop you from getting a car loan. In fact, car loans are one way of rebuilding your credit history.
Student Loans Are The Life Preserver Of The Education System
A loan is the reason many students are able to go to collegeand not have to worry about money until after they'vegraduated. There is a lot of paperwork involved in theapplication process of a loan, but once you've completed itand been accepted, it will have been worth it.
Cash Advance Payday Loans: Yes The Rates Are Higher!
Typically Cash Advance Payday Loans have no credit checks, and a very minimal amount of paper work.They are mainly concerned that you are, whom you say, you are.
If You're Looking For Low Cost Car Finance, Loan Companies Offer Some Great Deals
These days having a reliable and safe vehicle to drive is more important than ever. With public transport packed to the hilt and often unreliable, many people have learned to rely on their vehicles to get to college or work, pick up the kids, do the shopping and even to perform their jobs.
Benefits of a Bridging Loan
A bridging loan has many benefits, some of which are listed below.A bridging loan can be used to cover the financial gap when buying one property before the existing one is sold.
No Credit Car Loans - Even With No Credit History, You Can Still Get Approved
Even it you have no credit history, you can still get approved for a car loan. With a car loan, you can purchase your vehicle and build your credit history.
What is a Secured Personal Loan?
A secured personal loan is the generic term for a loan. Essentially, a secured personal loan is one that is secured against your property.
Why Choose a Secured Loan?
Are you wondering why choose a secured loan? A secured loan is a loan which is provided to you from a bank or building society. Secured loans require you to be able to put an asset up to secure the loan, this is typically your home.
Taking the Time to Find a Homeowner Loan UK
Trying to find a good homeowner loan UK can end up being quite confusing at first. The commercials and advertisements that you usually see for a homeowner loan UK use terms like "equity" and "collateral" that you might not fully understand? and yet there's no real explanation to be found within the advertisement.
An Overview of Getting a Homeowner Loan
Should you be in the market for a homeowner loan, you might find yourself wondering exactly how to go about finding the loan solution that you're looking for.A homeowner loan is a loan that's designed for individuals who own a house or other real estate, and uses the value of the home as the collateral for the loan.
Get a Low Rate on a Secured Online Loan
Secured loans have become very popular over recent years, with more and more consumers realizing the benefits of this type of loan. Secured finance is available to those with an asset - usually the home - against which the loan can be secured.
Bad Credit Business Loans - to Exchange Bad Credit for Monetary Benefaction
You want to raise a business on your own or you want to expand it further. You have a plan and the vigour to make your mark in this field.
Fast Cash Loans - When You Should Borrow and When You Should Wait
A fast cash loan should be an option used as a last resort to avoid a financial emergency. With its interest rates, a cash loan should not be used to purchase the latest gadget or fashion item.
|home | site map|
|TIGER MEDIA© 2006|