Financing a Business - How Likely is your Small Business to get a Business Loan?

It is a hard fact to swallow that most small businesses fail during their first year of operation. Why? Often, it is because they cannot sort out their financing. The idea for the business may be great and may fill a niche in their market that needs to be filled. Unless the business can get the proper funding, they are doomed to fail before they even start. Not every business owner is a financing expert. Many business owners are idea people - not numbers people. They need help with determining how much financing they need, finding sources of business loans and even help with the application process. When a business owner applies for a loan, there is always concern about the application process. Is all the proper information on the application? Has anything been left out? Does additional documentation need to be included? Is the business owner applying to the right bank, the right source or should they look elsewhere for financing? There are organizations out there that can help. They can help you prepare your application and be sure all the information the lending source needs is on the application. They can also tell you how likely it is that you will receive the business loan. In other words, they assess your business fundability.

What is Business Fundability

Business fundability is a measure of the possibility that your business can obtain business loans or other types of business funds. It measures the financial health of your company and all business owners could use that information. Some think that business fundability is the same thing as a business credit score. It is not the same thing as your business credit score or credit rating. Your business credit rating is only a part of the assessment of your business fundability assessment. A business fundability assessment provides a business owner with a scorecard report which is an evaluation of your business.

How did the Concept of Business Fundability Come About?

In March, 2012, a press release issued by CredSystems, a company that has offered business credit coaching systems and a nationwide business loan funding advisor network for the last five years, announced Business Fundability as a product they are offering. The CMO of the company states that the product is in response to the high small business failure rate due to poor financial planning and performance. All too often, small business owners tap their personal funds to start their businesses and end up losing their retirement nest eggs and life savings and then lose their businesses because they don't know how to obtain the proper financing for their businesses.

Business Fundability, the product, collaborates with Experian, the credit reporting agency, along with a network of advisors across the U.S. in order to help small businesses learn to apply for commercial business loans.

The Basic Components of Business Fundability

Business credit is one component is business fundability. Establishing your business credit does not happen over night, but it is an important component of business fundability.

Your business identify is one of the first things you do when establishing a business and is another factor in business fundability. Business identity occurs when you establish your form of business organization, register your business name and address and when you establish your business bank account.

Your bank rating is crucial to business fundability. If you have established a relationship with a bank, you must have a stellar payment record and adequate deposits that you could use as a compensating balance for a loan.

Complying with legal requirements is another component of business fundability. Your company must meet state, county, and city regulations and any licensing requirements relevant to your type of business.

If you think you meet these tests, you can fill out an application to be examined for business fundability by one of the advisors that exist across the U.S. The Association of Small Business Development Centers offers a business fundability test and counseling for small business owners on their website.