credit: the 3 most important "cs"
Post on 21-Oct-2014
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Learn about the 3 "Cs" in credit: Character - who are you when times get tough? Cash Flow - the amount of cash available from all sources of income in relationship to the total amount of personal and business debt. Collateral The amount of cash available from all sources of income in relationship to the total amount of personal and business debt.TRANSCRIPT
Credit: The 3 Most Important “C’s”
hennesseycap.com
What Alternative Lenders Look For
Underwriting the critical 3 “C’s”
Character – who are you when times get tough?
Cash Flow
Collateral
Character
Your willingness to pay back your loanHow you have paid your bills in the past is an
indication of how you will pay your future debt obligations.
Key Factors for Hennessey CapitalOrdering Process You Customer’s credit worthiness
Character
Determine management’s reputation and experience in the industry and community.
Determine how past obligations have been handled.• Business credit
Cash Flow
Cash Flow = The amount of cash available from all sources of income in relationship to the total amount of personal and business debt.
Collateral
Primary source of repayment • Receivables (85%)• Inventory (50%)
Results
The stronger the company’s “3 C’s” are, the greater chance the company’s loan will be approved.
good character good collateral (receivables & inventory) good debtors good cash flow_______________________________________
= good chance for funding
++++
Summary
Character
Cash Flow
Collateral
Hennessey Capital Financing
A division of Hitachi Capital America Corp.; works with B2B companies in the manufacturing, service, and distribution s paces to provide working capital through factoring and asset- based lending
Provides up to $5 million and more for companies that are post-revenue (has sales) but pre-bankable (may not fit the mold for
a traditional bank loan)
Uses receivables & inventory as collateral
Financing Options Factoring
Business to business sales companies
Limited track record or rapid growth
Leverages up to 90% of invoices for immediate cash
Bridge the gap between service and collection/payment
Can be used in conjunction with current bank facility
EXAMPLE: $100 = $85 advance paid at time of invoice with balance due $15 less our fees paid when customer’s payment is received.
Financing Options Asset-Based Line of Credit
Established business to business sales companies.
Restructure current bank debt, successor financing to factoring or flexible tool for long term needs.
Leverage asset classes to maximize cash-accounts receivable, inventory, machinery and equipment or real estate.
A/R Inventory is used as collateral
Working With Banks Complementary Relationship
• Focused on debtor strength, not profitability • Past losses are acceptable [BK]• Less focus on personal net worth • Non-bankable entities are acceptable • We help businesses establish a track record and transition into a traditional banking relationship • We participate with banks to supplement your additional working capital needs or complement an existing bank line • The bank maintains the business banking account
Joe Romeo Senior Business Development Officer Hennessey Capital
Phone: 248.658.3224