|
We have very few rules that are
"cast in stone" rules.
Although the following
guidelines
are important for most First Capital equipment leasing programs,
start-up and
new
business programs often have their own special requirements. General guidelines
for "clean personal credit" appear below as well:
Extending
Credit
The decision to extend credit to Start-Ups and New Businesses will rely
heavily on the financial strength and demonstrated ability to manage
credit of each of the principals (owners of 10% or more) of the entity
seeking lease financing.
Credit Based Criteria
Start-up and new business leasing in
particular, is
a "credit-based" decision (as opposed to asset
based). The "idea," the business plan, projections and the
value of the equipment are all considerations in an approval, but none will outweigh the
importance of the principal's credit. As the business doesn't have any
"credit," the only credit left to consider is that of the owners.
We are not "investors."
We are not venture
capitalists, nor are we looking for equity or any participation
in the "upside" of your project's success. Our only interest is in
the timely repayment of the lease and hopefully an opportunity to fund
your business' future growth & expansion! If the deal falls apart at any
point, for any reason and we have to recover overdue payments and/or
recover your used equipment, the total transactions is almost certainly a
NET LOSS for the leasing company.
What
We Mean By "Clean
Credit"
(Start-Ups & All Businesses)
 |
Personal Credit
Bureau Report Characteristics that will be considered:
- Minimum Score 600
(650 is better, 700+ is where you "want"
to be)
-
No slow pays during the previous 12 months (or
VERY GOOD explanations)
-
No Unpaid Charge Offs
(or VERY
GOOD explanations)
- No Unpaid Collection Accounts
(or
VERY GOOD explanations)
- At least 7 "trade lines" (accounts
on you credit bureau)
- Oldest credit account on
your bureau at least 3 years
- "Availability" of credit is
important. Greater than 50% is good (Being
"maxed out" is a significant red flag)
|
|
|
Recent Inquires
- Less
than 10 in the previous 12 months. (Don't
"shop" your lease to death, you'll end up being turned down
automatically, by everyone! We see this everyday)
|
|
|
Bank Reference
(business or personal account for
start-ups) that show a 3 month
history as follows:
- Lease amount up to $20,000: The average bank balance should be at
least 4-figures (low)
- Lease amount up to $30,000: The average bank balance should be at
least 4-figures (medium)
|
|
|
Bank Account
should be "in good standing" with NO NSF's
(or
VERY GOOD explanations)
|
|
|
Comparable Debt.
Can you show a track record of repaying a
debt comparable to amount you are requesting?
(A big
plus)
|
|
|
No Personal
Bankruptcy
(especially for start-up or new businesses).
|
|
|
Revolving Debt
(credit & other charge accounts)
should be less than $25,000
|
|
|
New Debt.
Too much
"new debt" within the previous 12 months adds risk to the
current transaction and is a negative.
|
|
|
No Open Tax Liens or
Unsatisfied Judgments
(your assets
may be subject to seizure at any time)
|
|
|
No Child Support
Defaults
(your assets
may be subject to seizure at any time)
|
|
|
No Student Loan
Defaults
(your assets
may be subject to seizure at any time)
|
Other credit
considerations:
| Homeowner (a
big plus)
|
|
 Co-signer! --
Can you bring a stronger co-signor to the transaction?
Don't
be shy about asking close friends or relatives--it may be
the difference between an approval or a decline! (This is a big plus for
marginal transactions, it is of NO USE if the principal is
significantly below the standards outline above)
|
|
