“An athlete may run ten thousand miles
in order to prepare for one hundred yards.
Quantity gives experience.”
- Ray Bradbury – American Writer

Now that the economic recovery is underway many businesses across the country have resumed regularly scheduled replacements and upgrades to their equipment and technology.  First Star has seen a significant increase in new credit applications submitted thus far in 2010.  Although we would like to approve every request that comes in we are still challenged by stringent credit granting guidelines.

Often times we find ourselves adopting the role of advisor or consultant for prospective clients.  Many small business owners, especially those that have not sought financing in a couple of years are surprised to realize that they will have to pass more rigorous tests to demonstrate their credit worthiness.  The pendulum has shifted and we have moved from a period of very soft credit underwriting to a period of more thorough and comprehensive qualification criteria.

For the immediate future it is probably safe to assume that this dynamic is the new normal.  Going forward, business owners need to be prepared to create a package that really sells them to a credit analyst.  This package needs to be more comprehensive and compelling than what they have been used to.  The perspective of the credit analyst must be kept in mind when the funding request is being compiled.  All presentations regardless of whether they are in writing or delivered verbally should be constructed with the audience in mind.  In today’s economic environment, it is not uncommon for credit analysts to see the proverbial glass as being half empty.  Thoroughly documenting the health of your business and the merit of the funding request will make a huge difference in the likelihood of achieving your desired end goal of being approved.

It is important that the credit package be as thorough and truthful as possible.  If there is any doubt about what is relevant vs. irrelevant you should always err on the side of caution and provide too much information rather than not enough.  When the story is incomplete or specific aspects don’t make sense you should not assume that creditors will be inclined to give you the benefit of the doubt.  This won’t happen – they will be forced to assume the worst.

There are a few things that if done well will significantly increase the likelihood of your financing request being approved. 

• Be conservative – a clear, complete and conservative plan of what your company will need and when will give lenders comfort that they are reviewing a credit worthy request. 
• Be straight forward about your companies weaknesses – lenders know what industries / geographies were hit particularly hard by the recession.  It is important to acknowledge this and specifically address what your company has done to adapt to or overcome market conditions.
• Document policies / procedures / systems – the more systematic and predictable the business is the more stable lenders will perceive it to be.  Also, standardized processes will bring the caliber of work to a consistently high level.

At First Star Capital, we strive to do everything in our ability to meet our clients' needs and help them obtain the financing they need when they need it.  The key for a business is to be able to put together a package that is compelling for a lender and for the immediate future this is going to be a more thorough process than it has been in recent years.

About First Star Capital

First Star Capital is an established national firm that has financed thousands of different businesses across the country and has funded hundreds of millions of dollars worth of capital equipment. We are an independent commercial lender with a specialty focus in equipment financing and leasing. First Star Capital is a direct lender with the ability to quickly and efficiently fund new financing requests between ten-thousand and ten-million dollars. Since we are a direct lender with our own funding and servicing capabilities we are able to deliver tangible value added financing solutions with the utmost flexibility. First Star Capital has the internal ability to underwrite a variety of different financing requests – nothing is too big or too complicated.

First Star Capital

(800) 604-4817

Brad@FirstStarCapital.com

www.FirstStarCapital.com

Did You Know?

A billion:

A billion seconds ago it was 1959

A billion minutes ago Jesus was alive

A billion hours ago our ancestors were living in the stone age

A billion days ago no-one walked on the earth on two feet

A billion dollars ago was only 8 hours and 20 minutes at the rate the government is spending it

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