Credit Scoring
By Lou Wallace
One of the largest differences between Asset Based lenders and Banks is the use of credit scoring. Banks credit score everything they do when it comes to granting credit. Bank loan officers must determine by credit score whether they will take the next steps to look at an extension of credit for a company. If a company or its owner does not score within the range established by the Banks loan policies the business loan is rejected. This credit scoring is the governing factor when the Bank looks at a business loan request. The owner or a business must pass this credit score limit. While some Asset Based lenders use credit scores, they have the flexibility to look beyond those numbers and look at the other strong points of a company. Some Asset Based lenders do not credit score at all.
Asset Based financing relies heavily on evaluating the experience of the company’s management team, the industry, the client or customer base as well as the collateral that is available to secure the loan request. All of these elements play a role in the mind of an Asset Based lender when determining an extension of credit.
This is a continuation in our series of articles outlining the differences between Asset Based Lenders and Banks.
Performance Funding Group, LLC is a locally owned and privately funded asset based lender who has been providing several different loan products since 1997. Lou Wallace has been working in commercial loans since 1971. Lou Wallace can be reached at 602-912-0200.
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Credit Scoring
