Banks have their own internal way of scoring and rating businesses credit worthiness through a system called bank ratings, which rates a business from the bank’s perspective.
What lenders REALLY want to see?
They want to businesses that have this $10,000 average balance.
When a business has a $10.000 average balance, it yields a “Bank Rating” of Low-5, meaning the business has an average-daily-balance of $5,000 to $30,000.
A business that has a balance of $7,000 to $9,999 will rate a High-4, which will make it harder for a business to get approved for bank financing.
This is the bank rating scale, so you can see where your business might rank:
●● High 5, account balance of $70,000-99,999
●● Mid 5, account balance of $40,000-69,999
●● Low 5, balance of $10,000-39,000
●● High 4, 7,000-9,999
●● Mid 4, 4,000-6,999
●● Low 4, 1,000-3,999
There are other factors outside of average bank account balances that affect this rating.
A business will be scored higher if it has the average balance of $10,000 for 3 months. It is crucial that the money is in the account, and stay in the account for 3 months to maximize the bank rating.
Overdrawing the account and obtaining non-sufficient-funds charges is one big way any business can severely hurt it’s bank rating.
For the best rating, a business should insure their bank statements reflect a positive cash flow. Positive cash flow is the amount of revenue left over after the company has paid all its expenses.
When an account shows a positive cash flow it, indicates that a business is generating more revenue than is used to run the company. This increasing the bank rating.
A bank rating is improved when the business has a consistent amount of regular deposits.
Other factors can also affect a rating including age of the bank account, other bank products that the business uses, how many investment and savings accounts the business has.
Having a good bank rating is essential with securing bank financing.
To maximize your bank rating insure you keep your bank balance over 3 months as high as you can, preferably over $10,000 and that your account doesn’t go negative.
Take advantage of and use other services your bank offers such as CDs, savings accounts and other investment accounts. Open your bank account when your corporation starts, and leave it open as this will help your bank rating.
Make consistent deposits into your business bank account and insure each month you have good cash flow through your account. By regularly putting into the account more money than you take out.
Taking these steps will ensure you have an exceptional bank rating and can get approved for high amounts of bank financing.
About the Author
Samantha Stephenson is currently the CEO of SSBBC LLC
At SSBBC LLC, Samantha specializes in helping business owners establish excellent business credit scores and then leverage those scores to access cash and credit for their businesses.
She is also the mastermind behind the release of the exclusive Business Credit and Funding Suite which is the leading business cash and credit access system in the world today.
For more information on business credit scoring, business credit, visit https://www.ssbbconsulting.com