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How to Determine the Fundability of Your Business

Published By Credit Suite at March 1st, 2016

Fundability” is a term to describe how ready (or likely) your business is to receive funding from lenders and investors. The more fundable your business, the better your opportunities will be for acquiring funds for growth and expansion.

Here are some factors that affect your business’s fundability:

Business Details – Believe it or not, the simple details of your business such as a commercial address, business listing, your corporate structure and filings, and business licenses all can and will affect the fundability of your business. It is extremely important to have your “ducks in a row” when building business credit, and that means having your business details all hammered out and taken care of. “The devil is in the details,” certainly holds true here.

Business Credit – Your credit rating is part of your fundability picture. While it is only PART of the picture, it is an important part. Building business credit is part of increasing your business’s fundability. Even if you intend to use equity financing, building your business credit profile is an important part of obtaining optimum fundability.

Business Bank Accounts – Your business bank accounts are an important part of your business’s financial picture. Things that affect your fundability may include account age, account history, and balance rating (often referred to as “bank rating”). The bottom line with bank accounts: the higher your balances are, the better your business will look to banks and investors.

Business Assets – Your company’s assets such as inventory and owned equipment, letters of credit, and contracts can all play a part in determining your fundability. As with bank accounts, more is better. The more assets you have that can be converted into cash, the more fundable your business will be.

The Business Itself – The length of time you’ve been in business, and even the industry you are part of can play a part in your fundability. These are the things you have the least control over, of course, but they may present challenges that you should be aware of when you are trying to obtain funding for your business.

The better the picture is across all 5 of the above points, the better the fundability of your business.

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