Financial Profiling: Small Business House Arrest

Have you heard of racial profiling? There is nothing new under the sun.

A simple definition of racial profiling is when an individuals race or ethnicity by law enforcement personnel is used as a key factor in deciding whether to engage in enforcement.

Financial profiling is when an business’s outer characteristics is used by lenders and investors as a key factor in deciding whether to engage in loaning money or buying into the business.

These characteristics are known most commonly as the 5 C’s of Credit. According to Investopedia, the 5 C’s are a method used by lenders to determine the credit worthiness of potential borrowers. The system weighs five characteristics of the borrower, attempting to gauge the chance of default.

The five Cs of credit are:

  • Character
  • Capacity
  • Capital
  • Collateral
  • Conditions

What does that mean? Yes, your business should “look” a certain way to get past screening criteria for funding. Oh,…”Yes”, certain characteristics will warrant almost an instant denial. Being aware is to be prepared. Unless you are “Mr. or Mrs. Money-Bags”, you WILL need capital at some point in time.

My goal is to show you how to begin with the end in mind. Don’t make mistakes now that will hinder or harm your ability to receive growth capital later on!!

With almost 20 years in Finance, I will share an insiders perspective on financial profiling.

Get your financial house in order now, before your chances for obtaining capital are arrested!